China's Forex Reserves Decline to $3.23 Trillion

China’s foreign-exchange reserves shrank to the smallest since 2012, indicating that the central bank sold dollars as the yuan’s retreat to a five-year low exacerbated depreciation pressure.

The world’s largest currency hoard decreased by $99.5 billion in January to $3.23 trillion, according to a People’s Bank of China statement released on Sunday. The contraction was less than a Bloomberg survey’s median estimate of a $120 billion drop. The stockpile slumped by more than half a trillion dollars in 2015, the first-ever annual decline.

Policy makers fighting to hold up the weakening yuan amid slower economic growth, plunging stocks and increasing outflows have been burning through the reserves. The draw-down has continued since the central bank’s surprise devaluation of the currency in August, when the stockpile tumbled $94 billion, a monthly record before December’s unprecedented $108 billion decline.

“While the remaining reserves represent a substantial war chest, the rapid pace of depletion in recent months is simply unsustainable,” said Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight in Singapore. “Domestic private investors and global currency traders see a one-way bet against the currency. This has resulted in large-scale private capital outflows since early 2015 as expectations mount that the PBOC will eventually be forced to capitulate once its reserves are sufficiently depleted.”

Outflows Rise

Capital outflows increased to $158.7 billion in December, the most since September and were $1 trillion last year, according to estimates from Bloomberg Intelligence. That’s more than seven times the amount of cash that left in 2014.

The PBOC has stepped up efforts to stem the exodus, warning speculators that they will be punished. It intervened in the Hong Kong market last month after the yuan’s offshore exchange rate sank to a record 2.9 percent discount to the onshore rate. Apart from selling dollars, the monetary authority also gave guidance to some Chinese lenders in the city to suspend yuan lending to curb short selling, a move that contributed to the overnight interbank lending rate surging to an all-time high of 66.8 percent on Jan. 12.

Yuan Outlook

The median estimate in a Bloomberg survey is for the yuan to drop to 6.76 a dollar by the end of this year, with Rabobank Group the most pessimistic with a 7.53 prediction. The currency has declined 1.24 percent so far this year, closing at 6.5755 in Shanghai on Friday. Chinese financial markets are shut for the Lunar New Year holiday.

China’s top economic planner said that the objective for this year is for an expansion in the range of 6.5 percent to 7 percent. The 6.9 percent growth in 2015 was the slowest in 25 years. Exports probably declined for the seventh straight month in January, according to the median estimate in a Bloomberg survey before data due Feb. 15. China increased its gold hoard in January, raising its holdings to 57.18 million ounces at it looks to diversify its foreign-exchange stockpile.

“The smaller decline in the reserves suggests that some capital outflow restrictions imposed in January worked, ” Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong, wrote in a note on Sunday, adding that he estimates the drop in February will be “much smaller.”

Source : Bloomberg

Bank Sentral China Jamin Tak Ada Pelemahan Yuan Lagi

Bank Sentral China (PBOC) memberi jaminan kepada pasar bahwa tidak ada alasan untuk yuan jatuh lebih dalam lagi, membantah spekulasi ada keingingan di Beijing untuk pelemahan lebih lanjut.

Di saat yuan melemah untuk hari ketiga, Kamis kemarin, PBOC memastikan pihaknya punya alat untuk menjaga stabilitas yuan dan membuka kemungkinan nilai tukar kembali menguat di masa mendatang. PBOC mengatakan lingkungan ekonomi kuat, surplus perdagangan, kondisi fiskal yang terjaga dan cadangan devisa berlimpah memberi dukunga yang kuat pada nilai tukar.

Pernyataan ini ditujukan untuk menjawab isu seputar adanya dorongan dari tingkat tinggi agar nilai tukar lebih ditekan. Reuters mendapat laporan dari sumbernya bahwa kekuatan besar dalam pemerintah mendesak agar yuan dibiarkan melemah lebih jauh lagi, dengan devaluasi mencapai 10%.

Tapi Deputi Gubernur Yi Gang menepis isu itu, sembari mengklaim tidak perlu menyesuaikan yuan untuk mendongkrak ekspor. Ia juga berjanji pihaknya akan memperbaiki mekanisme penetapan harga yuan, lebih membuka pasar valasnya dan menarik investor asing dengan meliberalisasi pasar keuangan.

Lupakan Yunani, kondisi Tiongkok lebih parah & bisa sulut krisis dunia

 Mata masyarakat dan investor dunia kini tertuju pada drama bangkrutnya Yunani. Namun, investor seharusnya lebih khawatir dengan apa yang terjadi di negara dengan penduduk sekitar 1,4 miliar orang dengan PDB terbesar kedua dunia, yaitu Tiongkok.

Pasar saham Tiongkok mulai dari The Shanghai Stock Exchange Composite Index dan Shenzhen Stock Exchange Composite Index merosottajam mencapai 30 persen dari angka tertingginya. Ini terjadi karena kekhawatiran investor pada saham perusahaan Tiongkok yang sedang mengalami gelembung atau bubble. Pemerintah Tiongkok bahkan telah mengeluarkan beberapa kebijakan untuk mengurangi anjloknya pasar saham. Namun ini malah balik menyerang pemerintah sendiri.

Regulator pada hari Minggu mengatakan bahwa mereka akan menyediakan lebih banyak modal untuk entitas dan memungkinkan pinjam uang untuk membeli margin lebih atau praktik meminjam uang untuk membeli saham. Membeli margin ini sangat berisiko.

Para ahli menyebut, naiknya pasar saham Tiongkok pada awal tahun ini disebabkan karena banyaknya investor membeli saham dengan utang. Dan, ketika saham pertama mulai jatuh bulan lalu, banyak investor menjual saham mereka dengan cepat untuk membayar utang. Hal ini menjadi pemicu merosot tajamnya pasar saham Tiongkok.

Bahkan kondisi ini diperkirakan bisa lebih buruk karena investor menyadari bahwa perlambatan ekonomi Tiongkok mengikis keuntungan perusahaan.

"Pasar saham Tiongkok tidak didukung oleh fundamental negara. Sebaliknya, pasar sedang diangkat oleh pinjaman pemerintah dan manipulasi," ucap pendiri Pento Portofolio Strategies, Michael Pento seperti dilansir dari CNN di Jakarta, Selasa (7/7).

Penyelamatan pasar saham juga dilakukan oleh broker Tiongkok dengan membeli saham di Shanghai Composite. Namun hal ini diyakini akan menimbulkan masalah baru.

Asisten profesor bidang keuangan dari Warwick Business School di Inggris, Lei Mao mengaku khawatir dengan kebijakan pemerintah Tiongkok yang dapat menggembungkan nilai perusahaan besar dengan mengorbankan banyak perusahaan kecil. Kebijakan pemerintah terbukti tidak terlalu efektif, hal ini dilihat dari Shanghai Composite yang hanya mampu naik tidak lebih dari 2 persen. Sedangkan Shenzen Composite tetap turun hampir 3 persen.

Pasar saham Tiongkok tenggelam dengan cepat beberapa waktu terakhir. Apakah ini pertanda krisis ekonomi dan kekacauan seperti 2008?

Tiongkok saat ini adalah mitra dagang terbesar kedua bagi Eropa dan Amerika Serikat. Selain itu, Tiongkok adalah adalah salah satu konsumen komoditas terbesar dunia. Penurunan harga saham tentu akan mempengaruhi ekonomi dunia secara langsung.

Harga minyak dunia turun pada hari Senin kemarin dan banyak yang menyalahkan Yunani dan penurunan nilai tukar Euro. Tidak banyak yang berpikir kalau kondisi ini terjadi karena pengaruh kondisi di Tiongkok.

"Lihatlah cerita yang ditulis tentang penurunan harga minyak dunia saat ini, dan mereka akan berbicara tentang bagaimana permintaan minyak turun di Yunani. Saya harus berpikir lagi, ini permintaan Yunani? menurut saya permintaan Tiongkok," ucap Direktur EverBank Global markets, Chuck Butler dalam laporannya.

Melihat kondisi Tiongkok saat ini, menurut Chuck Anda bisa mengabaikan Yunani seutuhnya. Jangan terlalu terjebak dengan berita di Eropa.Tiongkok lebih berpengaruh pada ekonomi global dan bisa menyulut krisis.

 

Sumber : Merdeka.com

Fitch Affirms China at 'A+' With Stable Outlook

Fitch Ratings has affirmed China's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'A+'. The issue ratings on China's senior unsecured foreign and local currency bonds are also affirmed at 'A+'. The Outlooks on the Long-Term IDRs are Stable. The Country Ceiling is affirmed at 'A+' and the Short-Term Foreign Currency IDR at 'F1'.

KEY RATING DRIVERS

China's 'A+' IDRs with Stable Outlook reflect the following key rating drivers:-
- China's macroeconomic performance is strong on almost any comparison.

 The five-year average growth rate to 2015 of 7.8% is more than double the 'A' median of 3.1% or 'AA' median of 3.2%. However, China's remarkable growth has been accompanied by a build-up of imbalances and vulnerabilities. Fitch expects growth of 6.8% in 2015 and 6.5% in 2016, well below the 10.5% average over 2001-2010, as the economy goes through a period of adjustment and rebalancing. Fitch's base case is for a relatively smooth transition towards a less credit-intensive and more consumption-oriented, if likely slower, growth path. However, the economy's structural weaknesses give rise to various risks to this relatively benign scenario.

- Aggregate indebtedness of the economy rose to 242% of GDP by end-2014 in Fitch's estimate, up from 128% at end-2008. Fitch expects it to rise further in 2015, posing mounting systemic risk. The stand-alone credit profiles of the banks comprising China's system are weaker than is generally the case for countries whose sovereigns are rated in the 'A' range. Fitch believes the reported non-performing loan ratio for commercial banks of 1.25% at end-2014 is probably deeply understated. Risks remain associated with the proliferation of "shadow banking" activity since 2009, despite recent regulatory action to curb it.

- The agency's expectation that the economy's adjustment will be relatively orderly is based partly on an assessment that the authorities' capacity for economic management remains high, given the state-dominated nature of the system. However, there is a risk of a more disruptive and credit-negative adjustment. Fitch's estimate of China's investment/GDP rate in 2014 of 47.9% in 2014 is the fourth-highest of any rated sovereign. The rise in the investment rate from an average 42% over 2002-2008 coincided with a boom in residential real estate construction. The real estate boom began to unwind in 2014 as credit disbursement slowed, a process that almost certainly has much further to go. A sharper slowdown in construction and real estate development that leads to job losses poses a downside risk to China's economy.

- The sovereign's external balance sheet is China's core credit and rating strength. Official foreign reserves of trn at end-2014 dwarf government external debt of USD34.2bn at end-September 2014 (latest available). China's ratio of sovereign net foreign assets (SNFA) to GDP, at 41.4% of GDP at end-2014, was far stronger than the 'A' median of 9.3% and the eighth-highest of any Fitch-rated emerging market sovereign.
- The country's external finances overall are a strength. China's net external creditor position of 41.5% of GDP at end-2014 greatly exceeded the 'A' range median of 7.5%, and was the second-strongest in the 'A' category. The country has run an annual current account surplus since 1994. The liquidity ratio is projected at 509% in 2015, well above the 'A' median of 104% and the 'AA' median of 155%. Fitch does not yet view the rise in private sector external debt and greater volatility of capital flows since 2012 as a risk to the sovereign ratings, although these factors do complicate economic policy-making.

- The Chinese central government has low explicit debt. On-balance-sheet gross central government debt was just 16.6% of GDP while fiscal deposits were 5.6% of GDP at end-2014. However, Fitch believes the Chinese central government faces a range of contingent liabilities. In particular, there is still insufficient clarity over the fiscal indebtedness of local governments (LGs). Fitch estimates China's general government debt (including LGs) at 55.2% of GDP at end-2014, above the 'A' range median of 47.9%. The agency acknowledges that further disclosures on LG debts expected during 2015 could reveal a higher or lower figure. Fitch assesses the public finances as a neutral factor in China's credit profile overall.

- The authorities have committed to a range of structural reforms that could lay the foundations for more sustainable growth in future. Deposit interest rate liberalisation (leading to higher rates) could prove a powerful engine for rebalancing by effectively transferring wealth away from more leveraged corporates towards households, which are net savers. The anti-corruption drive may be viewed as a political strategy by the leadership to centralise power, but could also improve resource allocation by reducing graft.

- China's level of income and development remains low for the 'A' peer range, despite years of rapid growth. Governance indicators are weak for the 'A' range according to the World Bank's framework of indicators. Transparency is low for a relatively highly-rated sovereign, in particular with respect to LG debts and bank balance sheets.

RATING SENSITIVITIES

The Stable Outlook reflects Fitch's view that upside and downside risks to the ratings are balanced. The main factors that individually or collectively could lead to rating action are:

Positive:

- Progress on structural reform oriented towards sustainable longer-term growth

- Increasing evidence that the economy was adjusting smoothly

- Greater clarity on the strategy to address the debt problem in the economy, including at LGs

Negative:

- A sharper growth slowdown than currently anticipated, leading to a rise in unemployment and/or a materialisation of risks to financial stability

- A rise in estimated general government indebtedness well above Fitch's current estimate

- A change in policy direction that increased economic imbalances and structural vulnerabilities, thereby increasing the risk of an eventual disorderly adjustment

KEY ASSUMPTIONS

- The ratings assume the global economy evolves broadly in line with the projections in the agency's Global Economic Outlook, and that the eventual rise in US interest rates does not prompt a global systemic crisis in emerging markets

- Recognising China's emergence onto the global stage, the ratings assume the continuation of an open global trade and financial system

- The ratings assume China's domestic social and political stability is broadly maintained and that regional geopolitical risks do not escalate sharply.