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Bank Of America Investment By Randy Chen

Hike By Thibault Worth Asian market investors remained pessimistic this week, in anticipation of possible interest rate rises in both the United States and China. Visit our AXcess News Forum and add your comments on this story. Try your hand at writing, the best story will be published on our news network. Take our business poll too! Print This Page June 21, 2004 (AXcess News) Asian market investors remained pessimistic this week, in anticipation of possible interest rate rises in both the United States and China. Hong Kong's Hang Seng index market started the week on a bad note, plunging 2.5 percent, as investors sold on fears the United States might raise interest rates sharply later this month. Hong Kong's currency is pegged to the U.S. dollar, so the city's interest rates are likely to follow U.S. rates higher.

Investment Opportunity (AXcess News) Hong Kong - China's Central Bank raised its 1-year lending rate by 30 basis pointsto 5.85% from 5.58% in an effort to slow the Chinese economy slightly which soared by +10.2% in Q1. The rate hike took the market by surprise since the Chinese central bank had been expected to use administrative controls to curb investment and lending in hot sectors.

The same sentiment is shared by the Swiss National Bank who raised interest rates by 25bp yesterday, bringing the mid point of their target range to 2.5 percent.

Banc Of America Investment While the move to raise its benchmark lending rate surprised the market, China kept its deposit rate unchanged at 2.25%.

The central bank's commitment to continue to raise interest rates has helped to keep the Euro steady near its record highs.

Banking Investment Global economists thought that China would require banks to lock up more cash in reserve as the first step towards curbing credit growth, instead of raising its benchmark interest rate.

The consensus seems to be that yesterday's current account data solidified expectations that the Bank of Japan could raise interest rates as early as August.

Investment Solution Strategic But the move to raise China's benchmark interest rate may have come from banks extending 1.26 trillion yuan in new loans in the first quarter -- more than half the central bank's target for the whole year.

Fears over the U.S. economic outlook raise expectations that the Federal Reserve will continue to cut interest rates, nation euro zone.

Investment Banking Services Investment growth has also increased, from 25.7% in 2005 to 27.7% in the first quarter.

Bank Investment The last time China's Central Bank raised its benchmark interest was in October, 2004, which did little to dampen growth.

Alternative Investment Economists attribute China's economic growth to "cheap money" as its trade surplus hit a record $102 billion last year. Foreign investment has also played a major role with $1 billion flowing into China every week.

Online Investment Services The Group of Seven developed nations want China to revalue its currency, which the Chinese Central Bank has been slow to agree to, letting the Yuan rise 1.2% after its last increase in July 2005 of 2.1% when China untied its currency from the dollar, moving to a basket of international currencies instead.

Accompany Essential Investment Last week, China's President Jintao Hu visited the United States, meeting with President George Bush, where Hu said the way for the U.S. to correct its trade imbalance with China was to relax trade barriers with China, especially in the technology sector rather than looking to China to revalue its currency.

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