China Inflation May Quicken, Hurting Banks, Utilities, BNP Says

Bloomberg
January 18, 2010

China’s inflation rate may accelerate to as high as 8 percent this year, hurting banking, utility and phone stocks, according to BNP Paribas.

[efoods]“Investors want to be involved in anything that benefits” as inflation quickens, Erwin Sanft, head of China and Hong Kong research at BNP Paribas, said in a Bloomberg Television in Hong Kong today. “There’re only three sectors that don’t benefit, which are banks, telecoms and utilities.”

China’s central bank last week unexpectedly raised the proportion of deposits that banks must set aside as a credit boom threatens to stoke inflation and create asset bubbles.

The nation’s consumer price index will rise 1.4 percent in December, according to economists surveyed by Bloomberg, following a 0.6 percent increase in November. The statistics bureau is scheduled to release monthly data on Jan. 21. China’s CPI will likely rise 3 to 3.5 percent this year, according to State Council Development Research Center researcher Ba Shusong, the Shanghai Securities News reported Dec. 14.

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