It’s a sleepy Monday morning on what is traditionally a very slow week in the markets. The news is dominated by Hurricane Irene, and the images out of Vermont are heartbreaking. The rest of the Eastern Seaboard seems to have handled it very well.
In Monday trading, the China markets sold off a bit. The Shanghai A shares gave back 1.36%, and the B shares 1.15%. The A shares seem to be trapped in a range between 2640 and 2740 for now.
The Wall Street Journal carried an article written by Yukon Huang of the Carnegie Endowment. He suggests China economic numbers are badly skewed by two major factors- the amount of low end household spending that occurs in the “underground” economy in order to avoid taxes, and the government expenditures which, in China, act almost like household expenses. He believes middle class consumption is grossly understated in China.
Bank of America economists Lu Ting forecasts China will be tightening bank reserve ratios once again in September. Short term- probably a negative for the markets, but longer term there’s nothing more important than bringing inflation under control.
China industrial profits rose 28.3% in the first 7 months of 2011 according to the National Bureau of statistics.
The Financial Times reports solid profits from China’s oil industry paves the way for further off shore investment.