Investors praise action on leaks
Source: Agencies |
June 23, 2011, Thursday
|
Print Edition
Print Edition
INVESTORS are praising a Chinese government crackdown on economic data leaks that have become a symbol of the unruliness of the country's vast and increasingly influential financial markets.
After pledging for months to clamp down on the early release of sensitive economic figures, Chinese prosecutors said this week they were investigating five people from several government agencies for suspected involvement in divulging official economic data.
The probe is the biggest public investigation that China has conducted into information leaks.
"It is a good move," said Kevin Lai, an economist from Daiwa Capital Markets in Hong Kong. "Data leaks or policy leaks are very serious. You need to find ways to protect the data until the last minute."
Unlike other major economies where important economic data is issued under carefully monitored embargoes, Chinese data often appears in the markets days or minutes before scheduled releases, to the benefit of insiders but to the detriment of everyone else.
With China's growth now a key driver of the global economy, Chinese data, including monthly inflation, trade and industrial output releases, and the quarterly gross domestic product reports, are as closely watched as figures from the United States and other major economies.
Global stock indices and futures, major currencies, and prices of various commodities such as oil and gold can gyrate seconds after the Chinese data appears.
That can put insiders in a position to reap huge gains.
"It allows certain groups to run in front of the rest of the market and that is what most market participants would be upset about," said one currency trader at a regional bank in Sydney.
The sources of leaks vary: sometimes they spring from media breaking embargoes on releases and other times they appear to originate with government officials who disclose the figures in private meetings.
In April, Hong Kong-based Phoenix Television reported China's consumer inflation, producer inflation, manufacturing, retail sales, bank lending and money growth data for March a full day before the official release.
China's National Bureau of Statistics has said it may shorten the time taken between collecting and announcing the data to stamp out leaks.
But Lai said officials leaking data may still be tempted by cash.
"These data are certainly market moving and people are tempted to take the risks and take the bribes," he said.
After pledging for months to clamp down on the early release of sensitive economic figures, Chinese prosecutors said this week they were investigating five people from several government agencies for suspected involvement in divulging official economic data.
The probe is the biggest public investigation that China has conducted into information leaks.
"It is a good move," said Kevin Lai, an economist from Daiwa Capital Markets in Hong Kong. "Data leaks or policy leaks are very serious. You need to find ways to protect the data until the last minute."
Unlike other major economies where important economic data is issued under carefully monitored embargoes, Chinese data often appears in the markets days or minutes before scheduled releases, to the benefit of insiders but to the detriment of everyone else.
With China's growth now a key driver of the global economy, Chinese data, including monthly inflation, trade and industrial output releases, and the quarterly gross domestic product reports, are as closely watched as figures from the United States and other major economies.
Global stock indices and futures, major currencies, and prices of various commodities such as oil and gold can gyrate seconds after the Chinese data appears.
That can put insiders in a position to reap huge gains.
"It allows certain groups to run in front of the rest of the market and that is what most market participants would be upset about," said one currency trader at a regional bank in Sydney.
The sources of leaks vary: sometimes they spring from media breaking embargoes on releases and other times they appear to originate with government officials who disclose the figures in private meetings.
In April, Hong Kong-based Phoenix Television reported China's consumer inflation, producer inflation, manufacturing, retail sales, bank lending and money growth data for March a full day before the official release.
China's National Bureau of Statistics has said it may shorten the time taken between collecting and announcing the data to stamp out leaks.
But Lai said officials leaking data may still be tempted by cash.
"These data are certainly market moving and people are tempted to take the risks and take the bribes," he said.
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