FinanceAsia Magazine

Issue: July 2013

After the storm

China’s credit crunch highlighted several surprising factors: the authorities’ determination to push through reform and the central bank’s clumsiness in carrying out the task.

The People’s Bank of China deliberately starved the banking system of cash at a time when it was most needed in order to teach the banks to stand on their own. The result was a spectacular credit crunch, albeit brief. Ripple effects spread through financial markets, beyond the expectation and control of authorities.

What particularly irked bankers and unnerved investors was that the central bank made such a dramatic move without flagging its intentions beforehand.

China, of course has to force its banks to be more efficient ahead of fully opening its capital account — if it didn’t the resulting financial chaos would be politically damaging for the country’s leaders. However, it needs to consider its next move more carefully.

One test of its new found fondness for market forces in the finan- cial sector would be distress at a bank, many of whose products are seen by investors as government-guaranteed.

We can expect more hiccups and market volatility along the way. Companies with operations in China and investors in the region’s capital markets need to understand China’s timetable for opening its capital account, how it will happen and what still needs to be done.

To help, we have written about China’s timetable for convertibility on Page 25, the future of Chinese banks on Page 20, and how the infrastructure for handling renminbi is slotting into place around the globe on Page 36.

Alison Tudor-Ackroyd
Editor

 

About FinanceAsia Magazine

Established in 1996, FinanceAsia is the leading publisher of financial news in the Asia-Pacific region. Our combination of print and online products provide the latest news, analysis and insight into Asia’s financial markets.

Published monthly from our office in Hong Kong, FinanceAsia magazine provides our readers with the latest financial trends, interviews, features and investigative reports. The publication has a readership of key decision-makers at corporations, governments, investment and commercial banks, institutional investors, asset managers, brokers, traders and financial intermediaries.

Our regular sections include:

Data Story
We look at the key data behind a topical theme in Asian finance, showcased with an array of graphs and tables.

Greenshoe
A monthly opinion column from the FinanceAsia editorial team. We provide our thoughts on a topic making the headlines.

Deal of the Month
Our regular two-page spread with its signature artwork and in-depth analysis examines the equity, debt or M&A deal that we feel has had the biggest impact on the Asian capital markets that month.

Investor Dialogue
For company CEOs and CFOs, what investors think is a critical concern, and in this column we help them understand just this. Each month we speak to a Chief Investment Officer of a top fund and outline their views on corporate governance, what stocks they like and where they expect to generate the best returns.

Soapbox
A monthly opinion piece from a respected author or commentator on Asian business, finance or economics.

People on the Move
Here we summarise the key hires, fires and moves at the region’s banks, highlighting at least one major move each month.

Deal Tracker
We examine the major primary markets deals of the month and comment on the quality of the debt or equity transaction and the secondary market performance.

The Arts of Finance
A light-hearted look at investment opportunities surrounding the arts business in Asia.

 

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