CCTV Script 25/06/13
— This is the script of CNBC's news report for China's CCTV on JUNE 25, Tuesday.
Welcome to the CNBC Business Daily.
Concerns over China's cash squeeze continue to weigh on markets, despite the overnight repo rate easing from last week's all-time high of 11.74%
So how concerned are investors about the credit crunch? We asked our panel of experts.
[Sound on tape by Michael Mccarthy, Chief Market Strategist, CMC Markets: We don't know what the intentions are here, are they trying to stop the end users of the market, perhaps those developers who are working in the shadow finance side of the industry or they trying to take the heat out of short term funding of money markets books, until we see where rates go over the next little while, we won't know for sure.]
[Sound on tape by Michael Kurtz, Global Head of Equity Strategy, Nomura: This is the PBOC acting very forcefully to try to tame the abuse of these liquidity in the system and try to refocus the Chinese banks on providing credit to ground level businesses rather than on speculative activity.]
[Sound on tape by Bill Smead, CEO & CIO, Smead Capital Management: Right now what you've got is the Chinese rates spiking, the Shibor and people are demanding a lot higher interest for transaction between each other because credit is hard to come by.]
Analysts also told us that it was better for the PBOC to tighten liquidity now than risk a full blown credit bubble later on.
Have a listen.
[Sound on tape by Erwin Sanft, MD, Head of China & HK Equity Research, Standard Chartered: The concern and this has been the topic of the market, is 'why hasn't the economy picked up more when we have such strong credit growth this year?' So i do feel, in our view is that the PBOC feels they have the luxury to moderate credit growth because it wasn't having much impact on the economy anyway and was contributing towards greater risk in the future.]
[Sound on tape by David Mcalvany, CEO, Mcalvany Financial Group: It's a challenging circumstance to the end but when you have credit growth over 198 percent of GDP, the PBOC has to do something to reign in what could ultimately be a major credit bubble in China and if that credit bubble were to burst with ramifications which are untold and uncontrolled.]
[Sound on tape by Jiong Shao, Chief China Strategist, Macquarie: We are pretty confident they can fix the problem because let's not forget that China has a huge amount of reserves: they still have the triple-R, they can cut, they still have long term deposit ratios. They still have a few tools in the pocket they can take out to use. Right now, the PBOC is not using any of them. They are trying to let the industry to fix itself.]
Li Sixuan, from CNBC's Asia headquarters.