Kuwait News Agency (KUNA)

By Miyoko Ishigami BEIJING, Jan 22 (KUNA) -- Concerns over Europe, the US and a slowing Chinese economy have had a negative effect on financial markets, but investors are now looking for signs of a looser monetary policy from the People's Bank of China, the country's central bank, Kuwait China Investment Company (KCIC) said Sunday.

A looser monetary policy would encourage further economic growth, making credit cheaper and more accessible, especially given that Chinese regulators had been tightening the monetary policy for a while now, making room for more monetary easing, the company said in its weekly analysis.
It added that inflation came down significantly to 4.1 percent from a year earlier in December, but the Chinese government will continue to do gradual easing until inflationary pressures have fully subsided.
The year 2012 has risks, but there are many opportunities for the Chinese companies to perform well due to relaxed monetary policy, government support and a healthy domestic consumption, according to KCIC.
China's gross domestic product (GDP) grew 8.9 percent in the fourth quarter, beating expectations of an 8.7-percent growth and ending the year 2011 with a robust 9.2 percent growth. In 2010, China grew 10.4 percent year over year, a strong growth that was supported by increased spending by the government and a rebound from the financial crisis-driven slowdown.
Investors and economists have been fearful that China's growth may suffer a shock from a rapid slowdown, also known as "hard landing," primarily induced by the weakness in European and US export demand, a risk of plummeting domestic property prices and declining foreign investments.
"But China's economy proved its flexibility; when export demand eased, China's domestic consumption was still resilient and supported the economy," said KCIC.
China's growth has been outpacing a majority of the world's economies. However, robust growth has been gradually easing over the past six quarters and 2012 GDP growth is expected in the 8.4 - 8.6 percent range, slower than last year's 9.2 percent.
There are increasing fears that the worsening global macro situation could harm the country's strong growth and push it below the expected range, such as the worsening of the European debt crisis and the political divide in the US stalling important policy actions for economic recovery. Driven by these concerns, global investors risk aversion went up and money flowed out of emerging markets, including China, despite its resilient economy.
The financial markets are now expecting China's central bank to take action and ease its tight monetary policy in order to encourage growth in the face of a dire global macro environment, a move that could boost interest in Chinese stocks. The government has announced its intention to invest in the domestic economy and intends to add incentives to the Chinese services industries through tax breaks.
KCIC was founded in 2005 with a capital of KD 80 million by an Amiri Decree with a mandate to develop investment opportunities in Asia towards building an Asia focused asset management company. The public company employs a team of specialists in markets in Asia and currently manages assets in excess of USD 600 million. Key shareholders include the Kuwait Investment Authority, the Sovereign Wealth Fund of Kuwait, National Investment Company, one of the leading investment banks in the Middle East, and Al-Ghanim Industries, one of the largest conglomerates in the Middle East. (end) mk.hb KUNA 221537 Jan 12NNNN
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