Asian shares up as gold hits record high
Asian shares regain part of what they lost in previous days. Gold however tops US$ 1,900 an ounce, becoming the world’s currency. Watchers are now waiting to see what China’s big banks will do after officials highlight the dangers of their “bad loans”.
Hong Kong (AsiaNews/Agencies) – Asian shares are up, following good results in Europe and especially Wall Street yesterday. Still, gold has not stopped its upward trend. In Hong Kong, it broke the US$ 1,900 barrier. After opening at US$ 1.898, it surged to US$ 1,915.50 in the morning. Analysts predict its rise to continue as investors seek the safest haven asset available. For some, it could even top US$ 2,000 an ounce by the end of the year, a 41 per cent gain in 2011.
“Gold is the currency of the world at the moment, with the world convinced that the monetary and fiscal authorities are likely to do nothing right and everything wrong when it comes to resolving the world's current fiscal problems," well known economist Dennis Gartman said.
Central banks added 155 tonnes, valued at about US$ 8.18 billion, to reserves in the first five months of the year, this according to the World Gold Council. Thailand, South Korea and Kazakhstan added gold valued at about US$ 2.38 billion to their reserves.
Gold’s surge is that more significant since Asian indexes are all up, a little, following three days of losses (pictured Friday’s decline). Japan’s Nikkei 225 (NKY) Stock Average gained 1.2 per cent. China’s Shanghai Composite Index also added 1.2 per cent, whilst Hong Kong’s Hang Seng Index rose 1.1 per cent. South Korea’s Kospi Index, which fell 9.6 per cent in the previous three trading days, rebounded 3.9 per cent.
All this is a sign of renewed but cautious confidence in the US economy and in the European states’ capacity to cope with their debt.
Market watchers are looking ahead to later in the week, when US Federal Reserve chief Ben Bernanke will deliver a key speech, with many looking for clues to how he plans to boost the US' flat-lining economy.
The Libya crisis is another factor, as markets bet on higher oil supplies following a rebel victory over the Gaddafi regime.
In China, market watchers are waiting to see what the main banks—the Industrial and Commercial Bank of China (ICBC), the Agricultural Bank of China (ABC), the Bank of China (BC), the China Construction Bank (CCB)—will do after former People's Bank of China governor Wu Xiaoling said on Saturday that the big four banks only needed up to 500 million yuan over the next five years.
Experts note that Beijing is concerned that the big banks will be stuck with bad loads and wants them reduced. Others expect Chinese banking regulators to require the larger banks, including the big four that account for about 45 per cent of total banking assets, to increase their reserves. Meanwhile, the ICBC and CCB yesterday dropped to a two-year low as Wu’s forecast hit home.
Unrestrained spending by local governments, often for top-of-line offices and cars, but also major infrastructure projects such as highways and airports, has failed to generate enough cash to service borrowings.
At the same time, the central government wants to limit money supply because of inflation.
In July, the consumer price index in Hong Kong rose 7.9 per cent year-on-year, a record high since 1995, driven by rent and food prices. This could push workers to demand higher salaries and forced many companies to shut down.
In July, Chinese industrial output slowed down for the second month in a row following the rising cost of natural resources and lower foreign demand for Chinese goods.
As Beijing tries to control growth to reduce inflationary pressures, the latter could outstrip economic growth, eroding the purchasing power of lower middle class families, and drive them into poverty.
“Gold is the currency of the world at the moment, with the world convinced that the monetary and fiscal authorities are likely to do nothing right and everything wrong when it comes to resolving the world's current fiscal problems," well known economist Dennis Gartman said.
Central banks added 155 tonnes, valued at about US$ 8.18 billion, to reserves in the first five months of the year, this according to the World Gold Council. Thailand, South Korea and Kazakhstan added gold valued at about US$ 2.38 billion to their reserves.
Gold’s surge is that more significant since Asian indexes are all up, a little, following three days of losses (pictured Friday’s decline). Japan’s Nikkei 225 (NKY) Stock Average gained 1.2 per cent. China’s Shanghai Composite Index also added 1.2 per cent, whilst Hong Kong’s Hang Seng Index rose 1.1 per cent. South Korea’s Kospi Index, which fell 9.6 per cent in the previous three trading days, rebounded 3.9 per cent.
All this is a sign of renewed but cautious confidence in the US economy and in the European states’ capacity to cope with their debt.
Market watchers are looking ahead to later in the week, when US Federal Reserve chief Ben Bernanke will deliver a key speech, with many looking for clues to how he plans to boost the US' flat-lining economy.
The Libya crisis is another factor, as markets bet on higher oil supplies following a rebel victory over the Gaddafi regime.
In China, market watchers are waiting to see what the main banks—the Industrial and Commercial Bank of China (ICBC), the Agricultural Bank of China (ABC), the Bank of China (BC), the China Construction Bank (CCB)—will do after former People's Bank of China governor Wu Xiaoling said on Saturday that the big four banks only needed up to 500 million yuan over the next five years.
Experts note that Beijing is concerned that the big banks will be stuck with bad loads and wants them reduced. Others expect Chinese banking regulators to require the larger banks, including the big four that account for about 45 per cent of total banking assets, to increase their reserves. Meanwhile, the ICBC and CCB yesterday dropped to a two-year low as Wu’s forecast hit home.
Unrestrained spending by local governments, often for top-of-line offices and cars, but also major infrastructure projects such as highways and airports, has failed to generate enough cash to service borrowings.
At the same time, the central government wants to limit money supply because of inflation.
In July, the consumer price index in Hong Kong rose 7.9 per cent year-on-year, a record high since 1995, driven by rent and food prices. This could push workers to demand higher salaries and forced many companies to shut down.
In July, Chinese industrial output slowed down for the second month in a row following the rising cost of natural resources and lower foreign demand for Chinese goods.
As Beijing tries to control growth to reduce inflationary pressures, the latter could outstrip economic growth, eroding the purchasing power of lower middle class families, and drive them into poverty.
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See also
Harsh economic winter to follow Olympics
21/08/2008
21/08/2008
