tyb
China Bloodbath: Stocks Crash; Oil, Iron Limit Down Despite Emergency PBOC Intervention, Rate Cuts
China's reopening from the long Lunar New Year holiday was set to be ugly, and sure enough with Chinese stocks resuming trade at 9am on Monday, a wave of selling was unleashed culminating in nothing short of a bloodbath with the Shanghai Composite crashing 9% at the open, down by the most since the bursting of China's 2015 stock bubble, and wiping out 12 months worth of gains in a corona moment. Not even the hilarious beat in China's Manufacturing PMI (this time from Caixin), which somehow surpased expectations of a 51.0 print by the smallest amount possible at 51.1 (down from 51.5) despite a major portion of China's population under quarantine and the economy hitting a brick wall, had any impact on stocks. What is odd is that this is happening even as China earlier in the day barred short selling, which only means the central bank made a huge oversight and should have also banned all selling altogether.
As stocks collapse the flight to safety is predictably on with 10Y Chinese bond tumbling in yield to 3%, matching the lowest yield since late 2016….. while spiking in price.
The selloff wasn't limited just to stocks, however, with China’s benchmark iron ore contract falling by its daily limit of 8%, with copper, crude and palm oil also plunging by the maximum allowed. As Bloomberg notes, regions accounting for about 90% of copper smelting, 60% of steel production, 65% of oil refining and 40% of coal output have told firms to delay restarting operations until at least Feb. 10.
This is bad news for anyone still holding on to dreams of a Chinese economic renaissance, as the following correlation between China's macro surprise index and copper demonstrates. China's bloodbath is taking place even as the PBOC scrambled earlier in the day to inject a gross 1.2 trillion in liquidity which however as we explained, was woefully inadequate because when netting off the 1 trillion in short-term reverse repo funds scheduled to mature on Monday, the liquidity injection amounted to a far more modest 150BN yuan, or just over $27BN.
The lack of any notable impact from China's reverse repo injection probably explains why shortly after the catastrophic open, the PBOC also cut rates on both its 7 day and 14 day-reverse repo from 2.5% to 2.4%, and from 2.65% to 2.55% respectively. Any additional selling will only beget even more selling, which is certainly on the mind of whoever is buying US futs even as China is crashing.
https://www.zerohedge.com/markets/china-bloodbath-stocks-crash-9-oil-iron-limit-down-despite-emergency-pboc-intervention-rate
https://www.cnbc.com/asia-markets/
https://www.bloomberg.com/markets/stocks/futures
82-8000 VIP on final into JBA-should be on ground about now
o7 sir
awesome stuff, ty
China regulator urges fund managers not to sell shares unless they face redemptions
China’s securities regulator has urged mutual fund managers not to sell shares unless they face investor redemptions, four sources told Reuters, as the country’s stock markets plunged on Monday amid a growing virus outbreak.
The China Securities Regulatory Commission (CSRC) is giving verbal instructions to mutual fund companies, asking them not to offload their stock holdings unless necessary, according to the fund sources with direct knowledge of the so-called window guidance.
CSRC gave the instruction on Sunday evening, according to one source.
Chinese stocks tumbled more than 8% in morning trading on Monday as mainland markets reopened following a week-long holiday, giving investors the first chance to react to the rapidly-spreading coronavirus.
https://www.reuters.com/article/us-china-market-regulator-guidance/china-regulator-urges-fund-managers-not-to-sell-shares-unless-they-face-redemptions-sources-idUSKBN1ZX0C4
coming apart in a BIG way
POTUS' gas station back to base-longest I've seen it hang around after a departure
the big mindscrew is our futs are up nicely-for now. This could be the big disconnect moment-will take place over a period of time but it's not looking good for them. The people who think our mkts are out of touch with reality will see very shortly what that looks like in the opposite direction.
hope the anon who went short on the levered product on late friday didn't bet the house money.