The People’s Bank of China (PBOC) added another 15.98 tonnes of gold in August – at the same time its foreign exchange reserves fell a whopping $94 billion.
China Loses All Control, Spends 600 Billion Yuan On Plunge Protection In August, Tightens Capital ControlsSubmitted by Tyler Durden on 09/08/2015 07:38 -0400
So much for exiting the market. According to Goldman's estimates, China spent CNY600 billion propping up the stock market in the month of August alone. Meanwhile, MNI reports that in the wake of the yuan devaluation, SAFE began "'urging' [companies to] actively take measures to limit foreign exchange purchase for advance payment under imports... and postpone forex purchases."
- Sure, why not: China Rebounds as Trade Data Disappoints (BBG)
- Oh, that's why: China's Stock-Rescue Tab Surges to $236 Billion, Goldman Says (BBG)
- Can't make this up: German finmin says must avoid reliance on debt, cenbank stimulus (Reuters)
- Stocks rise after contrasting China, Germany trade data (Reuters)
- Euro zone second-quarter GDP revised up as Italy grows faster (Reuters)
- Brent oil rises on European, Chinese data; oversupply weighs (Reuters)
- Corporate Prosecution Deals Headed for a Legal Test (WSJ)
Futures Soar After Dramatic Chinese Last Hour Intervention Scrambles To Mask Latest Terrible Trade DataSubmitted by Tyler Durden on 09/08/2015 06:52 -0400
The last time we looked at Chinese stocks, just a few hours ago, they were on pace to close back under 3000, following the latest collapse in trade, where in August exports dropped 5.5% (last -8.3%) while imports tumbled -13.8% in dollar terms (worse than the -8.1% prior). As the Reuters chart below shows, this was the 10th month in a row of declines and the worst stretch since the 2008 crisis, confirming China will need far more currency devaluation to stabilize the trade pain. And then Chinese authorities intervened with gusto, waiting until the start of the afternoon session, at which point a massive buying orgy ensued, and pushed the SHCOMP from down more than 2% to close at the day highs, up some 2.9%!
Following Monday's roller coaster of manipulated market machinations, perhaps China's leadership will keep its mouth shut tonight and just "monitor" the situation. Japan's opening 300-point flash-smash has now been eviscerated back to unchanged, Chinese stocks look set to open lower as Margin debt rose for the first time in 13 days (likely thanks to CSRC telling retail investors to "come back in, the water's fine.") As markets anxiously await China's trade data - which will either confirm the collapse or confirm the manipulation (given the utter devastation in Taiwan and South Korea trade data), the PBOC fixes Yuan weaker after 5 straight days of stronger fixes and injected another CNY150 billion in 7-day rev repo.
The data point everyone has been waiting on is out and, just as we tipped weeks ago, China liquidated nearly $100 billion in USD assets during the month of August in support of the yuan.
News That Matters
Chinese Stocks Surge Then Tumble At The Close, Stun Market News Algos; Futures Levitate On Back Of USDJPYSubmitted by Tyler Durden on 09/07/2015 07:50 -0400
Chinese stocks opened with a bang, and as we previously noted soared higher at the open after China's long 4-day holiday weekend, which however subsequently slowly (but very surely) fizzled, eating away at the hope that the 3-day drop in the Shanghai Composite would finally come to an end following comments from PBOC governor Zhou that the recent rout in Chinese stocks is almost over, and result in a relief rally in Europe and the US. Alas, all that was promptly swept away at the end of trading in China when the Shanghai Composite tumbled at close of trading to confirm just how unpleasant a "death cross" is coupled with loss of central bank control, and to push the Shanghai Composite down 2.5% for the day and 3.4% for the year.
China Stocks "Death Cross", Default Risk Hits 2-Year High As Regulators Promise G-20 'Whatever It Takes' To Stabilize MarketSubmitted by Tyler Durden on 09/06/2015 21:22 -0400
Even before China reopened from its 5-day holiday, regulators were pitching Chinese stocks as cheap (37.3x P/E) and less-margined (+108% YoY) and promised to "safeguard stability" in a "variety of forms" seemingly pouting cold water on The FT's recent report (and the malicious instigator of China's market crash). All of this is quite ironic, given China's chief central bankers admitted "the chinese bubble has burst." As stocks open, CSI-300 (China's S&P 500) has confirmed a 'Death Cross' which in 2008 was followed by a further 60% decline. More troubling, however, is the incessant rise in interbank rates as despite CNY530bn of liquidity injected in the last 3 weeks, overnight rates have doubled. China credit risk jumps to 2-year highs and AsiaPac stocks are generally lower at the open (as US futures dumped'n'pumped) not helped by Japanese weakness on BoJ tapering concerns. PBOC strengthened the Yuan fix for the 4th day in a row - the most since Sept 2010.
As Dow futures opened ahead of this evening's China open (after being closed since Wednesday), it appears someone (or something) decided it was time to test down 100 points to Friday's pre-ramp lows. Of course that mini-flash-crash has now been followed - since stops were run - with a 140 point ripfest, we assume gunning for the stops just above Friday's late-day highs...
Before China’s bursting equity bubble grabbed international headlines, and before the PBoC’s subsequent devaluation of the yuan served notice to the world that things had officially gotten serious in the global currency wars, all anyone wanted to talk about when it came to China was a "hard landing." Now that the yuan devaluation has all but proven that China has landed, and landed hard, here are the five channels of contagion.
Keys in the week ahead: equity markets--still look lower; China--volatility likely to continue; Fed--market says no Sept hike