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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The Danse Macbre of the currencies has begun. Again.
Kaffirnomics?
Kafkanomics
Shouldn't the second graph be USDZAR?
zardoz:
http://www.imdb.com/title/tt0070948/
Right hand scale changed--never mind. Although it is inconsistent with the USDJPY graph.
Get lots of popcorn before the trading week begins.
I think its going to be an interesting week ahead as well.
That assumes the shelves aren't empty.
Straight. Down. 5-6-7...
...10...
-81 Dow futures open,how will they work a usd/jpy save today?..
Cookies for everyone!
The futures always accurately tell the story at opening bell but the later day ramps, announcements and algo trading make it a crap shoot.
Great news! It looks like I can buy some shares of DRDGold on the cheap.
Mine tailings! Who knew?
Montani, The largest gold nuggets found in Alaska in the last few years were from tailing piles, some over 10 pounds.
I've said it before and will again tonight. I love watching "Carry Trades" unwind. " carry trades are being unwound en masse"
Perversions of real economy economics, carry trades are speculator's energy source, so let their energy be drained. There are Carry Trades being used to prop up false price signals and pervert price discovery. Here's hopping somebody in Hedge Fund land is losing their asses tonight.
Apparently you are applying North Korean economics to your comments...
here here, i will drink to that
It's "hear, hear". But I'll drink to that, too.
well you know yeah right, well yeah
We've been watching the $/yen push the equity indexes around for a while. If Dippy buys without confirmation from it, he's going to wish he hadn't. Right now it looks like hammered hell...
http://tos.mx/CkCTA9
Jack: it's guaranteed that more than just one or two hedge fund managers will be pulling an all nighter while drinking straight vodka and shitting blood.
South Africa rapidly becoming another failed black african state!
Detroit South?
The Pretor family has endorsed changing the name of Pretoria. They don't want their name associated with the shit hole the niggers have turned it into.
Please define "Rapidly" I can be a billionaire if they keep it up. (and they will)
The United Kingdom is also well on the way to being another failed Black African European State!
Donkey Kong?
First they took 20'000 Ton of our Gold and printed $20 fiats representing each ounce which then they lend it back for Usury ( Interest) .
May the spirit of Truman remain in Hell indefetaly.
Since they are the only ones allowed to print, we will always remain in debt until we go broke, Rinse and repeat again until they own the Earth entirely.
It is time to Print money with Gold enbeded in it.
Let the Sun shine so the vampires die so humanity ends this cancer forever.
Long live GOLD
"It is time to Print money with Gold enbeded in it."
That's been tried many times before (gold coins), but it doesn't stop debasement. The problem isn't the content of the money, it's the character of the people who issue and control it.
Right.....I'll take gold please.
Relax...Doh will be up 300 points tomorrow and hovering around 18k by the end of the week.
All is awesome! Didn't you hear?
Long - South African refugees!
The 1% ers are cashing out !!!
They always get out first..
Only stupid people are staying in this market !!
How do you know?
It's beginning to look a lot like Christmas!
Wrong, only stupid people are staying long in this market! FIFY
today was a bad day to give up drinking, as will be tomorrow and the next day
Why no ZH article on the escalation in Oregon yet??
Its like the remote for the matrix got scrambled or sometin...the money and the news is gone!
Hurry up, Bill and Hillary need a distraction!
Dow Futures Tumble???? down 73pts. right now. Hardly a "tumble" FU ZH - you chicken little mthrfkrs
Now down 140.
its all ok PPT is still with their hookers and boy toys. Tommorw morning they will ready for the fight
I expect they'll make the effort. China PPT up to bat first though.
i hope i can stay conscious for that
Yes, ZH needs to employ some standards. Haphazard, misleading terminology sucks. Expectations matter. Enough messing with our heads. Here's a first stab:
Skyrocket +5%
Soar +3%
Spike +2%
Surge +1.5%
Climb/Jump +1%
Gain +0.5%
Lose -0.5%
Slide/Slump -1%
Dip/Flail -1.5%
Dive/Plummet -2%
Careen -2.5%
Break/Tumble -3%
Tank -3.5%
Dump/Plunge -4%
Implode -5%
Collapse -6%
Freefall -7%
Crash -10%
can we use "Holy Fuck" for both +15% and -15% ??
Friendly amendment.
'Hory Fuck' for the nightshift.