At 5:33 on March 25, 2008 Source: Sina
reporter Wang Donglin from Beijing

A-share market is facing significant uncertainty from the hot money problems. On the one hand, China is still Analysts said that this year the possibility of hot money in and out of significantly increased the magnification range of A-share market volatility, the stock market become troublesome.

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hot money has always been 06,07 A bull market years, the hot money to do more to bring the power of how strong is temporarily unable to assess. However, when many well-known international investors, private equity funds are fighting the idea of China's stock market, it is an indisputable fact. Speculative funds through trade, foreign investment, export credit, personal funds into the underground banks and other means, all-pervasive way into China to the stock and real estate market. Hot money of the property market, the stock market bubble probably to blame.

07 in the first half of the international balance of payments, capital account surplus reached 90.2 billion U.S. dollars, an increase of 132%, where are easy to hide hot money into the channel.

present these channels for hot money inflow is difficult to be completely On the contrary, due to factors such as the appreciation and interest rates, hot money inflows into China in enhancing the power objective. The central bank and foreign exchange bureaux in the second half of last year, said on various occasions to strengthen monitoring and supervision of foreign exchange inflows.

However, the hot money

A-share market from the beginning of October last year, also hit a major adjustment of speculative capital investment confidence in China's stock market, these funds may start to become Some analysts began to worry that speculative funds reap profits, may start mass evacuation in China, or even repeat the Southeast Asian financial crisis, when the A-share market will be at risk.

Some analysts believe that A-share market this year, a high degree of linkage with the international market, which has proved to be a lot of hot money in China's stock market activities. Even if the hot money is not focused on withdrawing from the Chinese, the frequent access to capital markets, also magnified the volatility of the stock market is not conducive to smooth operation of the market.

both domestic and international situation this year is facing many new uncertainties. Subprime mortgage crisis has exacerbated global financial market turmoil, some money out of U.S. financial markets, to emerging markets; U.S. dollar pushed crude oil, gold, commodity prices, has also attracted some speculative funds; U.S. dollar against all major currencies may also changes in the global flow of speculative funds. The global trend of more hot money is not fathom. China A-share market which in this situation is worrying.



power increase hot money inflows into the third year of appreciation, appreciation of the faster and faster, and is now difficult to see the end of the expected appreciation of suspense. Hot money to win this year's revaluation gains unprecedented enthusiasm.

since the reform of the RMB against the U.S. dollar exchange has risen 15% this year, less than 3 months since the RMB has appreciated 3.6% against the dollar, the rate has exceeded the pace of appreciation throughout the year 2006, more than 07 full- In appreciation of the half. Appreciation of the renminbi appreciation this year is likely to reach 8-10%. Such a high risk-free rate of return on hot money is a big attraction.

into China at this time happens once in a decade of inflation crisis. February 2008 CPI rose 8.7% in the 11-year record high. To combat high inflation, in 2007 the central bank to raise interest rates six times, while the central bank said From September 2007 the U.S. started cutting interest rates 6 times the federal benchmark interest rate to 2.25%. U.S. spreads have been upside down and expanded to 1.89%. Gary poor poor exchange two of hot money this year to enjoy 10-12% yield. Speculative funds intensified the heart of coveted Chinese market.

Japan and other countries in the process of currency appreciation, attracted by the positive long-term, hot money inflows are sustained for many years. After the initial appreciation of the test, the hot money inflows gradually increased. Experts fear that China is entering a similar stage, the threat of force in this year's hot money may suddenly increase.

signs as large inflows of hot money All along, the size of the hot money is no good way to estimate the previously used the

However, a sudden substantial increase in foreign reserves since last year, 86.7%, excluding trade surplus and foreign direct investment other than reserves 28.6%. That many of them overseas, finance, personal and corporate profit repatriation and so on. However, these factors are still difficult to explain only the The

studies have even believe that the 07 year has more than 460 billion U.S. dollars of foreign speculative capital inflows, the year this amount is 06 4 times higher than inflows; the past 5 years the amount of hot money inflows may be reached trillion. That is a horrible figure.

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flight of hot money hot money is the biggest worry for the

financial markets on a country already has too many destructive precedent for the Chinese reference. Even the most developed financial markets supervision of hot money is still helpless. With the deepening of economic globalization in recent years, caused by speculative funds rate financial crisis has accelerated the trend, and the outbreak of the crisis was no longer confined to developing countries.

whether the Asian financial crisis, or the U.S. subprime mortgage crisis, all of the financial crisis is brewing in the occasion of the influx of hot money, but the outbreak of the crisis was the final flight of the large number of hot money, which no one country's financial regulatory authorities are most worried about things. It is because of fear of hot money to flee, only the strict limits on the hot money inflows.

finally sub-prime crisis affecting the A-share market. This year, the tight side by the policy and economic growth may slowdown, A-share market advantages relative to the external market weakened. Since the beginning of the Shanghai index has fallen nearly 30%, a rate much larger than the United States, Europe, Japan, Hong Kong stock market decline during the year. A stock market less attractive to international speculative capital. From this perspective, a flight of hot money is indeed possible.

In addition, the dollar devaluation pushed up crude oil, gold, commodity prices, has also attracted the interest of speculative funds. This year, the dollar index fell more than 5%, crude oil futures prices rose more than 15%, spot gold rose nearly 20%. International experts have said that crude oil futures prices rose in the back of speculation of international speculative capital is the main driving force. There may be a lot of hot money in the transfer to the international commodity futures markets.

dollar hot money may also be cut off the original investment in the chain. International analysts believe that the generation of global hot money in recent years and mobile channels is the use of the yen carry low interest rates, a large number of borrowed yen into dollars to invest and then sell the dollar against other countries. At present, a substantial depreciation of the dollar against the yen is likely to impede the flow of hot money channels.

How big is the global hot money is currently unknown. However, in 2007 the total global foreign direct investment inflows amounted to 1.5 trillion U.S. dollars, analysts believe that the scale of hot money must be several times more than that amount. At present, China inter-bank market, the daily trading volume of 3,4 billion dollar, however, the stock market trading volume, but also hundreds of billions. Trading volume is still relatively small predators in the eyes of the international speculation, is still very easy manipulation.

research report in accordance with the above estimates, in recent years, particularly last year, the number of hot money inflows into China has been very alarming. Occurred from the subprime crisis can be seen, the excess liquidity in a very short period of time into liquidity shortage. Once the withdrawal of hot money concentrated together, can not be expected similarly destructive. The rapid appreciation of the RMB intertwined with the subprime crisis in 2008, hot money is always the A-share market worries can not be ignored.

2 (Source: China Securities Journal - Zhongzheng Wang)