From Humble Student of the Markets January 10, 2013 - 3:15am
Notwithstanding the upside surprise in the Chinese December trade data, Kate Mackenzie at FT Alphaville recently highlighted some SocGen analysis showing the dire effects of a hard landing in China (sub 6% growth). Here is the bottom line:
World GDP: -1.5 per cent (0.3 per cent a direct effect of China’s slowdown and the remainder through transmission mechanisms outlined below)
Taiwan: -4.5 per cent
South Korea -2.5 per cent
Malaysia: -2.5 per cent
Australia: -1.2 per cent
Japan: – 0.6 per cent
Eurozone: -0.3 per cent
US: -0.2 per cent
The analysis postulated a 50% drop in base metals, Brent crude to bottom at about $75 and an abrupt drop for gold but a recovery thereafter.
Trouble in shadow banking land
In a separate post, Mackenzie wrote about on China's shadow banking system, which is fast becoming China's version of subprime mortgage market...
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