The People’s Bank of China has cut interest rates for the third time in six months this week. With interest rates currently at 5.1% and the recent rate trimming of just 0.25%, the world’s second-largest economy probably still has plenty of room for more easing. Prospects for easing have lifted Chinese shares. The UETF SSE50 China (SGX: JK8) Exchange Traded Fund has risen around 40% this year.
It is hard to tell if the central bank’s move was prompted by the disappointing inflation numbers, the poor export numbers, subdued factory activity, the threat of more job losses or something else.
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The something else could be rising debt levels that are preventing companies and local governments from driving the economic growth that the country so badly craves, even though it doesn’t say so explicitly.
Imagine borrowing money from your lender to repay an outstanding loan from the same lender. Lend me a dollar so I can pay back the dollar that I owe you, is precisely what Greece has done.
The embattled South European economy is reckoned to have borrowed €650m from its International Monetary Fund holding account to help make a debt interest payment of €750m to the International Monetary Fund. It managed to find the other €100m from cash reserves. Unless creditors agree more aid, experts fail to see how Greece will be able to meet its continuing debt commitments.
About a month ago it was reported that Picasso’s Les femmes d’ Alger could fetch around US$140m at auction. It has done better than that. A lot better.
The Women of Algiers was sold by an anonymous collector through auctioneer Christies’ in New York to an anonymous collector for US$179.3m. The consideration includes the auction house’s commission of US$19.2m. A Christie’s spokesperson said: “This is not a silly price at all. That picture for me is worth every penny.”
Someone else who has been flashing the cash is Tiens Group boss Li Jinyuan. The Chinese billionaire treated 6,400 of his employees to an extended weekend break in France. The entire trip is reckoned to have cost S$50m. It included a tour of the Eiffel Tower and the Louvre in Paris, and a trip to Nice on the Côte d’Azur. Nice.
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