china

JPMorgan: China’s Potential Capital Outflows ‘Practically Boundless’

"China has seen nearly $1 trillion in capital leave the nation since the second quarter of 2014, and according to analysts at JPMorgan Chase, the sky's the limit for outflows going forward. The causes of these massive capital outflows, which have prompted the People's Bank of China to tap the country's war chest of reserves to support the currency, have grown more numerous in the second half of 2015, argues a team led by managing director Nikolaos Panigirtzoglou. Amid the broadening of sources of downward pressure on the yuan, however, a major factor that may have restrained the central bank from devaluing the currency in a big way has vanished." Continue reading →

Continue ReadingJPMorgan: China’s Potential Capital Outflows ‘Practically Boundless’

Pressure on China central bank for 15% yuan depreciation: sources

"China's central bank is under increasing pressure from policy advisers to let the yuan currency fall quickly and sharply, by as much as 10-15 percent, as its recent gradual softening is thought to be doing more harm than good. The PBOC has spent billions of dollars buying yuan over recent months to defend the exchange rate, but has failed to stabilize market sentiment. The currency has steadily lost another 2.6 percent against the U.S. dollar even after the bank sprung a surprise devaluation of nearly 2 percent in August. China's foreign exchange reserves fell by more than half a trillion dollars last year as the central bank bought yuan to support the exchange rate." Continue reading →

Continue ReadingPressure on China central bank for 15% yuan depreciation: sources

Shanghai Fund Manager Dumps All Holdings in ‘Insane’ Market

"'This is insane,' Chen Gang, chief investment officer at Shanghai Heqi Tongyi Asset Management Co., said in an interview on Thursday. 'We were forced to liquidate all our holdings this morning,' said Chen, whose firm manages about 300 million yuan ($45.5 million). Many private funds and hedge funds in China have agreements with investors spelling out mandatory liquidation levels if their holdings drop below a certain value. The CSRC capped the size of stakes that major investors are allowed to sell at 1 percent of a company’s shares for three months effective Jan. 9, the regulator said in a statement on Thursday. The restriction replaces an existing six-month ban that is due to expire Friday." Continue reading →

Continue ReadingShanghai Fund Manager Dumps All Holdings in ‘Insane’ Market

China halts stock market again after CSI 300 plunges more than 7%

"China's stocks were suspended from all trade on Thursday after theCSI300 tumbled more than 7 percent in early trade, triggering the market's circuit breaker for a second time this week. That drop-kicked stock markets across Asia, which were already wallowing after a weaker open amid concerns over China's swooning currency and economic slowdown as well as falling oil prices. China's securities regulator also issued new rules to restrict the percentage of shares major shareholders in listed companies can sell every three months, in an attempt to stabilize markets. Shareholders are not allowed to sell more than 1 percent of a company's share in that period." Continue reading →

Continue ReadingChina halts stock market again after CSI 300 plunges more than 7%

China slaps cap on overseas UnionPay cash withdrawals

"The gatekeeper of China's foreign exchange has moved to plug a loophole in the capital account by capping the value of overseas withdrawals on bank cards, amid rising concerns over capital outflows and illicit money transfers. The State Administration of Foreign Exchange has slapped an annual cap on overseas cash withdrawals for UnionPay cardholders at 100,000 yuan or its equivalent per card. SAFE requires banks to add accounts that exceed the cap to a watch-list and forbid further cash withdrawals outside of China. Still, the withdrawal cap did not address another obvious escape route, the number of cards for which an individual can apply." Continue reading →

Continue ReadingChina slaps cap on overseas UnionPay cash withdrawals

Chinese state begins buying stocks after Monday’s rout

"China's stocks rose in volatile trade as state-backed funds were said to intervene after a plunge on Monday wiped out $590 billion of market value. Trading was halted on Monday after the gauge plunged 7 percent, triggering new market circuit breakers that some analysts said exacerbated the sell-off. State-controlled funds bought equities and the securities regulator signaled a selling ban on major investors will remain beyond this week's expiration date, according to people familiar with the matter. The China Securities Regulatory Commission also suggested it's open to tweaking the circuit breakers, while the central bank conducted the biggest reverse-repurchase operations since September." Continue reading →

Continue ReadingChinese state begins buying stocks after Monday’s rout

China Launches Frightening ‘Social Credit’ Game; Soon Mandatory

"'Going under the innocuous name of Sesame Credit, China has created a score for how good a citizen you are,' explains Extra Credits’ video about the program. 'The owners of China’s largest social networks have partnered with the government to create something akin to the U.S. credit score — but, instead of measuring how regularly you pay your bills, it measures how obediently you follow the party line.' In the works for years, China’s ‘social credit system’ aims to create a docile, compliant citizenry who are fiscally and morally responsible by employing a game-like format to create self-imposed, group social control. In other words, China gamified peer pressure to control its citizenry." Continue reading →

Continue ReadingChina Launches Frightening ‘Social Credit’ Game; Soon Mandatory

Et Tu, Brute? (How Empires Die)

"The state-owned Bank of China has been ordered by an American court to hand over customer information to the US. The bank has refused to comply, as to do so would violate China’s privacy law. The US court has subsequently ordered the Bank of China to pay a fine of $50,000 per day. China is a sovereign nation, halfway around the globe from the US, yet the US seems to feel that it’s somehow entitled to set the rules for China. All over the world, those who live outside the US are increasingly observing that the US has become so drunk with power that they’re threatening both friend and foe with fines, trade restrictions, monetary sanctions, warfare, and invasions." Continue reading →

Continue ReadingEt Tu, Brute? (How Empires Die)

IMF Approves Reserve-Currency Status for China’s Yuan

"The IMF will add the yuan to its basket of reserve currencies, an international stamp of approval of the strides China has made integrating into a global economic system dominated for decades by the U.S., Europe and Japan. It’s the first change in the SDR’s currency composition since 1999, when the euro replaced the deutsche mark and French franc. It’s also a milestone in a decades-long ascent toward international credibility for the yuan, which was created after World War II and for years could be used only domestically in the Communist-controlled nation. The IMF reviews the composition of the basket every five years and rejected the yuan during the last review, in 2010." Continue reading →

Continue ReadingIMF Approves Reserve-Currency Status for China’s Yuan

Chinese Brokers Now Selling Margin Loan-Backed Securities

"Now, the PBoC will look to supercharge efforts to re-engineer a stock market bubble via leverage by pushing brokerages to issue ABS backed by margin loans. If brokerages simply offload the margin loan risk to investors and use the proceeds to fund still more margin lending which can also be turned into still more ABS, and so on, then the effect will be to pile leverage on top of leverage. What happens in the event the underlying stocks become completely illiquid (i.e. Beijing decides to suspend trading on three quarters of the market again)? The punchline: the senior tranche (which accounts for CNY475 million of the total CNY500 million deal) is rated AAA." Continue reading →

Continue ReadingChinese Brokers Now Selling Margin Loan-Backed Securities