Markets Fall as China Tightens Credit

Concerns that China’s rapid growth could lead to inflation have prompted the People’s Bank of China to tighten credit in the country. Back-to-back yield increases on bank bills and a recent increase in bank deposit amounts have investors worrying that credit tightening within China will slow down the rate of recovery in Asia.

“China tightened policy sooner than people were thinking, so that spooked the market,” said Nicholas Field, who helps manage about $11 billion in emerging-market stocks at Schroders Plc in London. “We have now passed that sweet spot where economies are starting to recover and there is a great earnings boost from the low point. This is not a collapse or a crash, but we will get a correction.”


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