Tuesday, April 13, 2010

Asian economies urged to raise interest rate

Asia’s developing nations are recovering strongly from the global financial crisis, but should now start raising interest rates and adopt more flexible exchange rate policies, the Asian Development Bank said in a major report Tuesday.
http://www.nytimes.com/2010/04/14/business/global/14asiaecon.html

My comment:
When interest rate is raised, you can expect property and stock markets to correct from their current level, which is a bubble caused by low interest rate.
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5 comments:

Anonymous said...

Interest rates are now at rock bottom and this cannot remain forever so it has to go up.

It's whether a matter of U-up or V-up.

If it go up too slowly, many will be itching to try the landbanking, structured FD, ILP etc for "bigger and maybe faster returns".

Or go into stock, property and even the COEs and maybe pushing them even higher.

April 13, 2010 2:24 PM
Anonymous said...

Hi,
Will the US government really have a drastic rate hike? I don't think so when its economy is still not doing too well. What we expect is that our economy to normalise the interest rate before it shoots up. That will take at least two years before we see real interest rate hike.

April 13, 2010 4:37 PM
Anonymous said...

Folks.
The USA has a very well developed bond market. Especially for its USA govt bonds with differing maturity time frame.

Anyhow, if you look at the technical charts of the 20 year Treasury Bonds (the most volatile and sensitive group), you will see that the prices are in a downward trend.

When bond prices drop, the effective interest rates go up.

Long story short.

Even though the USA government has not raised interest rates, the free market for bonds is already signalling in advance that higher rates are coming.

Of course, Singapore may be Uniquely Different. After all, it's YOUR Singapore.

April 13, 2010 6:31 PM
Createwealth8888 said...

http://createwealth8888.blogspot.com/2010/04/fed-rate-up-sti-down.html

See for yourself the effect of Fed Rate on STI

April 13, 2010 9:18 PM
Anonymous said...

Hi Mr. Tan,

Can you share what will be the implication of a rise in china's curency rmb to our property equity and our local China share?

Thanks.

April 13, 2010 11:26 PM

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