https://www.scmp.com/rss/271010/feed Quantitative easing (QE) refers to large-scale asset purchases by the US Federal Reserve to inject liquidity in the world’s biggest economy after the onset of the global financial crisis in late 2008. In September 2012, stubbornly high US unemployment and faltering economic growth prompted it to launch the third phase of this stimulus (QE3), under which it planned to buy US$40 billion worth of bonds per month, with no set end date. As of late 2012, it had bought some US$2.3 trillion in long-term... en https://assets.i-scmp.com/static/img/icons/scmp-meta-1200x630.png https://www.scmp.com Bravery can be difficult to distinguish from foolhardiness until the consequences prove the action to be coolly courageous or rash and recklessly bold. So, does unlimited fiscal and monetary stimulus signal an entry into a brave new world or a foolhardy plunge into disaster? Everything points to the latter. The spectacular blow-up in stock prices is matched only by an explosion in debt while fiscal and monetary stimulus is heading into space. Inflation warnings are flashing even as upstart... https://www.scmp.com/comment/opinion/article/3122429/worlds-free-spending-money-printing-spree-will-cost-us-dearly-end?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3122429/worlds-free-spending-money-printing-spree-will-cost-us-dearly-end?utm_source=rss_feed Sun, 21 Feb 2021 17:30:14 +0000 The euro and bond yields wilted in a sweltering Europe on Thursday as the European Central Bank signalled it was ready for even deeper sub-zero interest rates and to restart its mass bond buying programme. The bank didn’t take any steps on the day but its easing intentions were clear. It left the euro at a two-month trough, sent German Bund yields back to record lows and nudged Europe’s main stock markets higher. Traders were waiting for Mario Draghi’s afternoon news conference but German data... https://www.scmp.com/business/banking-finance/article/3020113/europes-central-bank-head-mario-draghi-prepares-some-sub?utm_source=rss_feed https://www.scmp.com/business/banking-finance/article/3020113/europes-central-bank-head-mario-draghi-prepares-some-sub?utm_source=rss_feed Thu, 25 Jul 2019 13:22:08 +0000 Beijing will create a ministerial-level division dedicated to financial industry security within the new National Security Commission to be chaired by President Xi Jinping. The move comes as the world's number two economy is increasingly worried about speculative capital flows that may threaten domestic stability. Xi's vision of the NSC was expected to focus on "all kinds of emerging and new threats that the government hasn't spent too much time and resources on yet", a source said. Financial... https://www.scmp.com/business/banking-finance/article/1415346/xi-jinpings-security-commission-also-tackle-financial?utm_source=rss_feed https://www.scmp.com/business/banking-finance/article/1415346/xi-jinpings-security-commission-also-tackle-financial?utm_source=rss_feed Mon, 27 Jan 2014 20:30:45 +0000 The US Federal Reserve decided to hold off on scaling back its bond-buying program on Wednesday, and at least one reason for its choice may have been a stubbornly weak economic indicator: bank lending. Since the bottom of the recession just over four years ago, commercial bank loans and leases have grown 4.0 per cent, one of the weakest post-recession recoveries in terms of borrowing since the 1960s, according to Paul Kasriel, the former chief economist of Northern Trust Company. For comparison,... https://www.scmp.com/business/economy/article/1312847/time-taper-not-if-you-look-bank-loans?utm_source=rss_feed https://www.scmp.com/business/economy/article/1312847/time-taper-not-if-you-look-bank-loans?utm_source=rss_feed Thu, 19 Sep 2013 02:21:58 +0000 The US Federal Reserve defied investor expectations on Wednesday by postponing the start of the wind down of its massive monetary stimulus, saying it wanted to wait for more evidence of solid economic growth. Investors responded by propelling US stocks to record highs and driving down bond yields. Yields on US Treasury debt had risen over the summer on expectations the Fed would cut back its US$85 billion a month in bond purchases that have been the cornerstone of its efforts to spur the... https://www.scmp.com/business/banking-finance/article/1312659/fed-surprises-markets-sticking-stimulus-growth-outlook?utm_source=rss_feed https://www.scmp.com/business/banking-finance/article/1312659/fed-surprises-markets-sticking-stimulus-growth-outlook?utm_source=rss_feed Wed, 18 Sep 2013 18:11:12 +0000 Gold is at a strange juncture. In sharp contrast to the previous two rounds of quantitative easing by the US Federal Reserve, gold prices are trending down, not up (see graph). Quantitative easing is inflationary. Gold offers protection on inflation. Investors should be buying gold now to guard against QE3-fuelled inflation, but this is not the case. Why not? Gold prices are largely driven by sentiment. No one has a fundamental need for gold. The annual production of gold is only about 3 per... https://www.scmp.com/business/commodities/article/1136020/quantitative-easing-does-little-boost-gold-prices?utm_source=rss_feed https://www.scmp.com/business/commodities/article/1136020/quantitative-easing-does-little-boost-gold-prices?utm_source=rss_feed Sun, 27 Jan 2013 16:00:00 +0000 Hong Kong stocks rose to a 16-month high on speculation the US central bank may decide to more than double the size of its monthly bond purchases, which could draw more hot money into the city's equity market. The Hang Seng Index added 179.41 points, or 0.8 per cent, to finish at 22,503.35 yesterday, the highest since August last year. Traders were expecting the Federal Open Market Committee to ramp up its monetary easing programme by purchasing US$45 billion worth of treasuries each month,... https://www.scmp.com/business/money/markets-investing/article/1103967/anticipation-bigger-us-fed-bond-buys-drives-hong?utm_source=rss_feed https://www.scmp.com/business/money/markets-investing/article/1103967/anticipation-bigger-us-fed-bond-buys-drives-hong?utm_source=rss_feed Wed, 12 Dec 2012 16:00:00 +0000 There were net capital inflows to the mainland for a second month in October. But it is unlikely to be sustained owing to global uncertainty and the yuan's stabilising exchange rate, analysts said. The mainland central bank and commercial banks bought a net 21.6 billion yuan (HK$26.9 billion) of foreign exchange last month, after net purchases of 130.7 billion yuan in September, People's Bank of China data released yesterday showed. The strength in the yuan exchange rate was one reason financial... https://www.scmp.com/business/economy/article/1084333/strong-yuan-and-exports-pull-more-capital?utm_source=rss_feed https://www.scmp.com/business/economy/article/1084333/strong-yuan-and-exports-pull-more-capital?utm_source=rss_feed Fri, 16 Nov 2012 16:00:00 +0000 Global asset managers Natixis and Amundi, two of the world's top 15 fund houses by assets, are set to expand in Hong Kong, hiring more professionals as more hot money flows into the city. Paris-headquartered Natixis Global Asset Management opened an office in Hong Kong last week, mainly to deal with sales of its wealth management products. The firm has high hopes for the new office, which may have the potential to catch up with its Japan unit. The Japan office of Natixis, which is also a... https://www.scmp.com/business/money/markets-investing/article/1078222/european-asset-managers-natixis-and-amundi-make?utm_source=rss_feed https://www.scmp.com/business/money/markets-investing/article/1078222/european-asset-managers-natixis-and-amundi-make?utm_source=rss_feed Thu, 08 Nov 2012 16:00:00 +0000 Inflation concerns have prompted swap traders to scrap bets Li Keqiang will ease monetary policy after he is appointed as the next premier at a Communist Party congress starting today. The cost to lock in the three-month Shanghai interbank offered rate for a year rose 25 basis points in the past month to 3.76 per cent, four basis points above the benchmark floating rate after trading below it for 18 months. The yield on the June 2013 bonds of China Construction Bank Corp, the nation's... https://www.scmp.com/business/global-economy/article/1077306/li-keqiangs-inflation-tightrope?utm_source=rss_feed https://www.scmp.com/business/global-economy/article/1077306/li-keqiangs-inflation-tightrope?utm_source=rss_feed Wed, 07 Nov 2012 16:00:00 +0000 The yuan traded at the strong end of its permitted trading band yesterday ahead of the Communist Party's 18th congress and the US presidential election, but analysts said the currency's strength was not sustainable. The yuan touched 6.2447 per US dollar in intra-day trading in Shanghai, exceeding the central bank's reference rate by 1 per cent. The spot rate of the yuan against the Hong Kong dollar was down 0.06 per cent at HK$1.2402. The rate hit a record high of HK$1.25 at the end of last... https://www.scmp.com/business/global-economy/article/1076598/chinese-yuan-trades-strongly-lead-us-election-and-18th?utm_source=rss_feed https://www.scmp.com/business/global-economy/article/1076598/chinese-yuan-trades-strongly-lead-us-election-and-18th?utm_source=rss_feed Tue, 06 Nov 2012 16:00:00 +0000 The Hong Kong government may be increasingly worried about hot money pouring into the city, but stock market participants are playing it cool. The reason could be that they have not seen much of that hot money flowing into the stock market yet, unlike the inflows that followed previous rounds of US monetary policy loosening known as quantitative easing. But the expectation is that it is just a matter of time until it does. Investors pushed the key barometer of share prices, the Hang Seng Index,... https://www.scmp.com/business/money/markets-investing/article/1075782/stock-investors-buoyant-despite-small-bounce-qe3?utm_source=rss_feed https://www.scmp.com/business/money/markets-investing/article/1075782/stock-investors-buoyant-despite-small-bounce-qe3?utm_source=rss_feed Mon, 05 Nov 2012 16:00:00 +0000 Get ready for rising food and petrol prices, and the number of mainland tourists, as the effects of the yuan hitting a 19-year high spills over into Hong Kong. Inflationary risks are ballooning in the city, with the yuan peaking at 6.2371 per US dollar this week plus an influx of so-called hot money - capital attributed to the third round of quantitative easing in the US, monetary policy widely seen as a euphemism for printing money. Amid signs that mainland China's economy is regaining... https://www.scmp.com/business/money/spending/article/1074817/stronger-yuan-bring-hong-kong-higher-food-prices?utm_source=rss_feed https://www.scmp.com/business/money/spending/article/1074817/stronger-yuan-bring-hong-kong-higher-food-prices?utm_source=rss_feed Fri, 02 Nov 2012 16:00:00 +0000 An influx of hot money into Hong Kong chasing the rising yuan has forced the city's financial chiefs to exchange HK$32.24 billion worth of local currency for US dollars in the past two weeks as they try to stop the Hong Kong dollar from spilling over its official limit of HK$7.75 against the greenback. Ten times this past fortnight, the Hong Kong Monetary Authority has intervened to weaken the local currency. The last time it took such action was in 2009, and many analysts believe the main... https://www.scmp.com/business/money/markets-investing/article/1074818/hot-money-inflow-expected-continue-analysts-say?utm_source=rss_feed https://www.scmp.com/business/money/markets-investing/article/1074818/hot-money-inflow-expected-continue-analysts-say?utm_source=rss_feed Fri, 02 Nov 2012 16:00:00 +0000 The spot rate for the yuan advanced to a new 19-year-high in intraday trading yesterday, but analysts said a significant appreciation was unlikely in the near future. The yuan closed at 6.2417 to the US dollar in Shanghai, the highest since 1993, when the government unified the official and market exchange rates. Yesterday's close for the first time hit the upper limit of the band permissible for yuan's daily trading. The People's Bank of China set the reference rate 0.05 per cent higher at... https://www.scmp.com/business/money/markets-investing/article/1069926/yuan-hits-new-intraday-high-against-us-dollar?utm_source=rss_feed https://www.scmp.com/business/money/markets-investing/article/1069926/yuan-hits-new-intraday-high-against-us-dollar?utm_source=rss_feed Thu, 25 Oct 2012 16:00:00 +0000 The surge of foreign exchange into the mainland last month is expected to ease pressure for monetary loosening in the near term. But the influx is unlikely to persist, given the gloomy trade outlook and lack of appreciation in the yuan, analysts say. Mainland banks bought a net 130.7 billion yuan (HK$162 billion) of foreign exchange last month, snapping two straight months of net sales and easing pressure in the near term for a cut in the reserve requirement ratio. Outstanding yuan positions at... https://www.scmp.com/business/money/article/1068214/net-money-inflow-takes-heat-chinas-central-bank?utm_source=rss_feed https://www.scmp.com/business/money/article/1068214/net-money-inflow-takes-heat-chinas-central-bank?utm_source=rss_feed Tue, 23 Oct 2012 16:00:00 +0000 Prices of second-hand homes in Hong Kong have risen by almost 3 per cent since the latest round of monetary easing in the United States on September 14, according to Centaline Property Agency. However, sales volumes are down, partly because purchasing power shifted to the new housing market and buyers were becalmed by the government's short- and long-term measures to cool demand. Centaline residential department managing director Louis Chan Wing-kit said buyers remained rational after a third... https://www.scmp.com/property/hong-kong-china/article/1062534/hong-kong-second-hand-flat-prices-rose-3pc-month-qe3?utm_source=rss_feed https://www.scmp.com/property/hong-kong-china/article/1062534/hong-kong-second-hand-flat-prices-rose-3pc-month-qe3?utm_source=rss_feed Tue, 16 Oct 2012 16:00:00 +0000 Central bankers do not attract much notice if economies are running smoothly. They usually come across as calm, politically neutral and academic. With a steady hand on the levers of monetary policy, they make small adjustments to keep inflation in check and economic growth at a sustainable level. The global financial crisis shattered this image. It forced central banks into the middle of policy discussion about key issues like growth and employment. It also gave rise to a new phrase describing... https://www.scmp.com/business/economy/article/1054708/quantitative-easing-what-it-why-its-important?utm_source=rss_feed https://www.scmp.com/business/economy/article/1054708/quantitative-easing-what-it-why-its-important?utm_source=rss_feed Sun, 07 Oct 2012 16:00:00 +0000 The third round of quantitative easing (QE3) by the US Federal Reserve has boosted the average price of flats in the 100 major housing estates in Hong Kong to record highs. The Centa-City Leading Index compiled by Centaline Property, which reflects average prices at 100 mass and luxury housing estates across the city, climbed 0.3 points to 110.14. The data, which was released yesterday, is based on the formal sale and purchase agreements handled by the firm and signed from September 24 to 30. It... https://www.scmp.com/business/money/markets-investing/article/1054940/qe3-boosts-price-hk-flats-say-agents?utm_source=rss_feed https://www.scmp.com/business/money/markets-investing/article/1054940/qe3-boosts-price-hk-flats-say-agents?utm_source=rss_feed Fri, 05 Oct 2012 16:00:00 +0000 The city's Mandatory Provident Fund (MPF) turned the corner in the third quarter, helped by monetary easing in the United States last month that boosted stock markets worldwide. The 443 retirement funds, which cover 2.5 million employees in Hong Kong, recorded an average 4.66 per cent return in July-September, recovering from a loss of 3.64 per cent in the second quarter, according to data provider Lipper, a Thomson Reuters company. Third-quarter MPF average returns, however, fared worse than... https://www.scmp.com/business/money/markets-investing/article/1054146/mpf-back-track-third-quarter-thanks-qe3?utm_source=rss_feed https://www.scmp.com/business/money/markets-investing/article/1054146/mpf-back-track-third-quarter-thanks-qe3?utm_source=rss_feed Thu, 04 Oct 2012 16:00:00 +0000 On Monday Monitor looked at the argument that holds that the real purpose of the Federal Reserve's latest exercise in printing money is to pump some inflation into the US economy. The idea is that rapidly rising prices would shrink debt levels relative to nominal output and encourage consumers to go out and spend before things get more expensive. It sounds like a high risk strategy. Any talk of printing money inevitably conjures up images of 1923, when price rises got so out of control that the... https://www.scmp.com/business/article/1040147/warning-quantitative-easing-could-end-causing-deflation?utm_source=rss_feed https://www.scmp.com/business/article/1040147/warning-quantitative-easing-could-end-causing-deflation?utm_source=rss_feed Tue, 18 Sep 2012 16:00:00 +0000 The Hong Kong Monetary Authority's move to tighten requirements for second mortgages is expected to slow sales of older homes but is unlikely to trigger a significant price correction, according to property agents. Midland Realty expects the number of transactions in the secondary residential market could tumble by 11 per cent to 16,000 in the fourth quarter. The latest mortgage lending policy would deter buying interest from investors with limited budgets while plans by developers to speed up... https://www.scmp.com/business/article/1039370/hks-stricter-mortgage-rules-may-affect-sales-older-homes?utm_source=rss_feed https://www.scmp.com/business/article/1039370/hks-stricter-mortgage-rules-may-affect-sales-older-homes?utm_source=rss_feed Mon, 17 Sep 2012 16:00:00 +0000 Hong Kong's central bank moved to cool the city's overheating property market by making second mortgages harder to get, but some analysts are betting the new measures won't be enough to dampen prices. The announcement yesterday by Norman Chan Tak-lam, chief executive of the Hong Kong Monetary Authority, came on the heels of the US Federal Reserve's unveiling on Thursday of a third round of quantitative easing measures (QE3) to provide liquidity and to keep US interest rates low until... https://www.scmp.com/business/article/1037255/hkma-acts-cool-property-market-after-us-launches-qe3-stimulus?utm_source=rss_feed https://www.scmp.com/business/article/1037255/hkma-acts-cool-property-market-after-us-launches-qe3-stimulus?utm_source=rss_feed Fri, 14 Sep 2012 16:00:00 +0000 Stock markets rallied. Gold prices soared. Officials in Hong Kong warned of the comeback of an overheated property market. But apart from pushing up asset prices, the US's money printing, or the so-called third round of quantitative easing, is expected to offer limited help in preventing the ongoing economic slowdown on the mainland and in Hong Kong. The Federal Open Market Committee on Thursday kicked off a new QE program under which US$40 billion will be spent per month to buy agency... https://www.scmp.com/business/global-economy/article/1037178/artificial-stimulus?utm_source=rss_feed https://www.scmp.com/business/global-economy/article/1037178/artificial-stimulus?utm_source=rss_feed Fri, 14 Sep 2012 16:00:00 +0000 Hong Kong stocks rose to their highest level in just over four months, led by property and commodity-related issues, on speculation that the US Federal Reserve’s potentially unlimited quantitative easing measures will boost asset prices in the region. The benchmark Hang Seng Index rose 2.9 per cent, or 582.15 points, to end at 20,629.78, the highest level since May 4, 2012. The Hang Seng China Enterprises Index, which tracks Hong Kong-listed Chinese enterprises, gained 3.68 per cent to end at... https://www.scmp.com/business/money/stock-talk/article/1036833/market-wrap-fed-qe3-powers-hk-stocks-more-four-month-high?utm_source=rss_feed https://www.scmp.com/business/money/stock-talk/article/1036833/market-wrap-fed-qe3-powers-hk-stocks-more-four-month-high?utm_source=rss_feed Fri, 14 Sep 2012 08:48:40 +0000 The Federal Reserve said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative easing as it seeks to boost growth and reduce unemployment. “If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate,” the Federal Open Market... https://www.scmp.com/business/banking-finance/article/1036338/fed-undertakes-qe3-40-billion-mbs-purchases-month?utm_source=rss_feed https://www.scmp.com/business/banking-finance/article/1036338/fed-undertakes-qe3-40-billion-mbs-purchases-month?utm_source=rss_feed Thu, 13 Sep 2012 17:16:15 +0000