Higher Rates…Higher Markets

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While the US is engulfed with “toxic debt” problems, and there is “a run” on a UK bank, the Chinese markets are registering new records, despite more attempts to cool them, according to China Daily:

    “China’s major stock index shrugged off the latest monetary tightening measures on Monday, rising more than two percent to hit an all-time high.

    The benchmark Shanghai Composite Index increased 109.21 points, or 2.06 percent, to close at 5,421.39 points. The Shenzhen Composite Index rose 1.99 percent to 1,512.29, while CSI 300 Index went up 1.88 percent to 5,498.90.

    The rally came after the central bank announced an interest rate hike on Friday, the fifth so far this year and the third in less than two months. The latest monetary tightening was a response to an 11-year high inflation, a rapid growth in investment and industrial production, and trade surplus in August.”

    As the UK experience of the last few days shows, markets can move quickly – in either direction – and panic can spread just as fast. No doubt the regulators, as well as investors, are continuing to watch the market with care.

    While it is always hard to see what may be around the corner, some are already speculating about another interest rate rise. The question remains – will it make a difference?

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