“If we can’t even trust a big national bank, what other financial institutions can we trust?” Liu Min, who bought 12 million yuan worth of WMPs from Minsheng Bank, said as he learned that his money was gone.
Overnight China reported a barrage of economic data for March and Q1, that not only showed the first back to back GDP acceleration in seven years, but beat across the board as investment picked up, retail sales rebounded and factory output strengthened, following record credit growth and a fresh rebound in China's property markets which defy Beijing's attempts to taper the country's newest housing bubble.
"We have a dual economy: There are the ones who are angry and are falling behind and there are the ones who are doing very well. The financial markets are largely about those who are doing very well...So it’s quite a one-sided hope and we will see how it plays out."
As Zimbabwe desperately attempts to restart its monetary system, cow, cars, TVs, refrigerators, computers and other household appliances will become acceptable as collateral once they are evaluated and registered in the central bank’s register.
China's default wave appears to have made landfall, and as Bloomberg reports overnight, China’s deleveraging push has racked up the most defaults on corporate bonds ever for a first quarter. "Seven companies have defaulted on a total of nine bonds onshore so far in 2017, versus 29 for all of last year."
Is China on the verge of a "tipping point" or as Deutsche Bank puts it, on the edge of an "uncontrollable liquidity event"? For the answer and much more, here is everything you always wanted to know about the current precarious state of China's financial system.
During the so-called Chinese Banking Liquidity Crisis of 2013, the relative cost of funds for non-bank institutions spiked to 100bps. So, the fact that the 'shadow banking' liquidity premium has exploded to almost 250 points - by far a record - in the last few days should indicate just how stressed Chinese money markets are.
The relentless risk rally which took the Dow above 21,000 and the S&P over 2,400, has taken a breather overnight, with S&P futures modestly lower tracking European stocks, while Asian stocks advanced on US momentum; late Wednesday comments by a unexpectedly hawkish Lael Braniard has pushed the dollar higher, pressuring oil lower.
Debt in China has increased dramatically in recent years, accounting for roughly one-half of all new credit created globally since 2005. The country’s share of total global credit is nearly 25%, up from 5% ten years ago.
"Our global credit impulse (covering 77% of global GDP) has suddenly collapsed: whereas back in Jan '16 the global credit impulse was positive to the tune of 3.8% of global GDP (of which China comprised 3.5% of global GDP) it has now fallen back to -0.1% of global GDP."