The biggest news out of China today was the announcement Central Huijin Investment Ltd., an arm of the sovereign wealth fund China Investment Corp, was buying shares of the 4 largest China banks in the Hong Kong market.
Chinese banks, like their Western Counterparts, are trading at multi year lows, weighed down by fears of bad real estate debts in China and the European Debt crisis. Housing prices fell in September, making inflation less ominous, but sparking new concerns about a bursting bubble.
The shares of the China banks, which had been very oversold, bounced anywhere from 7% to 15% on the news.
The state run securities journal predicted inflation in 2011 is likely to be about 5.5%- down more than 1% from the high, and GDP growth will come in around 9.4%- also down about 1% from 2010.
Against all this, the Chinese consumer is financially in the best shape in the world. BofA reports a household debt to income ratio of 18% vs 95% in the US. Chinese households have $5.1 trillion in savings, more than the GDPs of India, Brazil, and Russia combined. The Chinese middle class has grown to the size of the entire US population, and will be double our size in 10 years.
Despite all these relatively positive developments, in overnight trading, the Shanghai A shares squeaked out a .11% gain, and the B shares lost 1.4%. This market has not turned yet.