New York, New York (PressExposure) February 21, 2010 -- "Mann International", the Asian-based asset manager, believes that global market reaction to news that China has raised the required bank reserve limits for the 2nd time this year is overdone.
The world is looking to China to lead the global economy out of its moribund state but the country's recent stellar growth has raised concerns at the highest level that inflationary pressures are building in the world's third biggest economy. The main concern is that so-called "hot money" is flowing into assets like property and equities and fueling a bubble in those sectors. The People's Bank of China (PBOC) has, therefore, taken steps to dampen the flow of money to those speculating in those sectors.
"Mann International" analysts suggest that the tightening is being targeted and should have no discernible effect on Chinese economic growth in the year ahead despite market jitters.
Stocks in miners and oil companies sold off as investors speculated that the PBOC's measures would hit demand for raw materials in the country but "Mann International" analysts are thought to believe that the Chinese are merely demonstrating the type of prudence that governments in the West should have utilized before the onset of the credit crunch.
China has made a concerted effort to stoke domestic demand after recessions in the West decimated demand for Chinese goods. Some 4 trillion yuan has been injected into the Chinese economy since the stimulus package was announced in 2008 and this has prompted a strong economic rebound.