Shadow Banking

China's Margin Debt Is "Easily The Highest In The History Of Global Equity Markets"

"The explosion in margin financing behind the recent astonishing run-up in Chinese A shares is a new twist on China credit concerns, a long-standing grey swan for Chinese and global growth. As of the beginning of June, the balance of margin financing outstanding was RMB2.2tn, an estimated 12% of the free float market cap of marginable stocks and 3.5% of GDP—easily the highest in the history of global equity markets."

China's Market Isn't Fixed And Why The Global Bubble Will Keep Imploding

The Chinese economy is in an obvious deepening swoon and the median company on the Shanghai exchange had a PE ratio of 60X before the recent break. But no matter. Not only does everything financial race the skyscrapers to the sky in the land of red capitalism, but valuation upside is apparently whatever the comrades in Beijing want it to be. Says Goldman’s chief stock tout for China,“It’s not in a bubble yet.”. Why? Because “China’s government has a lot of tools to support the market.”

Gross Says Hold Cash, Prepare For "Nightmare Panic Selling"

That an ETF can satisfy redemption with underlying bonds or shares, only raises the nightmare possibility of a disillusioned and uninformed public throwing in the towel once again after they receive thousands of individual odd lot pieces under such circumstances.

The Biggest Threat To Chinese Stocks: "Shadow Lending" Crackdown

China's margin loan balance sits at around CNY2.2 trillion, and while that’s certainly impressive, there’s every reason to believe that at least another CNY500 billion in margin lending has been funneled into the Chinese stock market via the country’s shadow banking complex. As regulators tighten the screws on shadow margin lending, are stocks in for a rude awakening?

China Officially Doubles Down On Multi-Trillion Yuan Debt Swap Program

China has officially doubled the quota on a critical local government bond swap program designed to help provincial authorities crawl out from beneath a debt pile that amounts to some 35% of GDP. Participating banks can pledge the newly issued muni bonds for cash, but with four policy rate cuts already on the books this year, it isn't clear that more liquidity is the answer when it comes to boosting credit creation. 

IMF Panics - Slashes US Growth Forecasts, Demands Fed Stay On Hold For Another Year

Anxiety over financial stability and shadow banking risks appear to have force Christine Lagarde and her fellow extrapolators to hit the panic button:

IMF CUTS U.S. 2015 GROWTH FORECAST TO 2.5% FROM 3.1%, URGES FED TO DELAY FIRST RATE INCREASE UNTIL 1H 2016

Adding that they viewed the Dollar as "moderately overvalued" and any more appreciation would be "harmful," it seems global disinflationary pressures have left the IMF no choice but to say publicly what everyone has uttered under their breath. Now Yellen is really cornered.. and just exactly how are the talking heads going to spin this as positive?

The Defaults Continue In China As Duck Producer Sinks

Over the past several months we’ve seen at least three examples of Chinese defaults including Baoding Tianwei Group, a subsidiary of state-owned parent China South Industries. This suggests Beijing will begin to take a more hands-off approach when it comes to propping up borrowers. The latest example is a profitable duck processing company, which FT says has defaulted on its debts after banks refused to roll over its loans.

China May Double Down On Debt Swap As ABS Issuance Stumbles

China may raise the quota on a critical debt swap plan by as much as CNY1 trillion, underscoring how important its success is both in terms of kicking the can for the country's heavily-indebted local governments and in terms of jumpstarting the credit creation machine. Meanwhile, an effort to encourage ABS issuance is sputtering amid rising NPLs.

Margin Debt Breaks Out: Hits New Record 50% Higher Than Last Bubble Peak

For those who still cling on to margin debt as indicative of anything, the latest NYSE report should provide some comfort: finally the long-awaited breakout in participation has arrived, and after stagnating for over a year, investors - mostly retail - are once again scrambling to buy stocks on margin, i.e., using debt, and as of April 30, the amount of margin debt just hit a new all time high of $507 billion, $30 billion more than the month before, and nearly 50% higher than the last bubble peak reached in October 2007.

China's Third Bond Default Imminent: Coke Supplier To Miss Payment

Coca-Cola supplier Zhuhai Zhongfu Enterprise Co.will reportedly miss a principal payment on Thursday marking the third onshore default in China and underscoring the growing risks the country faces on a corporate debt pile that now totals some $14 trillion.

Why China Is So Desperate To Blow The Most Epic Stock Bubble

The Shanghai Composite is on the verge of 5,000 and has more than doubled in the past year but this may just be the beginning. The reason: if the Chinese stock bubble bursts, that will be the beginning of the end of the greatest con game in history.