china

China currency devaluation hits stocks; dollar gains on currency war fears

"China's 2 percent devaluation of the yuan on Tuesday pushed the U.S. dollar higher and hit Wall Street and other global equity markets as it raised fears of a new round of currency wars and fed worries about slowing Chinese economic growth. U.S. stock indices dropped more than 1 percent and stocks also fell in Asia and Europe as investors contemplated the implications of a move designed to support China's slowing economy and exports. Companies that sell to China were hit hard, with heavy equipment maker Caterpillar losing 3.13 percent and Germany's Volkswagen dropping 4 percent. Energy and materials shares also tumbled on China demand concerns." Continue reading →

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China Introduces $483 Billion Stock Support Program

"China has made 2.5 trillion yuan to 3 trillion yuan ($483 billion) of funding available for government agency China Securities Finance Corp. to support the stock market, people familiar with the matter said. The funding is to offer liquidity support to brokers and to purchase stocks and mutual funds. Chinese stocks rose the most in a week as the government gains ground in efforts to stabilize a stock market that plummeted in the past month after a debt-fueled boom. The money was available from the central bank’s relending facility; credit lines with commercial banks; borrowing by CSF in the interbank market; and bonds and short-term notes sold by CSF, the people said." Continue reading →

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How to offshore your credit card with China’s Unionpay

"China created Unionpay 13 years ago to serve as its own interbank for payments. The unique benefit of Unionpay is that is controlled by the People’s Bank of China and has no relation to the western banking system. In fact, the Russian government is using the system while they build their own payment system to get away from western systems. One Russian billionaire commented that he got a Unionpay-backed card to protect himself after US sanctions were imposed on Russia. You can get a Unionpay card by opening a bank account in Mainland China. Interestingly enough, wealthy Chinese are even using Unionpay for capital flight out of Mainland China." Continue reading →

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China: Risks … and Opportunities

"The meltdown in Chinese stocks presents both risk of contagion for global stocks, including our markets, and a great buying opportunity in the making for global-oriented investors. China’s mainland Shanghai Index soared 150% higher in just 12 months through mid-June. These eye-popping gains were fueled in large part by a massive expansion in margin lending, most of it off-the-books. A few weeks ago, officials in Beijing believed stocks could be getting overheated and decided to crack down on margin trading. Since then, Shanghai shares have plunged about 30% and have been down 13 straight days." Continue reading →

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Read more about the article China Lets Banks Roll Over Loans Backed by Pledges of Shares

China Lets Banks Roll Over Loans Backed by Pledges of Shares

"China will let banks roll over loans backed by shares and adjust their collateral requirements as the government tries to limit pressure for investors to sell stock and contain risks to the financial system from a market rout. The China Banking Regulatory Commission also wants lenders to support firms’ share buybacks by offering collateralized loans, the agency said in a statement on Thursday. One of the side-effects of the share market’s collapse from a June 12 peak was to diminish the value of shares pledged as collateral for loans from banks and brokerages. In China, a borrower pledging blue-chip shares can usually get a loan of as much as 50 percent of their value." Continue reading →

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China bans major shareholders from selling for next six months

"China’s securities regulator took the drastic step of banning shareholders with stakes of more than 5% from selling shares for the next six months in a bid to halt a plunge in stock prices that is starting to roil global financial markets. The China Securities Regulatory Commission (CSRC) said on its website late on Wednesday that it would deal severely with any shareholders who violated the rule. The prohibition is also seen applying to foreign investors who hold stakes in Shanghai- or Shenzhen-listed companies, although most of their holdings are below 5%. More than 500 China-listed companies announced trading halts on the Shanghai and Shenzhen exchanges on Wednesday." Continue reading →

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China Bans Margin Calls; Limits Pension Funds To Buying Stocks Only

"What do you do when two policy rate cuts, $19 billion in committed support from a hastily contrived broker consortium, and a promise of central bank funding for the expansion of margin lending all fail to quell extreme volatility in a collapsing equity market? Well, you can simply ban selling, which is apparently the next step for China. According to Caijing, the country's national social security fund is now forbidden from selling (but is welcome to buy). The pension selling ban comes just days after China moved to curtail margin calls in a similary ridiculous attempt to stop the bleeding by simply making selling against the rules." Continue reading →

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China’s brokers pledge to buy stocks to prop shaky markets

"China’s top securities brokerages said on Saturday that they would collectively buy at least 120 billion yuan ($19.3 billion) of shares in a bid to stabilize the country’s stock markets after a slump of nearly 30% since mid-June. The pledge follows near-daily official policy moves over the past week, including an interest rate cut and a relaxation of margin lending rules, that have so far failed to arrest the sell-off, which some market watchers fear could turn into a full-blown crash. While brokerages were likely to focus on stronger, blue-chip companies, Hao said there would be little interest in saving small and wildly overvalued 'growth' firms. Such companies are favored by ordinary investors." Continue reading →

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MSCI backs itself into corner on China share inclusion into global index

"MSCI’s decision to defer including Chinese shares in its emerging market benchmark share indexes for a second time may have trapped the index provider into making promises it can’t keep, both to Beijing and to its investor constituents. MSCI’s clients want Beijing to open its capital accounts so they can reliably move their money in and out of China’s markets, but the economy is facing its slowest growth in decades, which has led to capital flowing out of the country. For China, inclusion in the index could over time bring an estimated $400-billion into its stock markets and would help in its drive to internationalize the yuan currency." Continue reading →

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China’s Stocks Enter Bear Market as Rate Cut Fails to Stop Rout

"Chinese stocks tumbled, sending the benchmark index into a bear market, as signs of an exodus by leveraged investors overshadowed the central bank’s effort to revive confidence with an interest-rate cut. The retreat marks an end to the nation’s longest-ever bull market, a rally that’s lured record numbers of individual investors and convinced traders to bet an unprecedented amount of borrowed money on further gains. Zhang Gang, a strategist at Central China Securities strategist in Shanghai, called Monday’s losses 'panic selling' that will likely continue as margin investors are forced to liquidate their holdings and the recent selloff spurs more mutual fund redemptions." Continue reading →

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