The Macau Metro Monitor, August 29, 2011



CHINA EXPANDS BANK RESERVE RULES Channel News Asia, Intelligence Macau

According to Xinhua news agency, the People's Bank of China has ordered commercial lenders to include margin deposits in the reserves they must set aside.  The margin deposit is the collateral used for banks' off-balance sheet and securities transactions.  This move to further restrict bank lending indicates that containing inflation remains a government priority despite signs of a domestic slowdown.


IM believes this clamp on liquidity will pull 1 trillion yuan out of the banking system; in context, China is expected to see bank loans rise by ~6x that amount in 2011.



Macau government said the second government cash handout of 2011 will be implemented starting tomorrow.  Each Macau permanent resident will receive MOP3,000 while each non-permanent resident will get MOP1,800.  Earlier this year, the government had already handed out MOP4,000 to each permanent resident while each non-permanent resident got MOP2,400. The cash handout program was first unveiled in 2008, when inflation in Macau peaked.



Unemployment rate for May-July 2011 held stable at 2.7%, same as the previous period (April-June 2011).  Total labor force was 340,000 in May-July 2011 and the labor force participation rate stood at 71.8%, with the employed population increasing by about 2,200 over the previous period to 331,000.


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