Investing in China: Awaiting The National People's Congress
By Ian Cooper
Black Monday came and went for Chinese indices. And believe it or not, it was thanks to a foolish, untrue rumor of a 20% capital gains tax. But it’s to be ignored as Chinese regulators deny the news, according to Shanghai Securities News, citing the Ministry of Finance and the State Administration on Taxation.
Still, that’s not to say the Chinese markets are out of harms way. We wouldn’t be surprised to see further Chinese market weakness should the government move to hike interest rates. But we won’t know anything until The National People’s Congress meets next week. It may be a smart move, though, as a pre-emptive strike on inflationary pressures. The inflationary risk rears its ugly head as soon as the Chinese economy posts anything stronger than 10% growth.
In the meantime, Premier Wen Jiabao (as quoted by ABC News) reiterated the importance for China “to focus on ensuring financial stability and security” - a bullish move that signals the government’s resolve to prevent market disasters.
Volatility is good. Early Alert Trader is all over this, but we won’t have a play until after the meeting.
Take care,
Ian L. Cooper, Editor, Early Alert Trader