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
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lots of trading accounts are going to get Muhdicked this week
Go Hong Kong!
Time for the government in Hong Kong to start putting up those "Foxcoonn" type nets around all of the bank buildings ...
If they have the circuit breaker back on I think we may see it tonight. Hang Seng is trying to breach 3% now too. Seng CCI is pushing for 4%.
How can they only be down a point
Financial Futures are up on Yahoo. Hope they're green by opening. Green by afternoon would be good, too.
If it's now, life will change, for the worse.
This may help, Yahoo Fiancé Sucks ....
http://www.investing.com/indices/major-indices
Fellow ZH's turned me onto this site a while back, great real time futures quotes and overall market data.
According to this, the whole world is down.
This China shit sucks.
I took my mind off it by buying a cheap American made single action .22 LR pistol and driving out to the Brazos River turnaround and shot it using American made ammo.
I did not think about the end of days during this time.
CNBC's 2nd to top headline: "Pro sees oil tripling by 2018". I am sure there is something about long copper somewhere in there.
Yeah go long copper - Tesla coils will be all the rage once this is over !
.
I love China ripples turning into tsunamis in the morning.
Does anybody think they China may run out currency controls with everybody running to dollars? I know they entered a currency basket recently.
On another note, there is no way in hell that the gold price is reflecting that Asains are buying gold hand over fist which they most certainly are right now. So rediculous!
US Futures have just had a Benny Hinn miracle
This is impossible because the priests and followers of the shiny-shit cult have prophesized for decades that the USD is worthless and doomed to be replaced by chinese and russian fiat because their regimes are so much more clever than the idiot American regime and have accumulated large piles of magical shiny-shit.
I must be imagining the surge in my US treasury portfolio, ON TOP of the interest payments I receive.
Well, yeah, the Chinese Thieves Dens, er banks, are having liquidity problems.
You would too if the local enforcer knocked on your door and ordered you to buy stocks with every nickel you had in the drawer and forbade you from ever selling them back to some greater fool.
Bang Ding Ow
ZH is more knowing in reporting detail, but I did say HSBC et al were the most urgent problem.
Bank run. Margin calls.
Globalisation ties every climber to the same rope. Rise and fall together. Nasty outcomes on the way down.
Banksters don't care what happens to mainland China, but institutional investors in HK are going to be burnt, and that will affect all markets.
04:27 GMT. Good luck when markets open in the West.
US PPT finally earning it's pay. Is it undertime if ya work on Sunday, or still overtime?
Don't put a comma before the word 'or', and it is its, not it's. Minding markets encounters pedants ;-)
Apart from that, play on...
G'luck.
HK is the most liquid financial center of the East and where's the actions to defy China's centralized interferences to its real and financial economies. China's balance sheets are the oilfields for these bonfires fueled further with more controls and now at the crisis fire douse stage. Through the global digital air waves the contagions spread to yet more economies with inflammable balance sheets that amplify the fires within. Keep going with the controls under girded by the egos that attempt to enforce obeisance from global markets (LOL). Opportunities abound with so many resets in real time.Don't waste these concurrent meltdowns.
Ready. Steady. Do.
FFS, guys....lighten up!!!
ANYWAY, the denial is official, so expect an outright 15% yuan devaluation in 3...2...1.
The wingspan of the beautiful Black Swan can reach 60 inches. It's majestic curved neck allows it to gracefully search for food. ?????
To hell with stocks. Is gold going up or not? And how soon?
Burn this shit to the ground...I'm ready for it. I don't really care if others are not. I'm also ready to face whatever may come. I have a feeling I'm not the only one who feels this way, on ZH or just ordinary everyday Americans. The tension is palpable. People are sick of it.
Only a fraction of the US people are prepared for this coming event. Maybe in the 5 to 7 million range.
Me personally, I want the status quo to keep going a little longer for to keep up the preps so that when his whole thing does un-glue, mind you, we have maybe until the late spring before a massive crash, NOT CORRECTION.
I suspect that the entire northern hemisphere will be in a super depression by the end of 2016 with a minimum 15 to 20 year re-stabilization curve.
Best hope you live on the coast and have at the minimum of a solid long range sail boat you can stay out for extended periods or be able to travel to safe zones. The US is going to go through some serious death throws.
If 1929 to 1935 was any indication, 8 million died alone from the depression then. This time, this is a Rome collapse moment on a multi continent dual hemisphere scale.
The southern hemisphere is looking pretty good about now. Maybe a nice little fishing village somewhere :-)
What kind of a crazy, fucked up financial world are we living in when the currency of a country that has a 350% debt to GDP ratio (Japan) rallies when the entire world economic system, which it needs to pay the bills, is dead in the water.
This whole thing can't continue. It is simply FUBAR'd
Hibor is meaningless as no one borrows RMB at such rate unless forced to at gunpoint. This is a desperate move to curb speculation??? Yuan is about to be floated because of outflows are too high and find its natural level.... whatever that is? 8-9 RMB/$. This will solve China's stock market problems and export China's troubles overseas... Fasten your seatbelts!
Everyone relax. We all know that Asian cultures, especially Chinese and Japanese, are known for inscrutable wisdom and taking the long viee. Everything is under control. Move along. At least that's my slant on it.
Gold up about $4
It's the currencies priced against gold Trading Troll, not the other way around. How many (dollars) it takes to buy the unchanging ounce.
...and it's looking like it's going to take more of them...
If you like your free money, You can keep your free money.
Get the deer in headlights ready for tomorrow. We could use some Asian deer also, probably not PC though.
Asian deer can't see lights because......
Boom!
China:the road to perdition
http://goldenopportunitytrading.blogspot.com
Break out the Vaseline!
Where is Helicopter Ben to save them
Please consider this as a question from a certified beginner concerning the Shanghai market : could the periods 12/1/2014 - 2/2/2015 - 9/28/2015 - 1/11/2016 give the image of a big-ass Head and Shoulder ?
If not, what would be needed for this chart to show a real H&S ?
Thanks in advance.
Whoa. What a thread. What phase is the moon in?
There is a member here, I believe, who mis-spelled their handle. Dyslexic on the first two letters.
Who cares anymore! David Bowie Just Died! :(
@KuriousKat - that sucks, I agree. But at least he will not have to witness the downfall of modern capitalism in its current form...
That should be an advice for those world oligarchs.
Die just like Bowie did with dignity.
Here are some signs of a coming recession.
1. Investors in high-yield bonds are expecting to see their first negative return since the start of the credit crisis in 2008.
http://www.marketwatch.com/story/deteriorating-junk-bonds-flash-warning-signs-for-stocks-2015-12-07?dist=afterbell
2. Factory orders continue to drop
http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row
3. Default risk spikes
http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high
4. M&A set record
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
5. Iron ore prices tumble
http://www.marketwatch.com/story/iron-ore-prices-keep-crashing-adding-to-global-growth-fears-2015-11-30
6. Baltic dry shipping index tumbles
http://www.marketwatch.com/story/shipping-index-falls-to-all-time-low-stoking-fears-about-global-growth-2015-11-19
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
I wish those greedy chinese tossers buying up properties a very fucking loss year.
Uh Oh. When the interbank lending rates [HIBOR] rockets upward, it means banks no longer trust each other on 72 hour loans. This is what happened just after Lehman. Im thinkin Jack Lew didnt get much sleep last nite. Xi Jinping either for that matter. China needs to stabilize, and quickly, or we're all fudged.
my mother in law is a useless idiot