China’s stock markets are nearing their bottom for the year, according to a new report by Citigroup report, Bloomberg reported. Citi analyst Minggao Shen argued that recent cooling in the economy has eased investor concerns that further monetary and fiscal tightening could be in the works. While the Shanghai Composite Index (SCI) experienced gains last week, recent reports that around 23% of bank loans to China’s local governments may default has sparked worries among investors. Dagong Global Credit Rating Chairman Guan Jianzhong warned Monday that "[t]he current system [of rating local government bonds] doesn’t reflect all the risks," because local governments practice ratings shopping. Even so, the firm saw fit to award China with the world’s highest sovereign debt rating in a recent report, an analysis which drew opprobrium from some quarters.
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