China Contagion Spills Over To Hong Kong Banks As HIBOR Explodes To Record High, Stocks Tumble
Chinese stocks are trading at the lows of the day after Overnight HIBOR rates (Hong Kong's interbank borrowing rate) exploded a stunning 939bps to a record high 13.4%. It is clear that banks are utterly desperate for liquidity and/or are extremely concerned about one another's counterparty risk. This has dragged HSCEI down 5% (to its lowest since Oct 2011).
Something just snapped...
Evidently the pressure between On- and Off-shore Yuan was too much for banks to bear...
Smashing Hang Seng China Enterprise Index down 5% to its lowest since October 2011
But US equities are being bid by an invisible hand once China closed for lunch...
Chinese Default/Devaluation risk just jumpe dback above 120bps (highest since August collapse)
As we explained earlier, as Asian markets opened (ahead of the Yuan fix), they were in turmoil with FX markets crashing (JPY rallying as carry trades unwound), equity markets tumbling (Dow, Nikkei, and China A50), commodity carnage (crude and copper carnage) as Gold and bonds were bid. With offshore Yuan sliding ahead of the fix (and Onshore Yuan 3 handles cheap to Friday's fix), CFETS RMB Index dropping below 100 for the first time, and following Friday's 'token' stability, The PBOC decided to hold Yuan Fix practically unchanged for the second day. USDJPY and equity markets jumped on the news, then quickly faded.
We have seen this "stability" before...
Asian stocks collapse to lowest since October 2011...
Chinese media is pushing rumors of rate cuts and urging people that they do not need USD (despite the lines we noted earlier) demanding theyhave more patience... (via People's Daily)
More patience is needed for the Chinese economy which is in a transition period, as it transfers from old to new economic growth drivers while also facing a backdrop of a slowing global economy, the People's Daily reports citing academics. It would be too opinionated to judge that the Chinese economy would suffer a hard landing based on short-term fluctuations as many factors have had an impact on the yuan's recent depreciation and the stock market's falls.
"The fundamentals of many economic crises is the psychological panic problem, and we need to take good care of the market and foster new drivers; conclusions on the Chinese economy can't be made in a rush based on the short-term or partial changes," said Zhang Tiegang, professor at the Central University of Finance and Economics.
Yeah - all psychological.
Offshore Yuan was tumbling before the Fix...
As were Chinese stocks:
- *FTSE CHINA A50 JANUARY FUTURES SLIDE 3%
Of course, The Keynesian have a solution for all this...
- *STIGLITZ: RECENT CHINA MARKET VOLATILITY ISN'T CATACLYSMIC
- *STIGLITZ: CHINA NEEDS DEMAND BOOST TO AVOID DEEPER DOWNTURN
It's that simple eh?!
The reaction to PBOC "stability" is not good:
- *MSCI ASIA PACIFIC EX-JAPAN INDEX DROPS 1.7%, EXTENDING LOSS
- *CHINA SHANGHAI COMPOSITE SET TO OPEN DOWN 1.7% TO 3,131.85
And Dow futures jumped 80 point and then dumped 100...
Chinese stocks are tumbling...
And ChiNext is now down over 21% YTD...
* * *
As we detailed earlier, markets were turmoiling into the China Fix...
China ripples may be turning into tsunamis. As FX markets creep open, something serious must have snapped. The South African Rand just crashed 10% - the biggest single-day drop since Lehman - to new record lows. At the same time, carry trades are being unwound en masse, smashing USDJPY down to 116.75 (strongest Yen in a year). Somebody do something!!!
The South African Rand crashed 10% to a record low against the USD of 17.9169. This 10% collapse is the largest on record outside of the immediate post-Lehman move...
Don't forget - As goes the South African Rand, so goes The World?
Korean Won plunges to its lowest since July 2010...
And Yen is surging...
Smashing Nikkei futures down over 500 points from Japan's close....
As USDJPY tumbles so US Equity markets are slumping...
And crude is carnaging...
Copper flash-crashed at the open and is now retesting...
It appears people were expecting some Chinese intervention over the weekend... and so far have been disappointed.
For now, Gold is bid as a safe haven...
Charts: Bloomberg
(43 votes)
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Are there any job openings?
I can only say 'cool story bro.'
If you're gonna hang out in places like this, wear a badge on your didey
You're with The Fed, right?
Jinkies!
2016's best post. Thanks Scooby!
Fred, is that you? Surprised you just don't leave all the heavy lifting to the ugly chick and the stoner, and just bang the super model as often as you can. For christ's sake, man, you have a VAN.
If the chevy is rockin, dont come a knocking.
I was just about to hit the crib but decided to take one last look at ZH. Now my sides hurt so much from laughing and my blood is starting to circulate again it'l probably take me an hour to fall asleep.
Thanks boyz, good finish for the day.
@CPL
that shit you wrote there was fucking classic! lol
Dammit I read this entire post....need my 60sec back pls
In some universes, Velma looks like this:
http://www.liveforfilms.com/2013/06/10/cool-cosplay-velma-from-scooby-doo/
Ask the band to play "Nearer My God To Thee" or if you prefer "The Good Ship Lollipop".
See Bitchez! some of you wanted to be all positive and doubt the level of fubar about to be unleashed on us all with your +400 by Friday bullshit. HOLD ON TO YOUR FREAKING ASCOTS LADY BOYS.
Brandy snifting and cigars in the lounge, gentlemen!!
Martin armstrong just wrote 68350 was resistance to the dalla and would signal a rise in the dalla and a global meltdown
@stant : Do you have the cliff notes version? What the frick does 68350 mean?
The yaun to the dalla ^ the chart above says 6700 and change? Or http://www.armstrongeconomics.com/archives/41740
SOB! Save our BRICS!
Yeah, it seems rather coodinated that the BRICS currencies are all racing to the bottom. Perhaps it allll a coincedence.
All this chatter about bottoms is getting me horney.
Welp! Back to my bunker.
Hookers and blow beats these markets any day of the week.
I miss the Old Days, when Wall-Street was fueled on Hookers and Blow!
it is still the same.....the public gets screwed by Wall Street.....but this time, the Fed is alongside Wall Street in arranging the screwing.
and for the public, things still Blow, as they lose their jobs, their homes, and their hopes for the future of their indebted kids and grandkids.
Now all they do is....
Hey, you changed your picture again!
.....now all they do is eat dead babies
Look what this potential Lottery winner claims he would buy should he win.Fast forward to 50 Sec:
https://www.youtube.com/watch?v=R6EHIi7vZg8
QUICK! We need Al Gore, Shrillary and BillyBob. And those damned Chinese Monks! QUICKLY!!!
Speaking of hookers and blow, can someone on ZH pls post the historical price of a Midtown lunchtime rub'n'tug, plus the take-out price of an 8-ball?
From what gender?
...or do you care?
Some say dudes give the best blow jobs!
My old door gunner called it 'Home field advantage'.
Some say back door gunners play in the back field.
Don't know ab
Out the rub and tug but 200 gets the 8 ball delivered
The Chinese will end-up owning it anyway... SA, that is...
Gee, I wonder if Hollywood will protest when they clean out the trash and throw away the Mandela statues? Nope.
And re-pour the concrete out front.
Dear Overlords,
This shit with the markets is getting way too sloppy.
...& you need to bring the general level of violence down a notch lest you start to take delivery of some yourselves, quite soon and in proportion to said level.
I expect more out of my central planning oligarchs, dammit.
Get it together or we are going to outsource this contract.
-Folks
Hey man, just wait until the algobots become self aware
Kyle Bass - Margin call on line 2
Nah, he's got it handled. As he will tell you, timing is all-important, as well.
However, still a great comment.
If I win the new zillion dollar lotto I am getting some face time with this guy.
This is your Captain speaking. Just a bit of turbulence, folks, though we will be suspending beverage service until further notice.
Might be better to increase the beverage service.
yeah...
More vomit to clean up. Good idea.
Long Barf Bags...
Considering women are the majority...
Might be a good idea.
Keynesian pilot:
Due to turbulence we will be temporarily suspending the laws of thermofluid dynamics. We will get more lift by going slower, changing the wing attack angle and we will broadcast our altitude regularly. Do not worry if it looks like the ground is getting closer. It is not. Trust our altitude reports.
We should be arriving in the next 30 minutes but if not, we will arrive eventually. We will arrive even if it appears we are going the wrong way or to a different airport. We are using route derivitavies and synthetic course plots.
In any case, you are in good hands. We are experienced at piloting and we only crash 25% of the time.
Now relax, enjoy your free beverage and watch the Kardashians on your monitor. I hear they are wearing less than usual today.
We know you did not have a choice of airlines today but we thank you for flying and if you don't like it...well, it really does not matter.
I read that as "Kenyan pilot"...
Question - was the world created before or after Lehman?
Lehman = Big Bang