US
Will the global financial crisis discourage regulators in mainland China from liberalising the asset-backed securities market?
Fitch Ratings says yes. The ratings agency reckons Chinese policymakers are becoming more cautious in approving new transactions, fearing the market will repeat the subprime mortgage turmoil in the United States.
China’s asset-backed securities market is still not completely developed and liquidity remains low, according to Fitch. Mainland financial regulators also have a reputation for doing U-turns on announced policies. The central government is set to delay the launch of margin lending and short selling practices amid worries that short selling will exacerbate market sentiment.
So should China go full steam ahead with securitisation, or are Wall Street’s woes a warning to stay away from this mad market? Liberate or regulate? Make your choice below.
Chinese policy seems reactive and hard to pin down…they liberalised commercial lending this week too, after cracking down earlier this year. Who knows what will be next!
FG, you mean to say that Western regulators aren’t reactive – they’ve been U-turning ever since the crisis began!!
In the current environment, Chinese caution is not so surprising and may also be the best approach.