Global Liquidity...boom?

by Michael J. Howell29. October 2013 21:12
Recent UK Media comment has picked up the buoyant Liquidity story. No question that Liquidity is strong and little doubt that strong liquidity acts through rising asset prices. However, our database covers all cah and credit flows to the private sector across 80 economies and not just deposit flows to banks. To be accurate our data shows there is a World of difference between Developed Market Liquidity which is close to previous highs (although not yet at new highs) and Emerging Market Liquidity which is near its lows. For completeness, we can add that Frontier Market is closer in strength to Developed Markets. Emerging Markets are the odd man out. The reason in our view remains the slowing Chinese economy which has clipped EM private sector cash flow. We should be worrying about recent Chinese PBoC tapering, and not only upcoming Fed tapering.


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