Money Matters | Seven trillion yuan in QE … it's all in the policy tea leaves
Is it or is it not quantitative easing?
Mainland investors have been debating it this week. Never mind the verdict, the debate itself has proven to be good enough to fuel a week-long rally in the share market.
The trigger did not come from a big gun, but a little-known blogger, Huang Sheng.
On October 11, Huang posted a commentary with an eyebrow-raising title: "Here comes seven trillion yuan! Here comes the Chinese QE!"
He was alluding to two policy announcements by the People's Bank of China on October 10.
One, the removal of the loan-deposit ratio that limited a bank's lending capacity to 75 per cent of its deposit. Two, the expansion of a lending programme that allows banks to use qualified loans as collateral to borrow from the central bank to 11 provinces from two.