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.”
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.