Baltic Dry Index. 1131 +31 Brent Crude 52.21
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"When the CSRC makes an offer, you cannot refuse it."
China Securities Regulatory
Commission (CSRC)
China, it seems to me, has been hit with full
moon madness. Probably made ten times worse by this full moon being a “blue
moon.” When the Chinese stock bubble burst back in June, collapsing 30 percent
in about two weeks, the Communist Politburo in Beijing seems to have panicked.
They had after all told everyone and their dog to start buying stocks. Not
everyone did, of course, but enough hapless Chinese gamblers did, that in the
space of two weeks in June they were taken to the cleaners for between 3 and 4
trillion dollars. Even in a still largely command economy, operating on the
world’s second biggest fiat currency, that was a massive hit in a spectacularly
short time. The knock-on effect is now starting to roll through the rest of the
Chinese economy. The global economy comes next.
The apparatchiks in Beijing feared mobs with
pitchforks or worse, and quickly set about trying to rig Chinese stocks back up
higher. But despite all their best efforts, it’s proved to be easier said than
done. Nothing tried so far seems to be working, at least not working as intended. Now
the apparatchiks are getting paranoid. Beijing
isn’t used to issuing orders that aren’t obeyed. Failure to comply in the
Communist version of workers paradise, risks “re-education,” or in extremis, a
bullet in the back of the head. If
Chinese stocks don’t start soon going up, the Politburo fears, China’s Giant Ponzi
Scheme is about to collapse! Millions of empty apartments, railways to nowhere,
unused airports in the back of beyond, and a million other vanity follies, will
all come crashing down to earth.
Crashing back to earth alongside them are our
global commodity producers who all ramped up, believing the Chinese led commodity
super-cycle, was a one way street to unlimited riches, rather than the dead end
street it’s now turned out to be. Emerging market economies and currencies are all
careening and accelerating on the road to their own version of Reykjavik. International
contagion is what comes next. Look out below. Bad things are about arrive in a
hurry.
Below, China runs out or road and talent.
Some people make thing happen, some watch while things happen,
and some wonder what happened? What happened?
The Poilitburo.
Exclusive: China watchdog extends pursuit of short sellers to HK, Singapore - sources
China's main share markets, both among the world's five biggest, have slumped around 30 percent since mid-June and authorities have been flailing in efforts to prevent a further sell-off that could spill over into the wider economy.
The markets regulator, the China Securities Regulatory Commission (CSRC), wants the trading records to try to identify those with net short positions who would profit in case of further falls in China-listed shares, three sources at Chinese brokerages and two at foreign financial institutions said.
At its regular press conference on Friday, the CSRC said it had not directly contacted top executives at Hong Kong brokerages. It also noted that it was normal, in the course of an investigation, to reach out to "relevant parties".
It denied other unnamed media reports that regulators had required Chinese brokerage heads to attend meetings in Beijing or Guangzhou.
The regulator has declared war on "malicious short sellers" or those it deems are trying to profit from a fall in share prices, rather than adopt a short position as a financial hedge.
"The implied threat by the CSRC is that anything that is not a hedge is a no-no," said a source in Hong Kong with knowledge of the requests. This person added that foreign brokers were likely to comply as best they could with the requests.
"When the CSRC makes an offer, you cannot refuse it."
The sources all have direct knowledge of the matter, but declined to be identified because of the sensitivity of the matter.
China Market Manipulation Probe Targets Spoofers After Crash
July 31,
2015 — 3:33 AM BST Updated on July 31, 2015 — 6:29 AM BST
Spoofing has become the latest target in China’s campaign against
stock-market manipulation after a $3.5 trillion selloff.The practice, which involves placing then cancelling orders to move prices, is suspected in 24 accounts on the Shanghai and Shenzhen stock exchanges, the China Securities Regulatory Commission said on its microblog. The bourses have restricted the accounts and regulators are investigating program traders, who have recently had an “obvious” impact on the stock market, the CSRC said.
China’s focus on spoofing follows a probe of “malicious” short selling, part of the government’s unprecedented effort to shore up investor confidence after a 29 percent tumble in the Shanghai Composite Index from its June high. Spoofing entered the popular lexicon this year after U.S. prosecutors said a London trader’s use of the strategy contributed to the flash crash in May 2010, when American equities briefly lost almost $1 trillion of value. The Shanghai Composite sank 8.5 percent on Monday, its biggest rout since 2007.
“The public isn’t happy about the market plunge so the regulator needs to take some actions as a response, and that’s part of the government’s plan to prop up the market,” said Zhang Haidong, the chief strategist at Jinkuang Investment Management in Shanghai. “Whether it’ll be effective remains to be seen.”
Spoofers make money by feigning interest in buying or selling at a certain price, creating the illusion of demand in an attempt to make other traders move the market. The spoofer cancels the original order and buys or sells at the new price to make a profit.
More
Chinese farmer invested life savings in stocks, lost it all
Tom DiChristopher Tuesday, 28 Jul 2015 | 12:42 PM ET
Investors throughout China are waiting for the government to step in and buy
more stocks so they can close out their positions, but many are losing hope.Yang Cheng, a farmer in the remote town of Panzhihua in southwest China, was one of many Chinese citizens who started buying up stocks after the government began promoting equity investment as part of a larger plan to expand the country's economy.
"When the market climbed to 4,000 points, I realized the risks were pretty high. However, public opinion on government policies affected my judgment," he told CNBC.
But after sinking his entire life savings—$164,000—and his relatives' money into shares of a local mining company, he lost everything. Not only that, but Yang's brokerage convinced him to borrow more than $1 million to buy stocks on margin. He now owes roughly what he originally invested after liquidating his portfolio.
Like many Chinese, Yang traveled to the office of the leadership and stock market regulator in Beijing to seek help, but was turned away.
"I don't know what to do. I trusted the government too much. I won't touch stocks again," Yang said.
“Worry, the interest paid by those who borrow trouble.”
George Washington.
The monthly Coppock Indicators finished July
DJIA: +88 Down. NASDAQ:
+189 Down. SP500: +116 Down.
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