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Chinese Stocks Slump After "Arrest-Fest", Yuan Strengthens Most In 9 Months, Goldman Cuts Outlook

Tyler Durden's picture




 

Update: So much for the "no more intervention" Since the government bailout fund has run dry of money, the brokerages have to step up - CHINA SAID TO ORDER BROKERAGES TO BOOST STOCK MARKET SUPPORT

A busy weekend in Asia was dominated by mayhem in Malaysia, and witch-huntery in China. Chinese authorities began a wide-scale crackdown on rumor-mongerers, arrested journalists, and even detained a regulator for insider trading, as they lifted loan caps on the banking system at the same as withdrawing (verbally) support for the stock market. China strengthen the Yuan fix by 0.15% to 6.3893 - this is the biggest 2-day strengthening of the Yuan fix since Nov 2014. Then just to rub some more salt in the wounds, Goldman cut China growth expectations to 6.4% and 6.1% respectively for the next 2 years. Chinese stocks are opening modestly lower (SHCOMP -3.3%).

  • *CHINA'S CSI 300 INDEX FALLS 2.8% TO 3,247.39 AT BREAK
  • *CHINA'S SHANGHAI COMPOSITE FALLS 2.6% TO 3,148.08 AT BREAK

And Japan

  • *JAPAN'S TOPIX EXTENDS LOSS TO 1.3%; NIKKEI 225 DOWN 1.7%

Yuan fixed stronger for 2nd day in a row...

  • *CHINA SETS YUAN REFERENCE RATE AT 6.3893 AGAINST U.S. DOLLAR
  • *CHINA RAISES YUAN REFERENCE RATE BY 0.15% TO 6.3893/USD

Then Goldman slahes China growth...

  • *CHINA 2016 GDP GROWTH FORECAST CUT TO 6.4% VS 6.7% AT GOLDMAN
  • *CHINA 2017 GDP GROWTH FORECAST CUT TO 6.1% VS 6.5% AT GOLDMAN
  • *CHINA 2018 GDP GROWTH FORECAST CUT TO 5.8% VS 6.2% AT GOLDMAN

A “double-dip” in China’s growth in 2015...

China’s economic growth was very weak in early 2015, reflecting a combination of slowing money/credit growth, reform-driven fiscal tightening, and an appreciating CNY, among other factors. Policy easing starting in March seemed to help revive growth in May and especially June. But growth has slowed anew in July and August, prompting market and policymaker concerns and a further spate of easing measures. We retain our 2015 real GDP growth forecast of 6.8%, but note that alternative indicators of activity suggest a sharper slowdown, and mark down our 2016/17/18 forecasts to 6.4%/6.1%/5.8% respectively from 6.7%/6.5%/6.2% previously. We now expect short-term interest rates to fall further, to 1.5% by end-2016 (from 2.25% previously).

...and increased policy uncertainty...

Policy uncertainty has increased. Measures to contain local governments' off-balance sheet financing have taken a back seat for now to a focus on reviving infrastructure spending. Equity market volatility has been large, diminishing the near-term potential for this channel to reduce reliance on debt financing. The snap 3% depreciation in the CNY is small in a macro context, but represents the sharpest weakening in two decades that were dominated by stability/appreciation vs USD, and has prompted an acceleration in capital outflows, heightening the risk of a larger move down the road.

But before all that, this happened...

First, as The FT reports, China "says" it will abandon buying stocks...

China’s government has decided to abandon attempts to boost the stock market through large-scale share purchases, and will instead intensify efforts to find and punish those suspected of “destabilising the market”, according to senior officials.

 

For two months, a “national team” of state-owned investment funds and institutions has collectively spent about $200bn trying to prop up a market that is still down 37 per cent since its mid-June peak.

 

...

 

Traders and officials said the latest intervention was aimed at providing a “positive market environment” in preparation for a big military parade this week to celebrate the 70th anniversary of the “victory of the Chinese people’s war of resistance against Japanese aggression”.

 

Senior financial regulatory officials insist that this was an anomaly, and that the government will refrain from further large-scale buying of equities.

Which could be a problem as all that stopped total and utter carnage last week was their buying...

 

But then they unleashed full scale fractional reserve banking...

  • *SCRAPPING OF LOAN CAP TO HELP STABILIZING ECO GROWTH: FIN. NEWS

Though we suspect this is as much use as a chocalate fireguard for the already maximally-indebted Chinese public.

Butnothing stops the propaganda from flowing...

  • *CHINA ECO FUNDAMENTALS BETTER THAN OTHER MAJOR ECONOMIES: 21ST

As authorities begin wide-scale crackdowns on rumor-mongers and nay-sayers...

  • *CHINA DETAINS REPORTER ON SUSPECTED SPREADING RUMORS: XINHUA
  • *CHINA DETAINS CSRC OFFICIAL ON SUSPECTED INSIDER TRADING:XINHUA

As The FT goes on to note,

In a worrying signal for global investors with a presence in China, some officials have argued strongly for a crackdown on “foreign forces”, which they say have intentionally unsettled the market.

 

“If our own people have collaborated with foreign forces to attack the soft underbelly of the market and bet against the government’s stabilisation measures then they should be suspected of harming national financial security and we must take resolute measures to subdue them,” said an editorial in the state-controlled Securities Daily newspaper last week.

As SCMP's Goerge Chen details...

 

As China.org further details,

Chinese authorities have held several people, including a journalist, an official of China's securities watchdog and four senior executives of China's major securities dealer for stock market violations.

 

Wang Xiaolu, journalist of Caijing Magazine, has been placed under "criminal compulsory measures" for suspected violations of colluding with others and fabricating and spreading fake information on securities and futures market, Xinhua learned on Sunday.

 

Wang confessed that he wrote fake report on Chinese stock market based on hearsay and his own subjective guesses without conducting due verifications.

 

He admitted that the false information have "caused panics and disorder at stock market, seriously undermined the market confidence, and inflicted huge losses on the country and investors."

 

Also put under "criminal compulsory measures" were Liu Shufan, an official with China Securities Regulatory Commission. He is held over suspicions of insider dealings, taking bribes and forging official seals.

 

According to Liu's confession during the investigation, he has taken advantage of his position to secure an approval from the securities authorities for a public company and help the growth of the company's shares.

 

In return, the head of the company offered bribes worth several million yuan to him.

 

Also, Liu has used insider information from the above-mentioned company and another company and obtained millions of yuan of illegal gains, according to his confession.

 

Liu confessed that he has forged official seals to fake a court ruling on divorce and taxation certificates for his mistress.

 

Xinhua also learned from authorities that Xu Gang, Liu Wei, Fang Qingli and Chen Rongjie, senior executives of the Citic Securities, China's leading securities dealer, have been put under "criminal compulsory measures" for suspected insider trading. They have also confessed to their violations.

 

"Compulsory measures" may include arrest, detention, issuing a warrant to compel a suspect to appear, bail pending trial, or residential surveillance.

*  *  *

Way to go China - "open" those markets up to anyone (as long as they are buying)

 

Charts: Bloomberg

 

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Sun, 08/30/2015 - 21:27 | 6488812 holdbuysell
holdbuysell's picture

I.E. USTSYs continue to be on sale.

Sun, 08/30/2015 - 21:31 | 6488822 myztix
myztix's picture

i thought it was at 6.4.

Sun, 08/30/2015 - 22:06 | 6488909 LetThemEatRand
LetThemEatRand's picture

In Communist China, government tells bankers to support stock market.  In oligarch USSA, bankers are government.

Sun, 08/30/2015 - 22:31 | 6488961 Enki Anu
Enki Anu's picture

In NWO the Khazarian Bankster Warlords tell the Chinese Gov to support
Shamita price crash so the Khazarian Bankster Warlords would be able to buy it back in 6 month for dirt cheep price or else they put 40% tariff on everything they make.
Any question?

Sun, 08/30/2015 - 22:55 | 6489019 Manthong
Manthong's picture

Maybe we should haul executive management from any of the top 50 hedge funds, top 10 money center banks and any of the Fortune 500 companies off to Gitmo should they dare sell any stock for the rest of the year.

No hearings, warrants or trials necessary in the USSA anymore because selling stock in size is now a terrorist act.

 

Sun, 08/30/2015 - 23:02 | 6489046 slightlyskeptical
slightlyskeptical's picture

Unless you are an insider and the company is the one buying your stock.

Mon, 08/31/2015 - 00:24 | 6489187 Lets Buy The Dip
Lets Buy The Dip's picture

That is true. LOL

All I can think is to look for more markets to crash this week. Did you see the VIX chart....hell shit! [see below]

Have a look at the VIX, major panic is about to set in to the market, with VIX showing a BULLISH FLAG, that is what bulls do not want to see. OUCH! Time to push the panic button???

See chart here ==> http://www.bit.ly/1fMcakI 

Mon, 08/31/2015 - 00:36 | 6489200 Antifaschistische
Antifaschistische's picture

Note to China.  Stop worrying about your markets....and start spending effort doing what it takes to make your companies great.  With China's resource power and intellectual power why isn't there a single product leaving China that the world knows as the "best in the world".   We know you hate Japan, but why is it, that Japan can produce the best of everything from Cars to Music Boxes to Tools to engines, etc.  Why?  If you would just fix this problem...the market would take care of itself.  Stop racing to make something that looks just like the good stuff...and actually make something good!  Then, we'll all be willing to buy your countries stock (if we can trust your financial reporting...but that's another issue)

Sun, 08/30/2015 - 23:32 | 6489117 PlayMoney
PlayMoney's picture

Any bets the "confessions" were done at the end of a catte prod?

Sun, 08/30/2015 - 21:35 | 6488826 highwaytoserfdom
highwaytoserfdom's picture

Sum Ting Wong

Sun, 08/30/2015 - 21:39 | 6488834 brucekeller
brucekeller's picture

Ho Lee Fuk, Wi Tu Lo

Sun, 08/30/2015 - 21:49 | 6488862 klayton biggs bee
klayton biggs bee's picture

And a double fuk tu you stoopid jokie....enough is enough!

Sun, 08/30/2015 - 21:47 | 6488858 klayton biggs bee
klayton biggs bee's picture

Stop with the damn chink jokes! There as old as you and your mamas underwear...for christs sake!

Sun, 08/30/2015 - 22:25 | 6488921 Proofreder
Proofreder's picture

They're - proper contraction of they are ...

Chink - derogatory term for Chinese people

Klayton Biggsbee - fuckwad that couldn't finish high school and doesn't understand Tradition.

WTF - Clayton is actually a little funny - for about 6 seconds - fool nigger.

 

Mon, 08/31/2015 - 04:27 | 6489353 klayton biggs bee
klayton biggs bee's picture

"Tradition"?  Of what? Telling the same ole stoopid Chinese joke? Klayton will pass on that! Thank's for the grammar check or usage or whatever the real important stuff you correct. Apply that same special urgency to something a bit more pressing huh!

Sun, 08/30/2015 - 22:51 | 6489015 Freddie
Freddie's picture

Free Jon Corzine!

Sun, 08/30/2015 - 21:39 | 6488832 KnuckleDragger-X
KnuckleDragger-X's picture

It looks like China is at the point of just throwing shit against the wall to see what sticks, unlike our fair, honest and open market....

Sun, 08/30/2015 - 21:40 | 6488840 Yen Cross
Yen Cross's picture

  They[PBoC] didn't officially tighten the trading band<> YET.

 So they're using excess reserves and swap lines.

 It's telling, the disparity in offshore, vs onshore Yuan pricing.

Sun, 08/30/2015 - 21:40 | 6488841 q99x2
q99x2's picture

some officials have argued strongly for a crackdown on “foreign forces”, which they say have intentionally unsettled the market.

Take it for what it is worth. Here's a tip: Lloyd Blankfein and Jamie Dimon.


Sun, 08/30/2015 - 22:48 | 6489007 ThroxxOfVron
ThroxxOfVron's picture

Why just arrest the 'Goldman Sachs of China' when you can arrest the Goldman Sachs?

Go big or go home Chi Na!

Sun, 08/30/2015 - 21:42 | 6488845 buzzsaw99
buzzsaw99's picture

growth is always 8.9% or 6.7% or whatever in china. that's totally believable. oh yeah bitchez. good ting i don't reside in china or dem bitchez would be re-educating my mutant ass at this very moment.

Sun, 08/30/2015 - 21:56 | 6488860 nmewn
nmewn's picture

Maybe this is what they had in mind when they printed to the moon in order to build all those Ghost Cities. Somehow I don't think they thought that one all the way through...lol.

//////

lol...XOXOXOX's ;-)

Sun, 08/30/2015 - 21:42 | 6488846 nmewn
nmewn's picture

Well...lol...at least Vice Public Security Minister Meng Qingfeng will have some nice warm tea to sip when he interrogates, ummm, errr, ahhh, admonishes, those "unpatriotic sellers of the Chi-Com governments nationally owned companies" for their lack of confidence in their governance of those companies.

Meanwhile, somewhere in NYC, Thomas Friedman is shouting "Go Meng Go!"...lmao!

Getting the picture yet? ;-)

Sun, 08/30/2015 - 22:29 | 6488955 Proofreder
Proofreder's picture

Minister Meng seems to have had his pointed eyeteeth removed for the photo.

Good try. 

Sun, 08/30/2015 - 22:50 | 6489013 ThroxxOfVron
ThroxxOfVron's picture

That's Meng The Merciless to you, Foreign Trader!

Sun, 08/30/2015 - 23:54 | 6489150 Yen Cross
Yen Cross's picture

  Max Von Sydow is the BOMB!

 Born Carl Adolf von Sydow.

 
10 April 1929 (age 86)

 Flash Gordon theme song


Sun, 08/30/2015 - 21:46 | 6488855 joego1
joego1's picture

I think the only free and open market is my local farmers market.

Sun, 08/30/2015 - 21:47 | 6488859 Unknown Poster
Unknown Poster's picture

Goldman seems to be mongering a rumor that Chinese growth is slowing. Buy Chinese stocks.

Sun, 08/30/2015 - 21:52 | 6488873 nmewn
nmewn's picture

Is the "Vice Public Security Minister" the equivalent of the head of the SEC or the DHS?

I'm getting confused again ;-)

Sun, 08/30/2015 - 22:55 | 6489020 ThroxxOfVron
ThroxxOfVron's picture

CCCFTC ?

PRCFTC ?

Mon, 08/31/2015 - 05:30 | 6489374 nmewn
nmewn's picture

I went with CCCFTC to avoid any confusion ;-)

Sun, 08/30/2015 - 21:58 | 6488882 the not so migh...
the not so mighty maximiza's picture

Comrades unite

Sun, 08/30/2015 - 22:30 | 6488956 richiebaby
richiebaby's picture

I can't wait for the day when the ultimate putz Jim Cramer is locked up and made to squeal on his masters

Sun, 08/30/2015 - 22:32 | 6488964 Omega_Man
Omega_Man's picture

shoot the short sellers.... here too

Sun, 08/30/2015 - 22:49 | 6489011 Ms No
Ms No's picture

Chinese market is going down pretty good right now.  US futures don't look super either.

Sun, 08/30/2015 - 23:26 | 6489096 Yen Cross
Yen Cross's picture

 I'm still trying to process the PBoC balance sheet expansion over the last 6-7 years.

 28 Trillion $usd! I'll bet Krugman and Dudley are having anal rub~downs, going into the London open.

 Long,  South China HLDG. Bitchez

 Forgot the /s

Sun, 08/30/2015 - 23:25 | 6489097 bahaar
bahaar's picture

So what we've learnt is this:

Crony capitalism by any other name (like Socialism with Chinese charaterstics for example) would stink as bad...

Sun, 08/30/2015 - 23:27 | 6489103 lasvegaspersona
lasvegaspersona's picture

How can a rumor be started on a company with no data?

"sell that shit man, I heard...uh  um...well actually I got nothing but they suck worse than this other shit because...um...er...

just sell everyhting...

Sun, 08/30/2015 - 23:28 | 6489105 Tsar Pointless
Tsar Pointless's picture

The end is not nigh. It's here. 

Sun, 08/30/2015 - 23:33 | 6489114 e_goldstein
e_goldstein's picture

 In a worrying signal for global investors with a presence in China, some officials have argued  strongly for a crackdown on “foreign forces”, which they say have intentionally unsettled the market.

Execute them by firing squad and then send the bill for the bullets to Blankfein.

Sun, 08/30/2015 - 23:42 | 6489139 polo007
polo007's picture

http://www.bloomberg.com/news/articles/2015-08-31/china-said-to-ask-brok...

China Asks Brokerages to Boost Market and Buy Back Shares

By Bloomberg News

August 30, 2015 — 10:34 PM EDT

China’s securities regulator asked brokerages to step up their support for share prices by contributing 100 billion yuan ($15.7 billion) to the nation’s market rescue fund and increasing stock buybacks, according to people familiar with the matter.

The China Securities Regulatory Commission gave the order on rescue-fund contributions at a meeting with representatives of 50 brokerages on Saturday, which CSRC Chairman Xiao Gang also attended, said the people, who asked not to be identified because the meeting hasn’t been made public. The regulator encouraged listed brokerages to buy back shares worth as much as 10 percent of their total market value, the people said.

China revived its stock-market rescue program on Aug. 27 after the government’s absence from the market earlier in the week contributed to the biggest two-day selloff since 1996. Policy makers are trying to bolster shares before President Xi Jinping takes the stage in a World War II victory parade this week.

The CSRC meeting was reported earlier by Cailian. The regulator didn’t immediately respond to a faxed request for comment.

Mon, 08/31/2015 - 01:28 | 6489264 Savyindallas
Savyindallas's picture

Brilliant! They're obviously getting their investment advice from Goldman Sachs. 

Mon, 08/31/2015 - 00:28 | 6489188 Md4
Md4's picture

For a government worried about raising the ire of 1.3 billion people (al la Tienammen Square II), they're sure trying awful hard to get the shit started.

Look, China...it's about over. The western consumption boon is fineto. You're breaking down, because we're broke over here.

If you don't stop the heavy-handed crackdown madness, I positively GUARANTEE YOU an economic crash will seem like a luxury problem very, very soon.

m

Mon, 08/31/2015 - 01:25 | 6489259 Savyindallas
Savyindallas's picture

But we're not broke. More QE is coming and bernie sanders will write us all a check to go further into debt. The party can continue as long as the Chinese and others play along. Increase credit card limits, subprime loans for houses, cars, student loans -and hell-why not? Let's do government backed sub-prime loans to all of us for Etrade stock accounts so we can all get rich and pay off all our debts by speculating on the market. That's a great idea no one has been talking about. As long as the Fed has our backs, we can all get rich. This can go on for years-maybe decades. Debt doesn't matter. Debt is good. I'm tired of all this negativity from the ZH crowd. America is a can-do nation  -a Shining City on the Hill, a Thousand points of light. We have a badass military  -we can go in and plunder the wealth of many more countries to help sustain it. They're all a bunch barbarians anyway  -bunch of goddam Muslims and Hindus and Buddhists and such. If anyone gets in our way, we'll just kick their ass and string up their leaders like we did to Saddam and Gadaffi.  This will work, I'm sure of it. Am I not right?  

Mon, 08/31/2015 - 03:22 | 6489308 StychoKiller
StychoKiller's picture

 

 

"...We got a thousand points of light, for the homeless man.

We got a kinder, gentler, machine gun hand!..." -- Neil Young "Keep on Rockin' in the Free World"

Mon, 08/31/2015 - 00:26 | 6489191 Holy Roller Empire
Holy Roller Empire's picture

Yawn. This is so boring. When do the fireworks start?

Mon, 08/31/2015 - 01:18 | 6489252 BellevueTrader
BellevueTrader's picture

When we drop 20+% in one day...and the circuit breakers are broken.

Mon, 08/31/2015 - 02:45 | 6489295 Montani Semper ...
Montani Semper Liberi's picture

The chilling effect on accurate economic journalism has to be enormous. What writer is going to publish a story on any negative economic news when you have the chicom censors looking for a reason to send youto jail for a few years?

 The same goes for stockbrokers and individuals who decide to sell stock at a loss to exit a losing position. As right as the move may be, you're going to think twice and three times about pushing the sell button if it could even possibly result in the "criminal compulsory measures" team knocking at the door. 

 Wouldn't be surpised to see them reach across the pond to serve some of those "criminal compulsory measures" on some brokerage houses in the US.

Mon, 08/31/2015 - 04:18 | 6489344 Midnight Hour
Midnight Hour's picture

Whe you think about it the Chines Stock Market is the best in the World. The Government has made it elegal  to short it or made it a crime to sell at less then the highest price, how can you loose Money in this?

Mon, 08/31/2015 - 06:05 | 6489393 overmedicatedun...
overmedicatedundersexed's picture

how much does israel trade with china? china's main problem is: not enough jews to run it's banks. ship all our jewish banksters to china and we solve 2 problems.

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