New York, NY (PressExposure) November 24, 2010 -- "Interactive-trade" believes that China will raise interest rates before the end of the year and have advised clients to position themselves accordingly.
Recent data showed that at 4.4% Q/Q, inflation in the world's second largest economy was 10% above estimates of 4.0%. The People's Bank of China, the nation's central bank, has raised the capital reserve requirements for the mostly state-owned commercial banks on two occasions and "Interactive-trade" suggest that a rate hike cannot be far way.
"China's monetary policy decisions may not be popular in the West for a number of reasons but, given the country represents a major component in the engine of future global economic growth, it would be prudent to ensure it doesn't overheat now by running it a little leaner", said an "Interactive-trade" strategist.
The firm said that investors can expect to see some retrenchment in the prices of several commodities like cotton, copper and iron. They believe that ongoing worries about the euro and the US dollar should underpin the price of precious metals but could not rule out a period of consolidation below current levels.
"Interactive-trade" analysts apparently believe that the move will impact upon mining and energy stocks as demand levels off and suggested that clients take some risk off the table and book profits on several recent recommendations within those sectors.