Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter
subscribe to our newsletter

Bank warns clients of ‘major correction’

RBS has advised its clients to “sell everything” except for high quality bonds and warned of a "major correction" triggered by China’s debt-driven expansion.

As reported by The Telegraph (UK) this week, RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crises warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel.

“Sell everything except high-quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” it said in a client note.

Advertisement
Advertisement

According to The Telegraph, Andrew Roberts, the bank’s credit chief, said "China has set off a major correction and it is going to snowball".

“Equities and credit have become very dangerous, and we have hardly even begun to retrace the 'Goldlocks love-in' of the last two years,” he said.

RBS said the epicentre of global stress is China, where debt-driven expansion has reached saturation. The country now faces a surge in capital flight and needs a “dramatically lower” currency. In their view, this next leg of the rolling global drama is likely to play out fast and furiously.

“We are deeply sceptical of the consensus that the authorities can ‘buy time’ by their heavy intervention in cutting reserve ratio requirements (RRR), rate cuts and easing in fiscal policy,” it said.

[Related: China slowdown a cause for concern]

Bank warns clients of ‘major correction’
mortgagebusiness

Latest News

The prudential regulator has confirmed that it is temporarily suspending the issuance of new licenses in response to the “economic uncerta...

The government has unveiled its previously announced commercial leasing code of conduct, which aims to protect tenants and landlords facing ...

The central bank has revealed that it has purchased over $36 billion in government bonds as part of its quantitative easing program to suppo...

FROM THE WEB
podcast

LATEST PODCAST: Managing the influx of COVID-19-related loans

Do you expect COVID-19 to reduce or increase your business flows?

Why we’ll keep delivering for our communities in the face of COVID-19

alex

As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of Mortgage Business.

Read more

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.