The Shanghai Composite declined -5%+ overnight on fears that the PBoC has fallen behind the curve in containing inflation. Rumors of a sizable rate hike are spreading. Yesterday’s 4.4% inflation print showed an alarming increase in the inflation rate. Reuters reports:
“With Chinese inflation jumping to 4.4 percent and liquidity also swelling, there is growing concern that Beijing has fallen behind the curve in tamping down on price pressures and will have to crank up the intensity of its monetary tightening.
Goldman Sachs said in a client note on Friday that Chinese stocks had lost their near-term “risk and reward appeal”, as Beijing looks set to roll out more tightening measures.”