China Regulator Instructs Companies To Delay Bad Results Until After Congress

Tyler Durden's picture

In the U.S., equity markets have officially reached the phase in the bubble where fundamentals are almost entirely irrelevant and stocks trade up irrespective of whether company earnings are positive or negative...in technical terms you could say we're in the later stages of the BTFD phase of the economic cycle. 

That said, as Bloomberg points out today, regulators in China still have to be a bit more 'creative' to quell market volatility during important national events.  As such, the China Securities Regulatory Commission has sent out a notice to public companies kindly requesting that they delay their earnings report during China's Communist Party Congress...but only if they're going to be bad.

China’s securities watchdog has asked some loss-making companies to avoid publishing quarterly results this week as authorities seek to ensure stock-market stability during the Communist Party Congress, according to people familiar with the matter.

 

The China Securities Regulatory Commission made its requests via the country’s stock exchanges, the people said, asking not to be named as they’re not authorized to talk to the media. At least 17 Shenzhen-listed companies announced delays to their earnings reports from Oct. 20 to Oct. 24, up from three during the same period last year, exchange filings show. The CSRC declined to comment, while China’s bourses didn’t respond to faxed questions.

 

Chinese regulators have stepped up efforts to quell market volatility during the twice-a-decade congress, a highly-choreographed reshuffling of the country’s top leadership that’s expected to shape President Xi Jinping’s influence into the next decade. While the smallest equity swings in 25 years suggest government interference has worked, critics argue that China’s leaders have backpedaled on a pledge to give market forces a more central role in the world’s second-largest economy.

And, to our great shock, the strategy seems to be effective:

Of course, you can't be too blatant in your attempts to control markets so a lot of companies have suddenly decided they need to "finish checking earnings reports" while others simply said they "have a lot on our plate to deal with" and can't be bothered by silly regulatory filings at this point in time.

Shandong Minhe Animal Husbandry Co., which farms chickens, and Shenzhen Hifuture Electric Co., an electrical equipment maker, were among the Shenzhen-listed companies asked to withhold their results this week, the people said.

 

Shandong Minhe, which estimated a loss for the Jan.-Sept. period in an Oct. 13 filing, said on Sunday that it hasn’t finished checking the content of its earnings report and will postpone its release, previously scheduled for Tuesday, to Oct. 30. Shenzhen Hifuture, which also projected a Jan.-Sept. loss on Oct. 13, gave this explanation for a similar delay in a Sunday filing: “We have a lot on our plate to deal with.”

 

Shandong Minhe declined to comment further when contacted by Bloomberg News. The stock dropped 1.1 percent on Tuesday and is down 35 percent this year. Shenzhen Hifuture, whose shares have been suspended since January, didn’t immediately reply to an email.

 

Most of the 17 Shenzhen-traded companies that announced delays to their results had previously predicted losses or steep earnings declines, filings reviewed by Bloomberg show. Ten of the companies declined on Tuesday, while one was little changed and one rose. Trading in five of the stocks was suspended.

Of course, now that the cat's out of the bag, we're going to go out on a limb and suggest it might be a safe bet to go ahead and unload any company that delays earnings reports over the next week or so...just a hunch.

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overbet's picture

So we should short anything that doesnt report on schedule based in China. Thanks Xi

johngaltfla's picture

How dare they! Who do they think they are, the Fed?!?

knukles's picture

Ah, who cares whether they make or lose money; it's all the people's anyhow.

 

nmewn's picture

Government-Sponsored-Enterprises.

It just sorta rolls off the educated linguists tongue as something OTHER THAN government condoned cronyism...dontcha think?

Hey! Hows my Tesla stawk doing? I haven't checked lately ;-)

vato poco's picture

"two distinct pressure points in the asian mindset: confusion and embarrassment" - Ludlum (IIRC). they will do literally *anything* to keep from losing face. seems like a crafty fellow/country/negotiating team might consider exploiting that weaknesst ... 

asteroids's picture

So, it's time to buy $YANG?

allamerican's picture

guy could shit in bucket and call it bitcoin, same goes rocket turd.

bankbob's picture

I believe a lot of bad news is coming out after the 19th Peoples Congress.

Muh Raf's picture

Nothing new here. Just like all that failed Chinese municipal debt, the government refuses to allow bodholders to force recovery ergo debt is not officially in default. 

Rex Andrus's picture

All ahead! Aye aye, captain!

Rex Andrus's picture

Trick or Treat

Black Halloween

Jump you fuckers!

spag's picture

how is this different from your boss telling you not to cause any issues or call him while he is on vacation for the next two weeks?

 

 

any_mouse's picture

A government regulator who works for the benefit of the government.

I am shocked. Shocked, I say.

China is no different than the West.

The West is no different than China.

USA has Monroe Doctrine. The Western Hemisphere is under protection of the US MIC.

China has declared similar, but differently, for the South China Sea.

Difference? There is no America Sea.

Counterpoint: All continental land masses in the Western Hemisphere have "America" in the names. God predestined United States of America to be his Empire.

That's why the USA calls itself "America". Disinformation and Deception.

Let it Go's picture

All bad news has been brushed aside.

China is coming off its 19th National Congress where it is all about a "new era" for China but under the surface, all is not well. It is difficult to ignore that China's central bank has warned extreme credit creation and trouble in the shadow banking system could lead to a full-blown financial crisis.

Recently Zhou Xiaochuan, the governor of the People’s Bank (PBOC), spoke of “fierce market reactions” and a possible Minsky Moment, the tipping point when credit cycles break and euphoric booms collapse under their own weight. The article below looks deeper into this situation and Japan's involvement.

http://brucewilds.blogspot.com/2017/10/china-china-china-it-is-all-about-china.html

HoPewGassed's picture

Yo Bruce, take your own advice: Let it Go

HoPewGassed's picture

"In the U.S., equity markets have officially reached the phase in the bubble where fundamentals are almost entirely irrelevant and stocks trade up irrespective of whether company earnings are positive or negative...in technical terms you could say we're in the later stages of the BTFD phase of the economic cycle.  "

I think General Electric would disagree. They are not alone. 

Besides, wait 'til the bond market starts to really blow up.  Equities are gonna hit the f'in moon, and beyond.  Just be sure to trade back into some mobile, privately held asset of actual value before they come back down. 

But, at least the Chinks and other BRICS are willing and able to set up and run honest markets.  Bwaaaaahahahahaha!  

"At least 17 Shenzhen-listed companies announced delays to their earnings reports from Oct. 20 to Oct. 24" - leading indicator for a short, or at least to get the hell out of those?