{"id":10983,"date":"2015-08-13T07:03:03","date_gmt":"2015-08-13T12:03:03","guid":{"rendered":"http:\/\/olduvai.ca\/?p=10983"},"modified":"2015-08-13T07:03:03","modified_gmt":"2015-08-13T12:03:03","slug":"china-black-swans-not-so-rare-anymore-as-pboc-shocks-markets","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=10983","title":{"rendered":"China Black Swans Not So Rare Anymore as PBOC Shocks Markets"},"content":{"rendered":"

China Black Swans Not So Rare Anymore as PBOC Shocks Markets<\/a><\/span><\/h3>\n

Investors should prepare for more surprises out of China after the yuan\u2019s devaluation became the country\u2019s latest unexpected policy move to roil global markets.<\/p>\n

That\u2019s the advice from Fraser Howie, co-author of \u201cRed Capitalism: The Fragile Financial Foundation of China\u2019s Extraordinary Rise.\u201d He says Chinese policy decisions are becoming \u201cerratic\u201d as authorities struggle to combat the nation\u2019s deepest economic slowdown in more than two decades.<\/p>\n

This week\u2019s tumble in the yuan — the biggest devaluation since 1994 — comes just a month after unprecedented state intervention in the stock market deepened a $4 trillion sell-off. Two years ago, authorities triggered the country\u2019s worst modern-day cash squeeze by restricting the supply of funds to the banking system. The failure of China\u2019s decision makers to telegraph and explain those policy changes has increased volatility worldwide as traders struggle to forecast what happens next in Asia\u2019s biggest economy, Howie said.<\/p>\n

\u201cThis complete lack of signaling has investors, both foreign and domestic, completely spooked about what\u2019s going on,\u201d Howie, a former managing director at CLSA Asia-Pacific Markets, said in a phone interview from Singapore. \u201cChina has a huge influence globally and markets don\u2019t like shocks.\u201d<\/div>\n

While investors parse every word in Federal Reserve statements for clues on future U.S. monetary policy, the People\u2019s Bank of China provides few such details, while decisions are often the result of political wrangling, according to Howie.<\/p>\n

 <\/p>\n

\u201cWe don\u2019t know what their policy is,\u201d he said. \u201cWe don\u2019t see minutes of meetings. We don\u2019t get regular announcements, so we get a tremendous lack of transparency.\u201d<\/p>\n

Yuan Plunge<\/h2>\n

The PBOC took markets by surprise when it cut the daily fixing for the yuan by 1.9 percent on Tuesday, ending a four-month peg against the dollar. The currency tumbled 2.9 percent in two days, the most since the country ended a dual-currency system in 1994, while it now trades at the biggest discount to the offshore yuan since 2010.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

China Black Swans Not So Rare Anymore as PBOC Shocks Markets Investors should prepare for more surprises out of China after the yuan\u2019s devaluation became the country\u2019s latest unexpected policy move to roil global markets. That\u2019s the advice from Fraser Howie, co-author of \u201cRed Capitalism: The Fragile Financial Foundation of China\u2019s Extraordinary Rise.\u201d He says […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[77,5752,130,1099,303,305,534,2914,2615,1031],"class_list":["post-10983","post","type-post","status-publish","format-standard","hentry","category-economics","tag-black-swan","tag-bloomberg-news","tag-china","tag-currency-devaluation","tag-fed","tag-federal-reserve","tag-monetary-policy","tag-pboc","tag-peoples-bank-of-china","tag-yuan"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10983","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10983"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10983\/revisions"}],"predecessor-version":[{"id":10984,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10983\/revisions\/10984"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10983"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10983"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10983"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}