Consumer Sentiment Falls
Sputtering economic recovery and rising housing prices have undermined Chinese propensity to consume, according to a report released by the Boston Consulting Group. The report finds that just 27% of Chinese respondents said they planned to increase spending in 2013, down from 38% in the year before, while 38% of respondents expected the Chinese economy to improve in the next 12 months, down from nearly 50% in the year before.
Rate Deregulation to Weigh on Banking Sector
The People's Bank of China, the nation's central bank, has been signaling that it will not tolerate banks taking advantage of the interbank market to boost yields or funding, as part of its effort to get the banks ready for interest rate deregulation, Nomura says in a report titled Silver Lining Still Some Way Away. Recent speeches from senior government officials and regulators have given the market a strong signal for reform. Nomura argues that the business climate for Chinese banks will remain challenging with rising credit cost and slowing earnings growth in the near term.
Central Bank Warns on Aggressive, Off-Target Lending
Some Chinese banks have been too aggressive in lending as loans made in the first 10 days of June came close to as much as 1 trillion yuan, Deutsche Bank says in a markets research report, citing Hexun.com, which in turn cites a central bank internal meeting. Half of the 24 biggest banks had their new loans exceeding their June quota in the first 10 days. Furthermore, over 70% of new loans extended in first 10 days of June were notes, suggesting a very low percentage of loans had gone to the real economy.
Smartphone Sales Surge 117% in Q1
Cellphone shipments rose 15% year on year to 97 million units in Q1 2013, including 78 million smartphones, which was up 117% year on year, according to IDC.
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