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China Economic News
20-12-2016, 11:28 PM, (This post was last modified: 20-12-2016, 11:30 PM by BlueKelah.)
Post: #721
RE: China Economic News
(20-12-2016, 10:38 PM)weijian Wrote: Not exactly unsurprisingly for China, a place where no factory owner trust another, or they are sure that home-made products look good on the outside but are definitely inferior on the interior. But then again, authorities are quick to quell it under control with all the tools they have at their disposal since this is mainly onshore driven.

China Bond Markets Roiled by Rumors, Fed Rate Increase


(Beijing) — Several mutual funds in China suffered huge selloffs amid a bond market crash Thursday, and the funds scrambled for money as most banks tightened lending to non-bank financial institutions. At 4:45 p.m. on Thursday, 15 minutes before the central bank's interbank high-volume payment clearing system closed, several fund management firms were still looking high and low for cash to pay panicked investors who were selling their money market funds.

http://www.caixinglobal.com/2016-12-16/101027840.html

The "tools" at their disposal can't do much sometimes, especially if there is a big change in sentiment. The prevalent trend now is for capital flight out of China and Hongkong and other EM back to USA. RMB to USD is already 6.95 despite CHina trying to stabilise things over the past few days. I expect by year end we will see RMB7 to USD. And when the $50k USD thing reset in Jan, China will face another round of outflow making things more jialat. 

The smog in their major cities wont be helping sentiment either.
China on second red alert as smog smothers cities, stops flights, closes roads
Beijing: Hazardous levels of smog covering an area more than twice the size the state of Victoria has blanketed northern China, prompting dozens of cities to issue pollution "red alerts" shutting schools, factories and disrupting flights.

In the year's worst air pollution episode, more than 200 million citizens across six provinces were experiencing hazardous levels of smog, with a further 260 million experiencing "heavy" pollution, Greenpeace said.

http://www.theage.com.au/world/china-on-...teuz4.html
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21-12-2016, 08:18 AM, (This post was last modified: 21-12-2016, 08:18 AM by weijian.)
Post: #722
RE: China Economic News
Again, it isn't suprising that things aren't bought to extremes in China. Toeing the party (boss)'s line is all that matters.

Soccer Investment Binge in 'Bubble' Mode, says People's Daily

(Beijing) — A recent Chinese investment frenzy in domestic and international soccer teams has all the markings of a bubble, the official People's Daily said, a year after President Xi Jinping called for more efforts to support the game at home. Despite its high popularity among sports fans in China, soccer has failed to develop in the country due to lack of a culture to support the sport at a grass-roots level. The Chinese national team seldom qualifies for the World Cup tournament held every four years, and the Chinese Super League is frequently marred by allegations of corruption and mediocre play.

http://www.caixinglobal.com/2016-12-19/101028415.html

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21-12-2016, 05:38 PM,
Post: #723
RE: China Economic News
(21-12-2016, 08:18 AM)weijian Wrote: Again, it isn't suprising that things aren't bought to extremes in China. Toeing the party (boss)'s line is all that matters.

Soccer Investment Binge in 'Bubble' Mode, says People's Daily

(Beijing) — A recent Chinese investment frenzy in domestic and international soccer teams has all the markings of a bubble, the official People's Daily said, a year after President Xi Jinping called for more efforts to support the game at home. Despite its high popularity among sports fans in China, soccer has failed to develop in the country due to lack of a culture to support the sport at a grass-roots level. The Chinese national team seldom qualifies for the World Cup tournament held every four years, and the Chinese Super League is frequently marred by allegations of corruption and mediocre play.

http://www.caixinglobal.com/2016-12-19/101028415.html

There you have it, another avenue for them to have capital outflows Big Grin

The day Chinese buy up Man U will be the day i stop watching EPL.
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21-12-2016, 06:43 PM,
Post: #724
RE: China Economic News
The Fed Puts China in a Bind
https://www.bloomberg.com/view/articles/...-in-a-bind
You can find more of my postings in http://investideas.net/forum/

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23-12-2016, 04:11 PM,
Post: #725
RE: China Economic News
USD 1 : RMB 6.94 today. Slowly inching up to 7 liao. Cloudy bond market and cloudy skies for the commies this month.

Alibaba Fintech Affiliate Tripped Up by China Bond Default

By
James T. Areddy
Updated Dec. 22, 2016 7:36 a.m. ET
0 COMMENTS
SHANGHAI—A $45 million corporate default in China this month is leaving 13,000 investors wondering whether they will be repaid and online powerhouse Ant Financial Services Group fielding uncomfortable questions about the quality of the investments on its platforms.
The fallout from a default by Cosun Group illustrates the complexity of business relationships in the country’s booming but largely unregulated financial-technology sector, which has channeled massive amounts of cash from individuals’ savings into loans to businesses.
Cosun, which makes mobile phones and was founded by Chinese telecommunications tycoon Wu Ruilin, this month issued notices that it would default on high-yield debt products that had been sold online two years ago to ordinary investors through Ant, a financial supermarket linked to Alibaba Group Holding Ltd. that also handles the e-commerce giant’s online payments.

At issue is a debt-issuance program under which Huizhou, Guangdong-based Cosun raised $166 million online through Ant. At least four firms involved in the program are trading accusations about responsibility to investors, according to their statements and an investor contract reviewed by The Wall Street Journal.
The two defaulting Cosun entities, which use the group’s Chinese name Qiaoxing, issued identical one-sentence statements citing “recent tight liquidity.” A spokesman for Mr. Wu couldn’t be reached and he didn’t respond to calls to his mobile phone.

------------------------------------------------------------------------------------------------------------------
China’s Bond Warning---
Beijing is learning about bond vigilantes. Last Thursday, after the U.S. Federal Reserve raised interest rates and projected more rises next year, China’s bond market fell out of bed. Investors are realizing that despite the government’s best efforts to prepare and isolate the domestic economy, China remains vulnerable to a stronger dollar.
Bond trading had to be suspended briefly on Thursday until the People’s Bank of China injected about $22 billion into the money markets to calm nerves. The PBOC also extended emergency loans to financial firms to encourage them to keep trading, a positive sign that the authorities have learned from their mistake of suspending stock trading after the June 2015 stock-market crash. But corporate-bond yields continue to rise and new issuances have been cancelled.
Government interference had pushed China’s bond market into bubble territory over the past two years. Beijing encouraged companies to issue bonds to reduce their reliance on bank lending, while prodding others to buy them. The authorities also rescued troubled companies to prevent them from defaulting, which has led to a fundamental mispricing of risk that will make the correction all the more painful.

As always, the bursting of a bubble reveals who was swimming naked. Last week, brokerage Sealand Securities defaulted on a bond-financing transaction allegedly made by a rogue employee. Rumors are also circulating that investors are pulling their money out of funds holding bonds. Firms that used high leverage to deliver promised returns now face margin calls.
The larger question is whether China’s real economy is itself a bubble. According to official figures, bank lending and social financing are growing at roughly double the rate of GDP. Total debt now stands at 260% of gross domestic product, up from 154% in 2008. That doesn’t count the trillions of dollars in loans that banks have classified as “investment receivables” and other such dodges.
China’s central bank tried this year to tighten credit, but its power is limited. The People’s Bank of China shares oversight with the China Banking Regulatory Commission and China Securities Regulatory Commission, an arrangement that allows financial institutions to move assets around to deceive regulators. Powerful interests within the government also want to keep the money spigots open to hit growth targets.
But questions about the durability of that growth are increasing. Easy money has eroded productivity. Companies evade capital controls and move their money abroad into dollars. Beijing’s foreign-currency reserves, while still massive, shrink month by month. Keeping the yuan from devaluing too quickly will require raising domestic interest rates, which will hurt growth and cause some companies to fail.
Even though the Chinese bond market doesn’t price risk accurately, it still reflects interest-rate expectations. Last week’s mini-tantrum suggests investors understand that China’s central bank won’t be able to keep rates low if the Fed carries through on its promised tightening. A stronger dollar is set to test China’s financial institutions and its real economy.
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23-12-2016, 04:16 PM,
Post: #726
RE: China Economic News
and everyone else is worried about holding Yuan.

https://www.bloomberg.com/news/articles/...n-at-least

One Yuan Now Buys Just One Hong Kong Dollar -- in 7-Eleven
by 
Emma Dai

December 23, 2016, 2:00 AM GMT+10 December 23, 2016, 12:23 PM GMT+10

  • Businesses are growing reluctant to hold yuan, Daiwa says

  • Yuan is a way off parity on foreign exchange markets
In a sign of how far confidence in China’s currency has fallen, 7-Eleven stores in Hong Kong are valuing the Chinese currency at par with the city’s dollar.
Just three years ago, one yuan fetched 1.28 Hong Kong dollars on the foreign currency market. While China’s currency would need to fall at least 12 percent to reach actual parity with the Hong Kong dollar, the exchange rate offered by the city’s largest operator of convenience stores shows how depreciation pressures are making the yuan less attractive to hold.
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24-12-2016, 11:17 PM, (This post was last modified: 24-12-2016, 11:19 PM by CY09. Edit Reason: edits )
Post: #727
RE: China Economic News
One interesting point is that while China is devaluing its currency, on the other side of the Pacific, US president Donald Trump is trumpeting that China is a currency manipulator and is artificially devaluing its currency.

If Trump does impose tariffs eventually and Janet Yellen keeps increasing interest rates, these may cause China's trade and capital accounts to deteriorate; weakening China's foreign exchange reserves. And China will find it hard to increase interest rates to retain capital because such a move will weaken its financial sector and create bad loans. China's Central Bank is walking on thin ice.

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25-12-2016, 04:12 AM, (This post was last modified: 25-12-2016, 07:24 PM by BlueKelah.)
Post: #728
China Economic News
At the moment China seems to be struggling to maintain the yuan strength by selling=Treasuries.

This will cause some pressure on Treasuries and move rates up a few basis points. Which is bad for usa and everyone else.

However if trump can manage to get apple and friends to bring back the billions usd from overseas, which I think he can (since usd is up anyways and everyone would wanna change usd)
if tax was minimized, and company like Apple bring back the billions then that flush of liquidity into America will help a lot.

China is like making things worse by trying=to defend the yuan instead of just float it.





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29-12-2016, 09:30 PM,
Post: #729
RE: China Economic News
(23-12-2016, 04:11 PM)BlueKelah Wrote: ------------------------------------------------------------------------------------------------------------------
China’s Bond Warning---
Beijing is learning about bond vigilantes. Last Thursday, after the U.S. Federal Reserve raised interest rates and projected more rises next year, China’s bond market fell out of bed. Investors are realizing that despite the government’s best efforts to prepare and isolate the domestic economy, China remains vulnerable to a stronger dollar.
Bond trading had to be suspended briefly on Thursday until the People’s Bank of China injected about $22 billion into the money markets to calm nerves. The PBOC also extended emergency loans to financial firms to encourage them to keep trading, a positive sign that the authorities have learned from their mistake of suspending stock trading after the June 2015 stock-market crash. But corporate-bond yields continue to rise and new issuances have been cancelled.
Government interference had pushed China’s bond market into bubble territory over the past two years. Beijing encouraged companies to issue bonds to reduce their reliance on bank lending, while prodding others to buy them. The authorities also rescued troubled companies to prevent them from defaulting, which has led to a fundamental mispricing of risk that will make the correction all the more painful.

As always, the bursting of a bubble reveals who was swimming naked. Last week, brokerage Sealand Securities defaulted on a bond-financing transaction allegedly made by a rogue employee. Rumors are also circulating that investors are pulling their money out of funds holding bonds. Firms that used high leverage to deliver promised returns now face margin calls.

sharing a little bit more about what happened:

7 Things to Know about China’s Bond Rout
http://www.caixinglobal.com/2016-12-28/101031384.html

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30-12-2016, 03:35 PM,
Post: #730
RE: China Economic News
Good article, the final paragraph sums it up pretty well... I am expecting not only a hard landing, but probably a very messy one in the future... (The China Securities Regulatory Commission (CSRC), for example, does not know how many under-the-table repurchase agreements securities firms have made in the interbank market. The National Association of Financial Institutional Investors, which oversees the interbank market, thinks it is the CSRC’s job to make securities firms abide by the rules.)

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