Bubbles building in Asia?
Reports suggest governments in China, Korea and Vietnam want to cool off their economies.
On Monday, I noted that U.S. stocks hadn't gotten as pricey as, say, stocks in Asia.
Turns out folks in Asia may be worrying financial markets are a bit overheated.
The Financial Times reported today that China has warned its banks to ensure that unprecedented volumes of new loans are channeled into the real economy.
The government wants to be sure that the cash isn't diverted into equity or real estate markets where, officials say, fresh asset bubbles are forming.
The froth in China may also be occurring in Korea and Vietnam, the report said.
In statements published last week, Wu Xiaoling, the retired deputy governor of the central bank, warned new lending this year would probably reach as high as $1.08 trillion, up a staggering 40% of the entire stock of outstanding loans in just one year.
She called growth excessive and said it would lead to bubbles in the property and stock markets.
The flood of new lending also has implications for the quality of bank loans and the country’s overall growth.
"China's economic recovery is being constructed on the back of a savaged banking system," said Derek Scissors, a research fellow at the Heritage Foundation in Washington, told the Financial Times.
"Tens of billions -- and perhaps hundreds of billions -- of dollars of loans will not be repaid."
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The major averages ended the midweek session on a flat note after spending the day inside narrow ranges. The S&P 500 hovered near the 2,000 mark for the majority of the trading day, but slumped to new lows during the last hour of action. The index then returned to its flat line, where it settled for the day. For the third day in a row, participation left a lot to be desired with just 487 million shares changing hands at the NYSE.
Equity indices opened with slim gains, ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
VIDEO ON MSN MONEY
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'