Powered by MOMENTUM MEDIA
realestatebusiness logo

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.

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.

Advertisement
Advertisement

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

With Anthony Albanese and several cabinet ministers sworn in following Labor’s election win, members of the mortgage and property industry...

The bank’s chief economist has responded to the RBA’s latest board meeting, maintaining that rates will lift by 40 bps next month. ...

The combined capitals recorded their lowest preliminary clearance rate for the year to date, with the CoreLogic analysts pointing the federa...

VIEW ALL

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

What is the maximum proportion of income borrowers should use to service a mortgage?

Website Notifications

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