20 February 2012

RIO Trade Update - China Easing

China Central Bank announced over the weekend that Reserve Requirement Ratio or RRR (the ratio of the money Chinese banks must keep in the bank, used to control credit growth) would be cut by 50 basis points from February 24th.

That annoucement is bullish for many miners including RIO because RIO earns 30% of revenue by selling Iron Ores, Copper and Coal to China.  Cutting RRR means Chinese government has allowed banks to pump more credit into the slowing economy, preventing the so-called hard-landing scenario.

Since Monday is Public Holiday in US, I highly recommend closing RIO short positions on Tuesday. If entered before or on the result date, you should not lose any cent.

Good Luck

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