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Bank Of China Shares Halted On $9Bn Rights Offering Announcement, As Bank Urgently Needs To Replenish Capital
Those China CDS are looking ever more attractive. Earlier today, Bank of China, Asia’s third-
largest lender by market value, announced it plans to raise as much as 60
billion yuan ($8.9 billion) in a rights offer to replenish
capital. Bloomberg reports: "The lender will sell 1.1 shares for every 10 held, or as
many as 19.56 billion shares in Shanghai and 8.36 billion in
Hong Kong, a statement to the Hong Kong stock exchange showed
today." This latest equity offering in a region already drowning in capital raises was enough to halt trading in BOC shares until July 5 as the response to it would hardly be considered favorable. A sale by Bank of China would “damage market sentiment and banking shares further because we’ve already been flooded by share offerings,” Tang Yayun, a Shanghai-based analyst at Northeast Securities Co., said before the announcement. “This is a surprise given that they just completed a bond sale.” The bolded sentence is critical as it merely implies that the rot from the trillions in bad loans made to assorted house flippers, tulip sniffers, and opium den casino dwellers are finally coming home to roost. Indeed, Bank of China's capital adequacy ratio fell to 11.09 percent
as of March 31, below the minimum 11.5 percent required according to the China Banking Regulatory Commission. The next wave of the solvency crisis tsunami has now officially made landfall in China.
More from Bloomberg:
Bank of China’s Hong Kong-listed shares were halted from trading today pending the announcement, and will resume on July 5, the statement said. In Shanghai, the stock was suspended in the afternoon. Bank of China has fallen 5.5 percent this year in Hong Kong to HK$3.97, outperforming the 9 percent drop in the benchmark Hang Seng Index. The stock has lost 21 percent in Shanghai to close at 3.40 yuan today.
The Hong Kong portion of the rights offer will be “fully underwritten,” the bank said in the statement, which didn’t include details about the underwriters. The share sale will need to be approved by investors and regulators including the China Banking Regulatory Commission and China Securities Regulatory Commission, it said.
In March, Bank of China won investor approval to sell shares equivalent to as much as 20 percent of outstanding stock in Hong Kong or Shanghai, or in both markets. President Li Lihui told investors in January the bank favored a Hong Kong sale.
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But, but, but the decouplers keep telling me China has a ton of dollars. Peter Schiff told me China is going to own everything, they aren't playing make pretend, at least that is what Peter told me.
http://stockcharts.com/def/servlet/SharpChartv05.ServletDriver?chart=$ssec,pltawanrbo[pa][d][f1!3!!!2!20]&pnf=y
Nice call Peter.
Where is TMosley's toilet when you need some cash?
"Those China CDS are looking ever more attractive."
Buying CDS for insurance on large sovereigns is like buying home insurance against the Sun imploding. Call up State Farm, tell them you want a policy to cover your house if the Sun implodes. You will not collect one dollar from a China default.
I don't think the suggestion was to buy insurance.
You are either doing it for insurance or what amounts to an investment if you are not hedged.
I would call it uncollectable insurance. Fiction really.
I am sure some insurance company would sell you protection against the sun expoding. Pay the premium. Good luck collecting.
Same as with CDS - basically ;-)
Dr. No that is pretty much the point. People are buying and selling CDS on stuff that could never be collected if they in fact did default.
Trading fiction on top of fiction.
Agree. However, after witnessing the puppet strings of AIG, I expect some sort of behind the scenes compensation for the "important" CDS holders once the fan starts spinning.
The point is that there is no standardized exchange, so both sides of the trade can mark it to whatever price they wish---of course as a profit---then get a bonus based on the "winning" trade. Everybody's a winner!
Putting them on an exchange is not going to change anything.
They all know it's getting ugly, so they are taking as much as fast as they can. Heck, Goldman even changed its bonus payout policy to do it each quarter rather than have to wait all the way to next February. We may not exist in the same form then.
It's stealing from the Roman treasury as the North side of Rome burns. I agree with you there.
Hey, still waiting for the address where I can send you $20,000 Zimbabwe dollars for an ounce of gold.
Mako doesn't understand the concept of the Sword of Damocles, nor does he see the Chinese government holding the world's largest pair of scissors, standing casually on a catwalk above it.
"Hey, still waiting for the address where I can send you $20,000 Zimbabwe dollars for an ounce of gold."
You don't read so well. I had an agreement for free $$$$, you agreed with the other guy and said they are worth nothing. Now you want to replace US dollars with Zimbabwe dollars, in agreement with you sending me $20,000 US which you agreed were worth nothing... I agreed to send you a gold coin for shipping. Matter of fact, no reason for you do anything... you give your address I will send trucks over to collect all these dollars you keep seeing coming out of your trailer's toilet.
You said dollars were everywhere but your dad is probably collecting unemployment because he can't find any. Why don't you call your dad, tell him to come look in your toilet so he can retire? Do you not love him? Why are you hiding all this money you claim is just sitting on the street?
Trying to save face is way too late, you are a wacko.
"Chinese government holding the world's largest pair of scissors"
Yeah, kind of like the Greeks. You are a world class retard. China can end this system just like all the large sovereigns can, so freaking what, next day riots throughout China and the rest of Asia.
You probably have the biggest stack of worthless Peter Schiff books. Sorry, China will be collapsing with the rest.
Actually, no, you're just an aggressive little close minded fatalist shit.
I never said dollars are everywhere. I said they are GOING to be everywhere. You're like one of those idiots that builds a house in a floodplain and is then surprised when it floods every twenty years. You fail to see the pattern that when a currency goes fiat, it suddenly has a very limited lifespan.
Paper currencies always go to zero. Gold does not. Once a paper currency becomes worthless, you can throw it into the street, wipe your ass with it, or burn it for fuel. You never do such things with gold because it is always valuable. You scream about math in damn near every post you make, complaining about how the whole system is, like, goin' down, man, and, like, it can never work, yet you don't even understand simple capital flows. You just see an exponential function somewhere in the system, but you fail to see that it is a declining exponent (ie as more money is lent by private individuals, there is less demand, so the interest rate falls, to zero at the limit). You also fail to see that even if it weren't a declining exponent, there is a counterexponential function elsewhere in the equation (default, which rises proportionally with interest rates).
Your argument is the same as that of the Malthusians, who were proven wrong with the Green Revolution.
Edit: and as to the Greeks, again, you're a fucking moron. Greece doesn't have any reserves of any kind. They have no stockpile of dollars, or Euro, or anything else. They spent everything they made, and more. They are beggars. What kind of moron can't tell a beggar from a rich man?
"Paper currencies always go to zero. Gold does not."
Do houses go to zero? Does food go to zero? Do companies always go to zero? Does chicken wire go to zero?
I assure gold does go to zero and has. Let me see you are on the Titanic, you have 100 tons of gold on you. Another guy has a seat in a lifeboat, how many seats on the lifeboat do you think you would have gotten for your 100 tons of gold? I would suspect zero. YOu could have the world total supply gold sitting there on the Titanic and you wouldn't even be able to purchase a seat on a lifeboat. Only a retard that should be removed from the gene pool would give up his seat for 100 tons of gold.
"You also fail to see that even if it weren't a declining exponent, there is a counterexponential function elsewhere in the equation (default, which rises proportionally with interest rates)."
Yes, and you are witnessing a counter right now when the equation can't be expanded. It's the exact same thing that happened 80 years ago. You are in denial.
"I said they are GOING to be everywhere"
Ok when? What are they waiting for? When can expect all these helicopters. I guess I should be buying all these cheap houses on the market right? I should be buying stocks too right? What about high yield bonds? Oh, it's just gold that is going to go up. hahahahahahahahahahahah
Yes, I am in denial, you are right the great depression never happened and the one before that and the one before that and the one before that. It's a large conspiracy.
"You just see an exponential function somewhere in the system, but you fail to see that it is a declining exponent (ie as more money is lent by private individuals, there is less demand, so the interest rate falls, to zero at the limit)."
Everyone is searching for yield the amount owed on the total amount continues to go up. I fail to see your point. You are not going to find anymore people to lend to at the rate you were in 2007. It's called a death spiral which is why your dad is out of work and will continue to find it harder and harder to find something.
There is no helicopters that is coming to save you and your dad.
See you really don't believe what you say, which is why you are out here whoring your investment. You want to see gold go up in dollars, I bet you get all warm inside every time you see it go up, oh, when it plunges you probably say... oh, I wasn't going to sell anyway.
Offer still stands you have any worthless dollars send them to me or I will have someone come and pick them up.
You two should do a MMA bout. I'm betting on Mako. Anybody want some action?
Houses? Yes, they fall apart. Food? Yes, it rots. Chicken wire? Yes, it rusts.
100 tons of gold on the Titanic? Not much, as you couldn't carry it with you onto a tiny lifeboat--I live on land so this is not a concern, and is such a rare situation as to be worthless. 100 tons of gold OFF of the Titanic? I could have gotten someone to throw their child into the briny deep for that.
I hold no illusions about the stability of a paper system. I argue only in favor of a gold based system. You argue that all systems that humans desire to use lead only to destruction, yet we are still here. You claim that every 80 years society is destroyed, yet it certainly isn't. You claim that this time is the same as last time. 8000 tons of missing gold and a debt greater than the entire productive capacity of the nation begs to differ.
You speak the words of a fool. No-one can predict when it will happen, anymore than they could predict when a leaky, crumbling dam is going to burst. All they can do is advise people to take what they can and get to high ground. Idiots like you will die in the night. Or perhaps not, as you have squandered all of your productive capacity erecting a wall around your property, in which you will grow your own food, and live out the rest of your short, miserable life as a peasant farmer. After the dam bursts, what do you think the odds of the town being rebuilt? Close to zero, I'd say.
Nice job putting words in my mouth, you sniveling brat. I never said the last depression didn't happen. I do know why it happened though. Government overspending. Same as the dpression before, and the depression before than, and before that.
The key word there is "is". I don't dispute that the current system is destined for failure, but it's not because of some exponential function. It's because of government overspending, huge amounts of debt, and the huge amounts of printing that are going on right now behind the scenes. I don't think helicopters are going to save anyone. I am preparing for the day that they do come, and for the societal breakdown that ensues, and for the return of society that will follow.
Also, nice job trying to push buttons by talking about my father. You're a real prize-winner, aren't you?
"They have no stockpile of dollars, or Euro, or anything else"
Yep, they have little to none. Shortage of dollars. Bingo, retard gets a clue.
What does it matter you said dollars were worth nothing. China has US Treasuries, whoppie do, they will be collapsing just like Greece. I am sorry you are in denial. I bet you took Peter's advice and bought Chinese and European stocks as well. Hahahaha
"you're a fucking moron"
He agrees with me than calls me a moron. Hahaha
No new money is coming on line in which to pay back the prior money lent, death spiral... end of story retard. Let me know when the helicopters are coming to save you and your dad, I bet you are telling him stories that you will take care of him, you have gold... you'll probably buy all of Chicago with a gold coin.
You can't tell the difference between the present and the future. This is why you are a moron.
Dollars can be used to buy US goods. Greece can't collapse any system but their own. China, on the other hand, has lots of dollars, and can use them to come buy goods until there are so many dollars that they are worthless.
I mean really, this isn't rocket science. What are you, in high school or something?
"China, on the other hand, has lots of dollars,"
China does not have dollars they have USTs. Retard.
I remember you, you were that guy telling me how the Japs were going to come to America and buy everything up in the 80s. Boy that turned out well. Oh but denial is so much better.
"Houses? Yes, they fall apart. Food? Yes, it rots. Chicken wire? Yes, it rusts."
OMG you are by far the biggest retard I have ever met.
Ok, I got it, whatever you have is going to the moon and whatever you don't have is going to the basement. Oh I get it now Cramer. I got it now... helicopters are going to fly out of Ben's butt and drop dollars and those dollars are all going to gold and nothing else. Ok, one of us is quite insane but we can pretend that it is me.
Too many Peter Schiff books in the world.
Jesus Christ; do you know ANYTHING about CDS trading ?
Apparently not; so I would ask you to shut the fuck up and stop making statements like Buying CDS for insurance on large sovereigns is like buying home insurance against the Sun imploding; because that only exemplifies your lack of ANY understaning of the topic you try to discuss.
I will not discuss with you the intricacies of CDS trading; the only thing you need to know is; you are trading the spread; not default.
I know how CDS trading works.
"the only thing you need to know is; you are trading the spread; not default."
I never said otherwise.
No, you are obviously an idiot when it comes to this; since i read your original comment and your original comment oozes ignorance on this topic. You thought buying CDS is a bet on default; WRONG.
I know what a freaking CDS is, I know how they are traded, I never thought anything like you suggested although my wording was not perfect. Your post ooozzes of creating a strawman. You go enter into a CDS contract on China and you let me know how that works out for you, how about that? :) Replace "buying" with entering and a paying a premium payment if that makes you feel better.
Gone for the weekend, have a great 4th.
Let's get the government out of the way and bring on the fucking global collapse. Bring on the pain, joblessness, dislocation, misery, etc. and then get it over with so the entrepreneurs can begin to rebuild.
You will not be around to see the next large up cycle unless you can go into bear sleep for a generation or two.
Government intervention at all levels is only prolonging the inevitable. I'd prefer getting on with it to the slow death we are now engaged in.
I tend to somewhat agree with you if humans didn't choose the same choice and start the same system over again. If your intention is not to do this anymore than I agree, if not, than ride on IMHO.
I guess those photos of row after row of unsold houses mean something after all. Just another gov't run housing program gone bad. So much for Freddiesan and Fanniewong.
While employment and stocks crumble....
Botox sales are flying off the shelves.....
Just a Phat Phinger on the syringe trade.
It pays to look good during the collapse.
Looks like another banking canary is about to stumble off its perch in the coal mine of bad debt.
OOOOOHHH MY !
Meanwhile back at the ranch
GOOOO ORANGE CLOGS
LOVE THE DUTCH
Well, many now find out they have lost a ton of money to the empty caverns of banks balance sheets...........the same is true for US banks and European banks.....good luck at getting your money back.....you'll need a ponzi to do it.
"The futures so bright you gotta wear shades"
What part of the unemployment rate dropped from 9.7% to 9.5% don't you understand. Green shoots everywhere, Green jobs for everyone, Cap and Trade will stop the oil spilling, illegal immigrants prevent unemployment and crime, not shooting back at the enemy makes our troops safer, everything wrong in the world is the fault of the US.
Get with the program! DOW 30,000!
PS: The banks passed the stress test (can't really show you the results but trust us they are all fine.)
This is bullish for chinese solars, yes?
Leo
They completed a bond sale to who?
If we knew perhaps it would not be a surprise.
“This is a surprise given that they just completed a bond sale.” The bolded sentence is critical as it merely implies that the rot from the trillions in bad loans made to assorted house flippers, tulip sniffers, and opium den casino dwellers are finally coming home to roost.
Don't want to get into an argument about banking regulation, capital etc but it shouldn't come as a surprise. Has been flagged for months now and nobody gives a rats @ss about tier 1/tier 2 capital. All that matters is core equity and if you want to grow your assets faster than retained earnings, you need to issue equity. Have to say this place is almost the polar opposite of CNBC in terms of extreme conclusions from certain items of data but reaching bearish rather than bullish conclusions.
The End of The Yuan Peg- China is Desperately Trying to Attract Foreign Capital in Order to Prevent a Banking Crisis
In an article published on April 29 in China security Journal , Vice President of Shenzhen Development bank mentioned that deposits in banks were decreasing since many investors were rushing into the property market.
In a June 21 article in Hong Kong Takung Newspaper their was a report that the major banks in China have been suffering from significant decreases of RMB deposits in the last c two months. The article also mentions that their was an even larger decrease of foreign exchange deposits.
An older article from June 10 in China 21 Century economic said confirms this news and states that new RMB deposits fell dramatically in the major Chinese banks. It also quoted one of the Chinese bank officials mentioning that it is time to let the Yuan float more freely in order to attract foreign capital.
A MESSAGE FROM CHINA:
http://williambanzai7.blogspot.com/2010/07/message-from-china.html
I will predict a few things here:
1. China will experience either the equivalent of a 1980's recession or some form of depression.
2. It will be less severe in China than in the United States and Europe.
3. There will be heightened civil unrest and potential for another 1989-type scenario.
4. China will not collapse in any way shape or form.
5. China will actually come out stronger and more progressive as a direct result of these events.
Certainly a lot of details like that to take into consideration. Thanks windows vps | cheap vps | cheap hosting | forex vps