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Chinese Stock Short Squeeze Stalls After IMF Delays Decision On Yuan SDR Inclusion

Tyler Durden's picture




 

Yesterday afternoon's meltup short-squeeze in China - after regulators announced their latest restrictions on short-selling - has stalled in the early trading tonight following The IMF's decision to delay inclusion of Yuan in the SDR pending a review in September 2016. Though this will be a disappointment to the Chinese, the door is still open though given waringse from BMW and Toyota over "normalizing" auto sales, the market problems may be morphing quickly into economic problems.

Chinese stocks see a modest lift at the open...

 

The IMF has delayed its decision on including The Yuan in The SDR...

  • *IMF ISSUES REPORT ON CRITERIA FOR YUAN RESERVE-CURRENCY STATUS
  • *IMF STAFF PROPOSES DELAYING ANY CHANGE IN SDR TO SEPT. 2016
  • *IMF SAYS `SIGNIFICANT WORK REMAINS' ON REVIEW OF YUAN IN SDR
  • *IMF: OPERATIONAL ISSUES MUST BE RESOLVED IF YUAN PART OF SDR
  • *IMF: YUAN MADE `SUBSTANTIAL PROGRESS' ON INTL USE SINCE 2010

As Bloomberg reports, though there is a delay the endgame remains in sight...

The International Monetary Fund said the yuan trails its global counterparts in major benchmarks and that “significant work” in analyzing data is needed before deciding whether to grant the Chinese currency reserve status.

 

IMF staff members also opened the door to a possible delay in any approval with a proposal to postpone by nine months, until September 2016, the implementation of a change in the basket of currencies that make up the lender’s Special Drawing Rights, according to an update on the five-yearly review released Tuesday. The IMF said postponing the change would make the transition to a new basket smoother.

 

The report suggests that while approval by the IMF board isn’t yet assured, it’s within reach, and the decision will come down to more than just the staff’s assessment. China has been pushing for the yuan to join the dollar, euro, yen and pound in the SDR basket; while countries such as France have welcomed China’s push, the U.S. has urged the nation to keep moving toward a flexible exchange rate and undertaking financial reforms.

 

“The ultimate assessment by the board will involve a significant element of judgment,” the IMF report said.

 

The postponement sets the stage for the IMF to add the SDR to the yuan just before Chinese President Xi Jinping hosts a meeting of Group of 20 leaders next year, said David Loevinger, managing director of emerging-markets sovereign research at asset manager TCW Group Inc. in Los Angeles.

“The end game is obvious,” said Loevinger, former senior coordinator for China affairs at the U.S. Treasury Department. “If the Chinese make this a priority, it’s pretty certain President Xi will have his deliverable at the G-20.”

But problems remain...

  • *CHINA CAR SALES SLOWDOWN 'HEADWIND' FOR GASOLINE DEMAND: BMI

As Bloomberg reports,

China has gone from growth engine to source of concern for carmakers including BMW AG and Toyota Motor Corp., with both warning Tuesday that the sales slowdown in the world’s biggest market will probably last through year-end.

 

BMW said decelerating delivery growth in China may force it to lower this year’s profitability goals, as consumers spooked by a stock-market rout and flagging economy stop spending on cars. Toyota likewise warned that higher costs and lower prices are making competition tougher.

 

“Things may well get worse from here,” Max Warburton, an analyst at Sanford C. Bernstein Ltd., wrote in a note on Tuesday. “The market continues to deteriorate.”

 

Carmakers are struggling to adjust to what BMW has called a “normalization” of a market that has grown eightfold since 2000, pushing it past the U.S. as the world’s biggest car market in 2009.

which is neither unequivocally good for refiners or automakers.

 

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Tue, 08/04/2015 - 22:14 | 6392131 holdbuysell
holdbuysell's picture

Not surprising. And thus the parallel paths of the AIIB, SCO, etc.

Tue, 08/04/2015 - 22:22 | 6392153 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

Yeah, weird how these two events converged isn't it?

Wed, 08/05/2015 - 01:36 | 6392457 OldPhart
OldPhart's picture

*IMF: Deathwatch, China. (we hope and pray)

No, too programmed.  VaChina's going to dip a hell of a lot.  But my investment's are in gold/silver/FMJ.

I don't really care about China's current problems.  I'm getting PM's at a huge discount, and it will probably drop even more (and I'll buy more).  When this bullshit normalizes, US $ are going to be worthless.  MY meager hoard is going to buy into the next paradigme at a substantial increase.  It doesn't matter if it's newdollars, yuan, euros or fuckin' bitcoin.  I have solid money.  It ain't going anywhere until I actively make it do so.  Because it's sitting here pretty close to me.  No one else has access to it.

Wed, 08/05/2015 - 02:46 | 6392489 Oracle 911
Oracle 911's picture

China's problem is the US financial warfare on China. The US is using an artificially engineered bubble (it was created within months). And we can be sure, the Chinese response will be disastrous for the US.

Wed, 08/05/2015 - 06:40 | 6392583 redd_green
redd_green's picture

The Chinese are and have been building their own artificial bubble to prop up exports. All those 60,000 factories across the USA didn't go out of business for no reason.

Wed, 08/05/2015 - 11:22 | 6393336 Farqued Up
Farqued Up's picture

I think that's accurate and I've always scratched my head why these goons in the West would ever think they could steer this herd of communist cats into something coherent. However, it's equally apparent that these West goons are a bunch of bankster central planners themselves.

West goons are investing in long term investments that benefit all mankind like welfare for the "unfortunate" and for transportation vehicles, such as tanks, aircraft carriers, Humvees, Boomers, and for entertainment such as fireworks, like big bottle rockets, mushroom clouds, "SPENT" uranium, fast jets, etc.

Meanwhile, the Red Commies are building ghost cities and other worthless worker programs that produce planned unwanteds.

We are sooo fucked. The Soviet Union collapsed and now this giant Humpty Dumpty that they have cobbled together is in a final nose dive, too, and for very similar reasons. Unfortunately, they are taking us ignorant (stupid) dumb fucks down with them. No, Virginia, the world will not allow them to skate free with their Kings and Queens to lord over the remnants. Even Hitlery is biting the dust and Jebbie My Daddy's Penis Worked Bush isn't running on Positraction, either.

The situation is screaming that the polished turd is still shit, otherwise, this place should be booming with gasoline/energy being so low and interest rates at zero and negative. In trouble, big time, we are.

Before I get too giddy with faint hope, though, the voting is still electronic, hide and watch. At least we don't have to watch that puppet, Cronkite, announce winners of national elections at 5 minutes after the polls close in Maine with 10 precints counted, and 3 more hours of voting remaining in the PST states. 

Tue, 08/04/2015 - 22:45 | 6392156 38BWD22
38BWD22's picture

 

 

IMO, China's Yuan will not get into the SDR unless/until one or both of the below happen:

-- They buy a bunch more gold.  Problem: if they buy a lot, it will get much more expensive.

-- They liberalize trading in their currency so that it can be freely changed and traded.

No way those would be accomplished by September 2016.

Tue, 08/04/2015 - 23:46 | 6392329 Luckhasit
Luckhasit's picture

I don't see China and the Yuan getting into the SDR, even though they want to.  I don't see the ruling party in China hoarding gold at rock bottom prices, to sell it the IMF for special drawing rights.  What I do see is China joining the IMF eventually because someone is going to need a shit load of gold and unless your digging it up (gold mining is getting its teeth kicked in) that price can only go up.

But that kind of shit doesn't happen in bizzaro world, who fucking knows.  We know they want in but I don't see them giving up the prize (that is China) to get in. 

Wed, 08/05/2015 - 00:38 | 6392390 old naughty
old naughty's picture

With convergence of "events" in September, may have moar to it than appeared...

Allowing China into the SDR means both Canada and Switzerland (remember what scrambled in January) will be allowed in as they're "moar significant" than China at the present time. So it will bulge to seven.

And then there's this:  

The US may be about to score a huge intelligence victory over China

still September !

And AIIB, SCO, etc. could be just all hypes.  Coafeidian

IMF is still aligned to US. And AIIB has IMF people on board.

Gold, humm, many possibilities. One may be to use to re-value (pop up) tbtf bank balance sheets.

Tue, 08/04/2015 - 22:22 | 6392152 Glass Seagull
Glass Seagull's picture

 

 

Paradox:  China wants in SDR, but must choose between outright share manipulation, or SDR inclusion.

Shouldn't have touched Citadel.

 

 

Tue, 08/04/2015 - 23:47 | 6392335 Luckhasit
Luckhasit's picture

Ah, what I just said.  The bigger question is the chinese government willing to sell out his country and people?

Wed, 08/05/2015 - 01:22 | 6392446 Four chan
Four chan's picture

judging by the kids of the upper deckers over here, and their lambos and bentleys, id say they have already sold out the billion or so slaves.

Wed, 08/05/2015 - 03:27 | 6392508 old naughty
old naughty's picture

They have "farmed" us for aeons...

now harvest soon.

"...sold out the billions or so"

The Guidestones say 500 million, only. So, you're way short.

 

 

Wed, 08/05/2015 - 01:20 | 6392441 bid the soldier...
bid the soldiers shoot's picture

So China's choice is SDRs or keeping Wall Street's billions locked in the market by the restrictions on covering short positions.

Let's see, if I were China which one would I pick.

 

“Eeny meeny miny mo” 

Tue, 08/04/2015 - 22:25 | 6392162 Conax
Conax's picture

China could unleash the Kraken.

They could tell them how much gold they are sitting on.

Wed, 08/05/2015 - 06:22 | 6392559 aurum4040
aurum4040's picture

Exactly, my conjecture regarding the Chinese marker collapse was that is was/is Western sabotage because of the October 2015 IMF meeting, Yuan SDR inclusion, and or outright USD kickout. The entire year, between September 2014 and right now has a stench of complete  Western manipulation and coercion to crush both the Russia and Chinese economies vis a vi the most ridiculous oil price collapse in history,  the sudden collapse of the Chinese market coupled with continued, blatant gold price manipulation via Western derivatives and a iinsanely leveraged 123-1 paper gold contracts vs. physical metal. My contention is that, yes Chinese share prices were high, however, they weren't high at all if the renimibi was revalued in October 2015. The US and USD clearly are in its last days and this whole Russian market, Chinese market, gold, oil charade are nothing but more smoke and mirrors completely influenced by the 'efficient' Western 'markets' thar are more rigged then the Chinese market would ever hope to be. My guess is that tptb are covering gold  buying oil,  Russian and Chinese stocks hand over fist right now - US fracking is a joke and is causing insane disruptions with the natural pressure beneath the earth's surface.   And one last thing- I can remember Jim Cramer crying on CNBC for short selling bans in the US in 2008, lest we forget. These neocon fucks are so goddamn stupid they're fucking with the very people who hold the true nuclear financial bomb, one the size the world cannot comprehend, directly over our heads day in, day out. One day they'll learn and honestly it's yet another chance to get the fuck out of the USD and into the future. 

Tue, 08/04/2015 - 22:38 | 6392194 Dragon HAwk
Dragon HAwk's picture

It's hard to bribe people, when your not in the same country ( club )

Tue, 08/04/2015 - 22:51 | 6392223 q99x2
q99x2's picture

Rothschilds going to show the Chinese who God's chosen people are.

Wed, 08/05/2015 - 01:10 | 6392430 Colonel Klink
Colonel Klink's picture

I'm of the belief that the Chinese would be just as happy to cook and eat the chosen people.  No need to waste cooking them to ash.  They've got 1.5 billion people who need to be fed.  A zionist in every pot.

Wed, 08/05/2015 - 06:08 | 6392566 SilvertonguedAngel
SilvertonguedAngel's picture

Just like they showed Putin...

Tue, 08/04/2015 - 22:54 | 6392229 turtle
turtle's picture

But the fact that the IMF has delayed the decision until Sep 2016 rather than an outright no until 2020 is significant... throws an interesting light on the timing of the recent market rout.

Tue, 08/04/2015 - 23:01 | 6392245 Winston Churchill
Winston Churchill's picture

Light blue touch paper and run like hell.

Tue, 08/04/2015 - 23:03 | 6392251 Ranger4564
Ranger4564's picture

I suspect the Chinese / BRICS will not take this kindly, and instead of working with the IMF, the Chinese / BRICS will just bypass the US / Cabal institutions and accellerate the AIIB / CIPS / BRICS Bank, etc, which are all being readied.

 

Tue, 08/04/2015 - 23:06 | 6392255 Winston Churchill
Winston Churchill's picture

Pssst. UST's going cheap.

Tue, 08/04/2015 - 23:57 | 6392344 Solarman
Solarman's picture

Have you noticed the BRICS are hurting, save India, and they are firmly in America's orbit.

Wed, 08/05/2015 - 01:47 | 6392460 bid the soldier...
bid the soldiers shoot's picture

what

they (India) are firmly in America's orbit.

So India is buying all their weaponry from  Russia so the US can reverse engineer it and improve their shitty defense industry.

You may have a point.

 

Tue, 08/04/2015 - 23:11 | 6392271 Kavklov
Kavklov's picture

Fuck the IMF!!!

PETROYUAN NOWWWWW

Tue, 08/04/2015 - 23:30 | 6392302 dust to dust
dust to dust's picture

 The IMF cannot even make a decision on Greece let alone China.

Tue, 08/04/2015 - 23:47 | 6392333 loveyajimbo
loveyajimbo's picture

So, in retaliation for what is clearly a USA decision...  China now crashes the Comex by standing for massive delivery in both gold and silver... then dumps their US bonds, then revalues gold at $8000/oz and asks the US to conduct a full, in-depth audit of the US physical gold holdings, WITH encumbrances...  that should take care of the good old dollar... and the fantasy joke of a SDR.

Tue, 08/04/2015 - 23:56 | 6392342 Solarman
Solarman's picture

Still living in your mom's basement?  China is weak, and it is being exposed.  The Fed can absorb every bond China sells, and then crank up interest rates and squeeze the dollar.

 

Then China must devalue and die slow, or not and die fast.  They are making things the ROW no longer needs in the quantities they make, but they must import food and oil, with ever cheaper Yuans.

 

The Chinese would have been better off spending money on developing their agriculture and green/nuclear energy, than paving it over with apartments they don't need.

Wed, 08/05/2015 - 00:46 | 6392406 kiwigal
kiwigal's picture

Perhaps you are unaware but China has been very busy buying dairy farms in New Zealand, huge tracks of land in Australia the size of England, farmers going bust, the banks moving in,then the Chinese buying up. Africa the same with mines. You Americans have no clue what is going on. 

Wed, 08/05/2015 - 03:25 | 6392504 Krumnoltzwitsky
Krumnoltzwitsky's picture

Shenhua (a Chinese coal company) has just received government approval to construct a massive coal mine on the Breeza plains in New South Wales in Australia. The amount of farmland that they bought up is way bigger than the mine would be even at its biggest. My guess is that they'll farm the excess land and ship the beef/wheat/whatever back to China while also shipping the coal back to China as well. The Chinese expats that are in the main office have already gotten a very bad reputation in the community because they treat everyone else like crap, don't pay invoices for 120 days and act like they can do and/or get whatever they want.

Wed, 08/05/2015 - 03:50 | 6392520 kiwigal
kiwigal's picture

That's scary. I gather mainland Chinese have been creating a housing bubble where you are too. It's going to be very interesting to see if the Chinese market crash deflates the Australasian property market, there are signs already here in Auckland that it could. One Chinese couple here registered as students have put about 6 properties worth 11 million on the market. Canada also has had the Chinese issue and their housing is coming down according to an article by CNN. All three countries have become too dependent on China, our dairy, your mining, I gather it is oil for Canada. All three countries have been played like a violin. I think the American population is totally unaware how dangerous China is, its tentacles have wound there way into many countries.

Thu, 08/06/2015 - 00:03 | 6396216 OldPhart
OldPhart's picture

"I think the American population is totally unaware how dangerous China is, its tentacles have wound there way into many countries."

Some of us are aware.  Unfortunately, we have our own war criminal government to deal with, China's a concern but the world is going to have to deal with the collapse of America any damned day.  All it takes is Saudi Arabia to decide that it would rather have gold, euros, rubles or yuan than arms and protection from an enfeebled nation.

 

Tue, 08/11/2015 - 09:29 | 6413413 Krumnoltzwitsky
Krumnoltzwitsky's picture

No, it's not really the mainland Chinese that are causing the housing bubble here where I live, but the mining industry. People think that because there are mines opening up around here that the price is just always going to go up and up, and so they ask ridiculous amounts for houses. There was a 2-storey 4-bedroom house at the toffey end of town that sold 2 years ago for $900,000 (the average house price here is about $320,000). And the rent here is atrocious, also due to the mining industry. A serviced apartment here nowadays can fetch up to $1,200 a week. There hasn't been any selling en masse by investors, I think probably due to a few subdivisions being finalised and blocks from those being sold and built on, easing the supply constraint. But I agree with what you're saying that our economies are far too dependent on China. When China falters, Australia, New Zealand, and Canada are all going to see their economies, if not their housing bubbles, collapse. Personally I can't wait for the housing bubble to finally collapse here in Australia. It's about time the prices went back to realistic levels, like maybe $30,000 for a decent house (assuming that the currency supply is adjusted to facilitate that, of course).

The way that China is investing at the moment though, they are securing raw materials for themselves because they don't have enough for their industries at home. I personally think that in a few years there will be another world war, and I think China is realising that too, hence the frantic pace of buying up strategic resources and land. They have the capacity to produce military hardware en masse due to substantial excess capacity in their factories, and I think they're stockpiling a lot of the resources now for future use.

Wed, 08/05/2015 - 06:43 | 6392587 redd_green
redd_green's picture

American's have got a clue. Crooked  Chinese are buying up everything from shopping malls to skyscrapers in Manhattan, to very large tracts of land across the USA.  

Wed, 08/05/2015 - 01:11 | 6392431 bid the soldier...
bid the soldiers shoot's picture

That's why they're renting farm land in Siberia.  

A Chinese firm is in talks with Russia about renting up to 115,000 hectares (284,050 acres) of land to grow crops and rear livestock in eastern Siberia.

Trans-Baikal regional officials say the deal with investment firm Huae Sinban could be worth up to $448m (£282m).

Local government leaders have signed a "letter of intent" with the company, Russia'sTass news agency reports.

Huae Sinban plans to rent the land for 49 years. China has made similar farming investments in other countries.

http://www.bbc.com/news/world-asia-33196396

Fri, 08/07/2015 - 13:10 | 6401746 johnlocke445
johnlocke445's picture

China does not sell their government bonds to foreign banks like the United States does. They consider this a national security risk. You know, like China now has us over the crap barrell because they purchased all of our bonds. As far as their apartments are concerned you are speaking from a position of ignorance. China has a complicated municipal taxing structure. Municipalities only get back 40% of what they send to Bejing in tax money, however Bejing gives them much more back if they extend their cities so as to accomodate the billions of people needing to relocate from the agricultural areas. Some cities do look like ghost cities, but make no mistake, they will all be filled in about 35 years. 

Wed, 08/05/2015 - 00:20 | 6392368 erk
erk's picture

China needs to stop trying to do western financial things we already know don't work for the western economies. They need to think outside the square.

 

Wed, 08/05/2015 - 00:28 | 6392377 thunderchief
thunderchief's picture

I hope they enjoy all that egg on their faces after giving the west shit gold numbers.

By next year's review they should be preparing for war with them.

Wed, 08/05/2015 - 00:40 | 6392396 ClassicCommodity
ClassicCommodity's picture

They must be confident the system will hold up if they're willing to extend this whole process.

Wed, 08/05/2015 - 00:51 | 6392415 22winmag
22winmag's picture

Why would the IMF hesitate to include the currency of an organ-harvesting, slave-laboring, side-of-the-road-shitting, one-party communist clusterfuck like China?

Wed, 08/05/2015 - 03:13 | 6392458 bid the soldier...
bid the soldiers shoot's picture

Look.  There in the Pantheon of Currencies, the winged US greenback soars above all the others.

 

The US borrowed more of them than were ever borrowed since the Big Bang.

And there cranking out perfect new ones, out of thin air, is Janet Yellen, laboriously turning the crank handle as did Ben Bernanke before her.

Turn, Janet, turn, turn 

"There is a time for every season under heaven.

A time to cast away bonds, and a time to gather bonds together;

A time to print, and a time to refrain from printing"

Don't let that yucky yuan touch our precious dollars and contaminate them.

Wed, 08/05/2015 - 01:26 | 6392449 GoldenDonuts
GoldenDonuts's picture

So you actually believe the stupidly low number that they published recently.  I guess that there is one born every minute.

Wed, 08/05/2015 - 03:58 | 6392524 RadioactiveRant
RadioactiveRant's picture

What is the point in putting a pegged currency in the SDR? Until it floats its just a second rate dollar.

Wed, 08/05/2015 - 04:03 | 6392525 EconoIdiot
EconoIdiot's picture

Starting to see the dawn of the true economic paradigm??? We definitely have problems to deal with...  

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