China Orders No Market Turbulence Ahead Of Party Congress

The most important event in China in five years is about to take place, and Beijing isn't taking any chances.

Ahead of the Communist Party’s twice-a-decade congress - an event so massive that according to Bloomberg "nothing escapes its pull" - which is slated to start on October 18 in Beijing, regulators have made it clear to the nation’s top brokers, bankers and financiers that they don’t want to see any major turbulence in markets.

In a repeat of the fiasco that followed the bursting of China's equity bubble in the summer of 2015 when Beijing effectively nationalized the stock market, and went so far as to throw prominent hedge fund managers and assorted "speculators" in prison, the China Securities Regulatory Commission has ordered local brokerages to "mitigate risks" and ensure stable markets before and during the Communist Party’s leadership congress next month, according to Bloomberg. Additionally, to leave virtually nothing to chance - and to have ready scapegoats in case someone does in fact sell - the CSRC also banned brokerage bosses from taking holidays or leaving the country from Oct. 11 until the congress ends.

Brokerage bosses were told to avoid travel of any kind from Oct. 11 until the congress ends, including business trips.

 

Luckily for them, China’s national day holidays are coming up in the first week of October. Local markets will be shut for an entire week, providing plenty of time to recharge for the congress.

Since the congress, which is expected to replace about half of China’s top leadership, is of paramount importance to President Xi Jinping who will use it as a foundation to cement his influence into the next decade, nothing is allowed to spoil the optics of supreme control at this critical moment.

And while China routinely takes steps to reduce market swings during key political gatherings, the travel ban on brokerage chiefs illustrates how seriously regulators are taking next month’s meeting, according to Bloomberg.

Still, the news will hardly come as a surprise to most market participants, and explains why Chinese markets have already rallied significantly this year amid expectations of government support, while equity volatility has tumbled to the lowest level in over 2 decades. The Shanghai Composite Index touched a 20-month high on Tuesday, while the yuan has strengthened 6.4% against the dollar this year.

In addition to the travel ban, China's regulator told brokerages and futures companies to check for risks in their liquidity, operations and financial health, effectively warning that it does not want to see any selling. The regulator also ordered firms to assess their information system security and credit risks and report their findings before October, Bloomberg's sources added.

Of course, with so much focus on how effective China will be at keeping its equity markets growing at a steady, controlled pace and avoiding turbulence ahead of the critical summit, anyone hoping to make a political statement against the Xi regime - whether domestically or offshore - could do so simply by causing even a modest market correction sometime in mid-October, especially since even the smallest spike in volatility could lead to a panicked selloff in light of such an unexpected move.

Comments

GUS100CORRINA TeamDepends Sun, 09/17/2017 - 20:58 Permalink

China Orders No Market Turbulence Ahead Of Party CongressMy response: I wonder what GOD has to say about the matter? Below is an 1894 prophecy from a Jewish Rabbi.  Note that the 2nd half of the prophecy has been fulfilled, but the 1st half has not been fulfilled which references great damage to the kings of the east. It would seem CHINA is setup for a great fall.One week before the solar eclipse transversed the continental US, Breaking Israel News was the first news service to publish an article about a prediction in the Yalkut Moshe, written by Rabbi Moshe ben Yisrael Benyamin in Safed in 1894. Rabbi Benyamin predicted that when a solar eclipse occurs at the beginning of the Hebrew month of Elul, as this one did, “It is a bad sign for the other nations, bringing great damage to the kings of the East, and bringing great storms and death to animals.”

In reply to by TeamDepends

BringOnTheAsteroid GUS100CORRINA Sun, 09/17/2017 - 21:12 Permalink

Predictions seem to work because so many are made and then we can use technology to find retrospectively the ones that seem to be closest to the mark. You do realise that the future is unknown don't you? You do realise that magical powers don't exist don't you? I'll make a prediction. There will be a third world War. You see how I misused the word prediction. What word should I have used? Go on, have a "guess".

In reply to by GUS100CORRINA

SilverRhino Sun, 09/17/2017 - 20:41 Permalink

The fucked up part?   Communist Party members to Party Congress seats; they have BETTER representation than American Citizens to House of Representative seats. 

hanekhw Sun, 09/17/2017 - 20:43 Permalink

I think Obama ordered the same thing in 2016 just before the Democrat National Convention and everyone agreed except Bernie Sanders who insisted on a new house first.

Hyjinx Sun, 09/17/2017 - 21:07 Permalink

These slants are too funny!  I can't wait until their carefully crafted house of cards implodes someday.  Very glad they removed themselves from the crypto markets as well.  Don't have to worry about what is going on between 8 pm EST and 8 am EST anymore with their incessant pumping and dumping.