Will Special treasury bonds hit the stock market?

Will Special treasury bonds hit the stock market?
Jul 2, 2007 23:17
FRANKENSTEIN Points: Join Date: Nov 29, 2004 Status: offline	According to the news, about 1.55 trillion special treasury bonds will be issued to buy 200 million US dollars of foreign exchange and it will be used as the fund to establish the state foreign exchange investment company. Will the special treasury bonds affect the stock market? That is what those investors are worried about. The purpose of issuing special treasury bonds is to adjust the supply of currency and deal with the excess liquidity in the market. At the same time, it can help 'digest' China's excessive foreign exchange and do some investments to make more money. By the end of March, China's foreign exchange has reached 1.2 trillion. How to deal with excessive foreign exchange has become a problem for China. Some analysts say that the issue of the special treasury bonds will not hit the stock market. However, this is just their estimation. For those investors in the stock market, do you think it will hit the stock market? How will China issue this special treasury bonds? There are three ways. First, bought by People's Bank of China. Second, bought by those commercial banks. Third, bought by those investors and investment companies. Which will China use to issue the special treasury bonds?

Jul 2, 2007 23:17

FRANKENSTEIN
Points:
Join Date: Nov 29, 2004
Status: offline

According to the news, about 1.55 trillion special treasury bonds will be issued to buy 200 million US dollars of foreign exchange and it will be used as the fund to establish the state foreign exchange investment company.

Will the special treasury bonds affect the stock market? That is what those investors are worried about. The purpose of issuing special treasury bonds is to adjust the supply of currency and deal with the excess liquidity in the market. At the same time, it can help 'digest' China's excessive foreign exchange and do some investments to make more money. By the end of March, China's foreign exchange has reached 1.2 trillion. How to deal with excessive foreign exchange has become a problem for China.

Some analysts say that the issue of the special treasury bonds will not hit the stock market. However, this is just their estimation. For those investors in the stock market, do you think it will hit the stock market?

How will China issue this special treasury bonds? There are three ways. First, bought by People's Bank of China. Second, bought by those commercial banks. Third, bought by those investors and investment companies. Which will China use to issue the special treasury bonds?

Jul 3, 2007 20:29

KEVIN0518
Points:
Join Date: Mar 13, 2007
Status: Offline

Well, personally I think that those investors are still worried the issue of the special treasury bonds. Although the government ensures that it will not affect the stock market, the market is changeable. Especially in recent days, the stock is not stable.

According to the expert's understanding, China will possibly adopt the first way, that is to let the People's Bank of China buy the treasury bonds. Actually, to let the investors and investment companies buy the treasury bonds is the most effective way. If the interest rates are acceptable, the huge amount of the treasury bonds can be easily absorbed by the market. It can directly decrease the excess liquidity. However, it may cause a big concussion in the stock market.

To ensure that the stock market can develop stably and healthily, China may let the People's Bank of China buy the treasury bonds.

Jul 3, 2007 20:51	#2
LEONARDO Points: Join Date: May 21, 2007 Status: Offline	Undoubtly, China will take the first counter measure. People's Bank of China is an official organization affiliated to the central government. People's Bank of China buy out the special tresury bonds wil ensure the stability of national economy. However, since security market is the barometer of national economy, more or less, it will be affected.

Jul 4, 2007 21:22	#3
KEVIN0518 Points: Join Date: Mar 13, 2007 Status: Offline	"since security market is the barometer of national economy, more or less, it will be affected. " Yes, the stock market has been affected. The shares have dropped from 4335 mark to 3404 mark though the government has not decided how to issue 1.5 trillion RMB treasury bonds. So sad to hear the news!

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