China pide paso... II

[manolewersa]

Y después del analisis del posible futuro de un boom en china. Eso como afectaría a europa o mas bién a españa??

Dejaría china de inundar el mercado con productos de mano de obra barata?

Permitiría esto, recuperar pabricantes locales que quebraron por no poder competir contra precios cercanos al precio de producción?

Con el boom de china, subiría la economía europea?

 

[frodho]

Mark Mobius: China's Problems as Big as US Subprime

While China's housing market problems are similar in scale to those faced during the U.S. subprime mortgage bubble and its banks are rife with bad loans, it won't lead to another Lehman-style crash, Franklin Templeton's Mark Mobius told CNBC on Monday.

Mobius said the similarities could not be denied but since Chinese banks are owned by the government, they will not be allowed to fail.

Investor antiestéticars have been heightened after a credit crunch last week led to a spike in yields on inter-bank loans. Some analysts have pointed out the credit crunch was spiked by China's central bank tightening liquidity, rather than a loss in confidence among banks.

(Read More: China's Central Bank Plays Hardball – Will It Backfire?)

Still, nervousness led to big drop in Chinese stocks on Monday, with the Shanghai Composite tumbling 5.3 percent to its lowest levels since early December.

"The perception of China is they are in the same kind of situation as the U.S., and yes it is true that a lot of loans are going to go bad, and that banks have been hiding a lot of these loans in so called trust companies," Mobius said on the sidelines of the FundForum conference of asset managers in Monaco.

"We have to ask what the consequence is, what will happen as a result, and the scenario will be very, very different in China, simply because the banks are controlled by the government, so they will not be allowed to go bankrupt."
As a result, Mobius said the liquidity problems faced by Bear Stearns, Merrill Lynch and Lehman Brothers at the height of the 2008 crisis won't happen in China.

Mobius manages some $53 billion in emerging market funds and has more money invested in China than in any other market.

(Read More: Goldman Joins Bandwagon, Downgrades China)

He said China has $3 trillion in foreign reserves which can be used to recapitalize the banks.

But not everyone agrees that China can make it through its current problems.

relleniton Chang, the author of "The Coming Collapse of China" told CNBC on Monday the credit crunch was a serious problem and could lead to a "catastrophic failure" in the banking system in the next six months.

"This is not so much as a liquidity crisis as a debt crisis," he told CNBC on Monday.

Mark Mobius: China's Problems as Big as US Subprime

---------- Post added 24-jun-2013 at 21:36 ----------

Forbes Columnist relleniton Chang Predicts Chinese Economy's Catastrophic Failure

relleniton Chang, author and Forbes Columnist known for his book The Coming Collapse of China, sees China on a decline that's becoming increasingly steeper. He explained his views on CNBC's Squawk Box Monday morning.

Chang began by noting his comments that this is China's "Lehman moment," referring to the former financial services firm's infamous bankruptcy filing that so far remains the largest in U.S. history.

"Everyone is saying this is reform, but there's no such thing as an engineered credit crunch. This is crisis management," said Chang.

"And the crisis began in the first week of May when the state administration on foreign exchange issued that rule cracking down on fake export invoicing. That triggered $40 billion outflow from the banking system and since then, this month we have seen two failed central government bail auctions, two spikes in interbank rates, and two waves of default in the interbank markets. Each crisis is getting worse than the previous one."

Despite the brilliance of "Chinese technocrats, these geniuses in Beijing that we all look to," and their ability to rig the system, there is a semi-open and semi-reformed economy, which means even though they have some control, there are various things that are occurring beyond there control, Chang said.

Part of this, Chang continued, is the wave of lending between enterprises to financially engineer other enterprises. The new government in China has made it a priority to crack down on enterprise engineering, but Chang says they'll fail.

"They're reacting to real incidents in the market. So, this is not like they've said, 'Oh, you know, we're going to concisely reform by tightening credit.' You know, if we thought that they engineered this credit crunch, then the central bank is reckless because of what we have seen in June," said Chang.

According to Chang, the real problem on the table is that China has an industrial economy "that is contracting at the moment," saying that at the same time that's no real use for credit, saying that at the same time overall credit has gone up 52 percent this year.

"You have all sorts of dislocations when you have money going into unproductive uses, and that's exactly what's occurring right now. This is not so much a liquidity crisis as a debt crisis, and it's not so much a debt cries as one of real problems in the fundamental Chinese economy," said Chang.

Chang went on to say that the People's Bank of China doesn't have many options right now because the able was set so long ago with these enormous increases in credit, saying that debt is now perhaps 200 percent of their GDP.

Chang said that the endgame is a financial collapse in China.

This will cause panic in the United States because we don't understand what's going on, Chang said. He cited April 15 when the National Bureau of Statistics issued it's Q1 GDP number showing China's economy at 7.7 percent instead of 8 percent, causing the DOW to drop 266 points. He said that we would have "shrugged it off" if we had a better understanding of the Chinese economy.

The reality of the Chinese economy is that it's not growing at 7.7 percent, but really 3 or 4 percent, and it's at 0 percent when you take out economically useless production.

"There's going to be no winners in any of this, because essentially what you're going to have is catastrophe failure," said Chang in reference to the Chinese economy.

Forbes Columnist relleniton Chang Predicts Chinese Economy's Catastrophic Failure | Benzinga

 

[lechon]

Y después del analisis del posible futuro de un boom en china. Eso como afectaría a europa o mas bién a españa??

Dejaría china de inundar el mercado con productos de mano de obra barata?

Permitiría esto, recuperar pabricantes locales que quebraron por no poder competir contra precios cercanos al precio de producción?

Con el boom de china, subiría la economía europea?

No seas ingenuo. El sistema capitalista financiero es global y único. Caso de que pete en China hay vasos comunicantes que harán que los bancos de los países centrales del sistema también tengan problemas muy rellenitos en sus chanchullos financieros, lo que hará que los Estados (o sea, la gente) tenga que poner riqueza real para rescatarlos.

Esto no va de que haya problemas para fabricar cosas y hay que fabricarlas en otra parte. El capitalismo financiero (que es la forma del capitalismo actual) ya no se preocupa de eso. No importa para sus negocios.

 

[Namreir]

Pues ya vereis como va a acabar Europa, en breve 6 millones de parados puedes parecer una cifra excesivamente optimista.

 

[dick jones]

Banda sonora recomendada:

[YOUTUBE]8OBafgG9SpQ[/YOUTUBE]

Asian Markets Plunge, Shanghai Composite Index Enters Bear Market Territory As China Liquidity Crisis Continues

Asian Markets Plunge, Shanghai Composite Index Enters Bear Market Territory As China Liquidity Crisis Continues

Chinese stocks fell to four-and-half-year lows on Tuesday, as the ongoing credit crisis in China’s banking sector further rattled Asian markets, which have been hit hard in recent weeks by concerns about the future of the U.S. Federal Reserve's bond-buying program.

China's Shanghai Composite index slumped 4.72 percent, or 92.64 points, to 1,870.59 on Tuesday, after suffering its worst single-day loss in almost four years in the previous session, to enter bear-market territory. The index has now lost more than 20 percent since February.

Japan’s Nikkei plunged 2.12 percent while Hong Kong’s Hang Seng fell 1 percent. In South Korea, the KOSPI declined 1.44 percent while India’s BSE Sensex was trading down 0.20 percent in mid-morning trade.

“We are cautious at the moment and continue to watch the unfolding situation, as we believe the biggest risk comes from the [People’s Bank of China] potentially mishandling the situation,” Bank of America Merrill Lynch’s China economist Ting Lu told MarketWatch.

“In our view, dealing with banks in breach of regulations should be done by improving prudential regulations rather than engineering an interbank credit crunch which could potentially backfire should banks lose mutual trust,” he said.

Interbank lending rates in China retreated from a record high last Thursday after the People's Bank of China's, or PBoC, injected 50 billion yuan ($8.17 billion) into the financial system through short-term liquidity operations. However, even as interest rates stayed above 6 percent on Monday, the PBoC, in a statement dated June 17 and made public on Monday said, that liquidity in the country’s overall banking system is at a reasonable level, suggesting that no more cash infusions would be forthcoming.

“Global markets are taking off risk and will continue to be jittery until interbank rates in China stabilize,” Ichiro Yamada, general manager of equities who helps manage the equivalent of $3 billion in stocks at Fukoku Mutual Life Insurance in Tokyo, told Bloomberg.

Meanwhile, comments from Fed officials on Monday, did little to help the mood in global markets.

U.S. stocks ended steeply down on Monday despite paring some early losses after Minneapolis Fed President Narayana Kocherlakota and Dallas Fed President Richard Fisher said investors should not overreact to the central bank’s plan to slow scale down asset purchases.

On Monday, the Dow Jones Industrial Average declined 0.94 percent and the Standard & Poor's 500 Index was down 1.21 percent, while the Nasdaq Composite fell 1.09 percent.

“Fed comments overnight did little to soothe market angst, with both revealing little concern about the market reaction to prospects of Fed tapering. However, both Fed officials were keen to point out that policy will remain accommodative even after the end of quantitative easing which helped to allay some of the pain on markets in overnight trading,” said a note from Credit Agricole.

 

[Serpiente_Plyskeen]

Dentro gráfico:

El PBoC habla de manguerazos... pero aparentemente, con la boca pequeña:
PBOC

China Money-Market Rate Increase Temporary, PBOC Official Says
By Bloomberg News - 2013-06-25T08 :22 :38Z

China’s central bank will keep money-market rates at a reasonable level and seasonal forces that have driven them up will fade, a People’s Bank of China official said.

China’s liquidity risks are controllable and the central bank will closely monitor rates going forward, Ling Tao, deputy director of the PBOC’s Shanghai branch, said at a briefing in Shanghai. The comments build on a PBOC statement released yesterday saying there’s a reasonable amount of liquidity in the system and urging banks to control risks from lending.

Ling is the first PBOC official to discuss publicly the increase in rates since a cash squeeze that sent the overnight repurchase rate to a record last week. Premier Li Keqiang is seeking to wring speculative lending out of the nation’s banking system after credit expansion outpaced economic growth.

Chinese stocks whipsawed today and the benchmark seven-day repurchase rate rose after falling for two days. The Shanghai Composite Index (SHCOMP) fell 0.2 percent at the close after declining as much as 5.8 percent.

Ling’s remarks precede the annual Lujiazui Forum financial conference starting June 27. The statement posted on the PBOC’s website yesterday was a notice, dated June 17, originally sent to its regional offices and China’s major banks. The PBOC didn’t give a reason for the lag time in releasing the statement.

“The central bank can be a little bit more transparent with the market -- for instance, it’s really unnecessary to wait for a whole week before it published the liquidity management notice yesterday,” said Ken Peng, a BNP Paribas SA economist in Beijing. “The Shanghai official’s comment, had it come a few days earlier, may have helped to calm the market a bit.”

--Gregory Turk, Zhou Xin. With assistance from Zhang Shidong in Shanghai. Editors: Scott Lanman, Chris Anstey

Asian Stocks Fall as China Sinks Deeper Into Bear Market - Bloomberg

Asian Stocks Fall as China Sinks Deeper Into Bear Market
By Jonathan Burgos & Yoshiaki Nohara - 2013-06-25T11 :16 :56Z

Asian stocks fell as a gauge of the biggest Chinese shares traded in the mainland sank deeper into a bear market amid concern a cash crunch will curb growth in the world’s second-largest economy.

Jiangxi Copper Co. (358), China’s biggest producer of the metal, dropped 4.6 percent in Hong Kong. Newcrest Mining Ltd. fell 2.4 percent after Australia’s No. 1 gold producer cut jobs at its Lihir mine in Papua New Guinea. Guangzhou Shipyard International Co., a unit of China’s largest shipbuilder, plunged 17 percent after announcing plans to sell shares and buy a shipyard.

The MSCI Asia Pacific Index fell 0.4 percent to 125.3 as of 8 :05 p.m. in Tokyo, reversing gains of 0.5 percent. Almost two shares fell for each that rose on the measure. The gauge dropped 13 percent from this year’s high on May 20 through yesterday after Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank may start dialing down stimulus, and as money-market rates in China surged to records.

“Global markets are taking off risk and will continue to be jittery until interbank rates in China stabilize,” said Ichiro Yamada, general manager of equities who helps oversee the equivalent of $3 billion at Fukoku Mutual Life Insurance in Tokyo. “Japanese shares are falling along with other markets, but it’s also the most resilient market because it benefits from a stronger dollar.”

Cash Crunch

China’s CSI 300 Index, representing the biggest companies in the Shanghai and Shenzhen stock exchange, dropped 0.3 percent, extending losses for fifth day. The measure has fallen 22 percent from this year’s high, surpassing the 20 percent threshold that some investors consider as a bear market. The benchmark Shanghai Composite Index (SHCOMP) slid 0.2 percent, paring losses of as much as 5.8 percent earlier.

The overnight interbank interest rates fell for a third day, the longest run of declines in a month, as the central bank refrained from selling bills amid the worst cash crunch in at least a decade. Liquidity risks in China’s financial markets are controllable and seasonal forces affecting interest rates will fade, Ling Tao, deputy director of the Shanghai branch of the People’s Bank of China, said at a briefing today.

Hong Kong’s Hang Seng Index gained 0.2 percent after falling as much as 2 percent. The Hang Seng China Enterprises Index (HSCEI) fell 0.8 percent, taking its slide from a Feb. 1 high to 27 percent.

Japan’s Topix index slid 1 percent, while the benchmark Nikkei 225 Stock Average lost 0.7 percent.

South Korea’s Kospi index dropped 1 percent and Taiwan’s Taiex Index retreated 1.2 percent. Australia’s S&P/ASX 200 Index slipped 0.3 percent and New Zealand’s NZX 50 Index decreased 1.1 percent. Singapore’s Straits Times Index rose 0.5 percent.

Relative Value

Shares on the Asia-Pacific gauge traded at 12.2 times estimated earnings yesterday, compared with multiples of 14.2 for the Standard & Poor’s 500 Index and 12.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 Index added 0.6 percent today. The gauge yesterday dropped 1.2 percent to its lowest level since April 22. The measure briefly slipped below a 2007 closing high of 1,565.15, a level that marked recovery of all losses from the financial crisis.

Raw-material producers led declines among the MSCI Asia Pacific Index’s 10 industry groups. Jiangxi Copper dropped 4.6 percent to HK$13.02. BHP Billiton Ltd. (BHP), the world’s biggest miner, fell 1.7 percent to A$30.81 in Sydney.

Newcrest Mining slipped 2.4 percent to A$9.30, the lowest close since September 2003. The company said it will cut about 150 jobs at its Lihir mine as it reorganizes its operations in response to the plunge in gold prices.

Glencore Drops

Glencore Xstrata Plc (805), the world’s largest exporter of power-station coal, sank 3.1 percent to HK$33.15 in Hong Kong, the lowest close since its May 2011 listing. The company is proposing to scale down operations at its Ravensworth mine in Australia amid difficult market conditions, Tony Galvin, general manager at the mine, said in an e-mailed statement.

Guangzhou Shipyard slumped 18 percent to HK$5.87 in Hong Kong. The company said yesterday it plans to sell as much as 2.5 billion yuan ($407 million) of new shares and buy a shipyard part-owned by parent China State Shipbuilding Corp.

ANA Holdings Inc., operator of the world’s largest fleet of Boeing Co. 787s, slid 2 percent to 197 yen in Tokyo after agreeing to dissolve a low-cost carrier venture with Malaysia’s AsiaAsia Bhd. amid disputes over operating the company. AirAsia, Asia’s biggest budget airline, lost 1 percent to 3.03 ringgit in Kuala Lumpur.

 

[McCoy]

Jefe (yanki) Secuestrado en una Fábrica China

Los chinos están aprendiendo maneras

Ya veremos que hacen en otras fábricas si la perspectiva económica sigue yendo a peor...

Chinese workers hold American boss hostage in Beijing | WJLA.com

BEIJING (AP) - Chinese workers keeping an American executive confined to his Beijing medical supply factory said Tuesday that they had not been paid in two months in a compensation dispute that highlights tensions in China's labor market.
Continue reading
The executive, Chip Starnes of Specialty Medical Supplies, denied the workers' allegations of two months of unpaid wages, as he endured a fifth day of captivity at the plant in the capital's northeastern suburbs, peering out from behind the bars of his office window.
About 100 workers are demanding back pay and severance packages identical to those offered 30 workers being laid off from the Coral Springs, Florida-based company's plastics division. The demands amowed rumors that the entire plant was being closed, despite Starnes' assertion that the company doesn't plan to fire the others.
The dispute highlights general tensions in China's labor market as bosses worry about rising wages and workers are on edge about the impact of slowing growth on the future of their jobs.
Inside one of the plant's buildings, about 30 mostly women hung around, their arms crossed. One worker, Gao Ping, told reporters inside an administrative office in the plant that she wanted to quit because she hadn't been paid for two months.
Dressed in blue overalls and sitting down at a desk, Gao said her division - which makes alcohol prep pads, used for cleaning skin before injections - had not been doing well and that she wanted her salary and compensation.
Workers in other divisions saw how badly her division was doing, thought the whole company was faring poorly and also wanted to quit and get compensation, said Gao, who had been working for the company for six years.
Starnes, 42, denied that they were owed unpaid salary.
"They are demanding full severance pay, but they still have a job. That's the problem," he said, still in the clothes he wore when he went to work Friday morning.
Chu Lixiang, a local union official representing the workers in talks with Starnes, said the workers were demanding the portion of their salaries yet to be paid and a "reasonable" level of compensation before leaving their jobs. Neither gave details on the amounts demanded.
Chu said workers believed the plant was closing and that Starnes would run away without paying severance. Starnes' attorney arrived Tuesday afternoon. Chu later told reporters that there would be no negotiations for the rest of the day.
Starnes said that since Saturday morning, about 80 workers had been blocking every exit around the clock and depriving him of sleep by shining bright lights and banging on windows of his office.
The standoff points to long-ingrained habits among Chinese workers who are sometimes left unprotected when factories close without severance or wages owed. Such incidents have been rarer as labor protections improve, although disputes still occur and local governments have at times barred foreign executives from leaving until they are resolved.
Starnes said the company had gradually been winding down its plastics division, planning to move it to Mumbai, India. He arrived in Beijing a week ago to lay off the last 30 people. Some had been working there for up to nine years, so their compensation packages were "pretty nice," he said. Then workers in other divisions started demanding similar severance packages on Friday, he said.
Kevin Jones, who advises U.S. companies on Chinese labor and employment law, said it is better if American executives stay at home and let their local managers lay off workers.
In a case last week, Jones said the chief financial officer of a U.S. telecommunications equipment maker wanted to come to Beijing to explain the situation and give 41 white-collar workers their termination notices.
"We told him to stay in America," said Jones, who chairs the Shanghai-based Faegre Baker Daniels labor and employment practice. The company's lawyers met with six employee representatives in a hotel. "We had two bodyguards but that was just in case things got out of control," Jones said.
Christian Murck, president of the American Chamber of Commerce in China, said Chinese labor law specified a minimum severance pay in the event of a layoff due to economic necessity or if someone is dismissed due to cause, but not a maximum one.
"There is a kind of structural weakness in the way the labor law is set up that leads to negotiations and disputes when departures occur," Murck said.

 

[Serpiente_Plyskeen]

Las empresas que ms venden en China - EL ABRAZO DEL KOALA - Cotizalia.com

Las empresas que más venden en China

Marc Garrigasait
EL ABRAZO DEL KOALA
26/06/2013

La inescrutable China aparece como una gran fuente de riesgo para los mercados financieros y para muchas de las grandes multinacionales planetarias. En los últimos 20 años, China prácticamente sólo ha aportado buenas noticias a la economía mundial y a los ingresos de muchas empresas en los cinco continentes. En mi opinión, China abandonó su modelo exitoso al sufrir la grave crisis de 2008, y en 2009 se abrazó al modelo occidental de crecimiento económico basado en el endeudamiento rápido. No hay más que ver las estadísticas ex y post-2009 de la concesión de créditos bancarios, que en China obviamente fue ordenada por el Gobierno y acatada sin dudarlo por los cuatro grandes bancos públicos del país.

China decidió aplicar el modelo occidental y en cierta forma 'español', construir infraestructuras por doquier y especialmente viviendas. Cada obra construida se contabiliza como inversión y aporta al producto nacional bruto en base a su precio de coste, con independencia de su utilidad. Por ejemplo, el aeropuerto de Castellón, que nadie aún ha usado, provocaría enormes pérdidas en una empresa privada, pero en términos de contabilidad nacional de cualquier país en el mundo suma su coste de construcción al PIB español. Seguramente, tras esta crisis debería plantearse la discusión de las normas de contabilidad nacional internacionales. No puede ser que sólo se tengan en cuenta el gasto, el consumo o la inversión como únicos elementos, en lugar de la productividad o la rentabilidad. No es un debate nada fácil, pero como mínimo sería bueno iniciarlo.

De 2001 a 2010, el crecimiento económico chino fue de media un 10% anual, pero el crecimiento del crédito fue del 17% anual. En 2009 y 2010 los préstamos bancarios chinos crecieron más del 30% y en 2010 más del 20% en relación al nivel ya muy alto de 2009.

Cuando la economía china tenía un bajón puntual, "alguien daba la orden de apretar el botón del crédito a los cuatro bancos públicos". Después de la caída del 5% en la bolsa china este pasado lunes 24 de junio, y sobre todo de los miedos acerca de posibles problemas de liquidez del sistema bancario chino que circulan estos días.

Recientemente en la web Zerohedge.com publicaron algunas estadísticas de cuáles son las empresas multinacionales más dependientes del gigante asiático. Son los números de las empresas que más venden a los ciudadanos y empresas chinas en los sectores de consumo.

Como podéis observar, las grandes marcas de lujo europeas han sido las mas beneficiadas de las compras chinas, y así se refleja en su evolución en bolsa en los últimos tres años. Por el contrario, una ralentización económica en la economía china, como parece puede estar produciéndose, les perjudicaría más que a otras empresas menos dependientes de dicho país.

No hay empresa que dependa tanto del gigante asiático como The Swatch Group. La empresa suiza de venta de relojes y artículos de lujo vende un 45% de sus productos en China. En consecuencia, sus ventas mundiales han tenido crecimientos altísimos, mejorando año tras año las previsiones. En los últimos 6 años ha doblado sus ventas en el mundo.

Le siguen las tres grandes marcas de lujo, las francesas Hermes Internacional y Louis Vuitton Moet Hennessy (LVMH) con nada menos que un 31% y un 28% respectivamente. La suiza Richemont, con marcas como Cartier, Piaget o Montblanc, vende un 26% a China, aunque un 41% a toda Asia, cifra muy superior a las dos empresas francesas. La marca de bebidas alcohólicas francesa Remy Cointreau depende en un 35% de China. La italiana Prada, otra empresa de éxito en el sector del lujo, depende en un 21%, la alemana Puma un 20% y la británica Burberry un 18%. La italiana Salvatore Ferragamo vende también un 18% y, al igual que Burberry, sus ventas asiáticas suponen cerca del 35%. La marca deportiva alemana Adidas vende un 12% a China.

En niveles del 10% en ingresos a China y de aproximadamente un 20% a toda Asia, se encuentran un gran número de multinacionales como Novozymes, Associated British Food con su famosa marca de ropa Primark, Pernod Ricard, L’Oreal, Henkel, Nestlé o Danone. La holandesa de alimentación y consumo básico Unilever apenas vende un 4%, pero cerca del 20% al continente asiático.

A pesar de la incertidumbre presente, se ha demostrado que la mejor forma de invertir en la bolsa china ha sido mediante una cartera de acciones de empresas multinacionales con mucho peso de sus ventas en el país. Por rentabilidad pero, sobre todo, por evitar los grandes riesgos de invertir en empresas chinas que la historia nos ha demostrado que en muchos casos, por errores o por fraudes, han decepcionado a los inversores.

 

[dick jones]

Estos ultimos dias el FSB ha estado reunido en Basilea...Entre otros temas han revisado la adaptacion de la banca a los acuerdos de Basilea 3, de los paises revisados, Suiza cumple y la banca EU y usana necesita mejorar. Los siguientes en pasar el test seran China, Brasil y Australia, me parece que no necesitamos informes para hacernos una idea de la nota de los banquitos chinos.

En la nota de prensa que podeis leer en la pagina del propio FSB, aparecen muchos temas que a los habituales del hilo no nos sonaran precisamente a chino8:

 

[arckan69]

UN POR QUÉ A LA CRISIS DEL INTERBANCARIO EN CHINA
Publicado el 26 junio, 2013 por Antonio Iruzubieta
Un informe de JP Morgan revela una interesante explicación sobre la crisis del interbancario sufrida la semana pasada en China:

JPMorgan… there is an additional reason for the tight liquidity, in the form of a crackdown on illegal bond trading by regulators. In recent years, wealth management products (WMP) have become an important channel for Chinese banks to attract deposits. Most wealth management products are short-maturity (65% are below 3 months, and 20% range from 3-6 months). The maturity dates of such products are usually at the quarter-end, to meet regulatory requirements on loan-to-deposit ratios. Due to competition in providing high returns for WMP, banks were forced to buy high-yielding bonds with 1-5-year maturities to serve as underlying of the WMP. Examples of such bonds are lowly rated credit papers with poor liquidity, or non-standard securities such as discounted bills and bank loans. This resulted in a term mismatch between the maturity of WMP and their underlying asset. To avoid any squeeze from this mismatch upon maturity of the WMP, small banks started to engage in a kind of sale-and-buyback operation of the underlying bonds, consisting of two steps. In step 1, bonds were sold before quarter-end in a “fake” sale to a friendly counterparty, with the aim to obtain cash to pay back the maturing WMP. In a second phase of the trade, the bond was then bought back using cash from new WMP issues. But in May the regulator banned this practice, as part of a general clampdown of the abuses in the WPM market. Part of the interest rate squeeze we are observing today is due to the difficulty in liquidating the (illiquid) underlying bonds before the maturity date of WMP at June-end. The demand for cash has therefore risen significantly, at least from the small banks. Note that China’s larger banks do not have problems accessing liquidity, but that primarily the small banks are suffering”.

El desplome de la bolsa china estuvo relacionado con la crisis de liquidez, los agentas financieros se vieron obligados a vender bolsa para conseguir liquidez y la caída se retroalimentó, provocando una durísima caída de las cotizaciones. El índice de Shangai abrió la semana cayendo un 5.5%.

En el escrito del lunes comentaba a este respecto “El índice se Shangai ha perdido como decía un 5.5%, quedando por debajo de los 2.000 puntos y a un escaso 10% de los mínimos de 2008. La zona de cierres, 1963 puntos, se configura como un soporte técnico relevante a defender, de no ser así, la probabilidad de descenso en busca de los 1750 puntos, mínimos de octubre de 2008, será muy elevada.”

A-SHARE SHANGAI INDEX, Semanal



El mercado chino ha conseguido recuperar niveles en las sesiones del martes y miércoles, respetando la estructura técnica y mostrando intenciones de recuperar lo perdido en las últimas semanas… aún así, todavía es pronto para confirmar.

UN POR QUÉ A LA CRISIS DEL INTERBANCARIO EN CHINA | ANTONIO IRUZUBIETA

 

[dick jones]

El tema visto desde uno de los banquitos.

Minsheng Bank tells the story of Beijing's credit worries - chicagotribune.com

Minsheng Bank tells the story of Beijing's credit worries

HONG KONG (Reuters) - The funding crunch prompted by China's central bank was meant to teach a lesson to the Chinese banks that continue to embrace risky lending tactics.

A look at the funding and loan figures at mid-sized lender China Minsheng Banking Corp. helps explain why the People's Bank of China (PBOC) made its move.

The PBOC's refusal to inject cash into the money market system last week caused a spike in inter-bank lending rates. Suddenly, banks used to borrowing at 3 percent saw the rate at which their peers would lend to them jump as high as 25 percent.

The move, which came as an economic slowdown weighs heavy on China's financial system, sent a clear and painful message to banks overly-reliant on short term funding: clean up your act.

Over the last few years, Minsheng has tapped several lending methods to try and bolster its returns, including heavy usage of something called a reverse repo, which allows a bank to mask the amount of money it is putting at risk.

The bank nearly doubled the amount of high-yield investment vehicles it sells, known in the industry as "wealth management products". Minsheng's borrowing has prompted concern from analysts, and illustrates the type of banking behavior the PBOC is trying to stamp out.

"Its business model in recent years of leveraging up the balance sheet with interbank transactions has run its course and is now at risk of unwinding," Citigroup said on Wednesday in a research note on Minsheng.

Minsheng's lending figures reveal a heavy percentage of loans needing to be repaid to meet short-term cash outflows -- around 40 percent by one estimate, compared with zero for some of China's biggest lenders.

Investors have been quick to punish Minsheng, whose Shanghai-listed shares have dropped 16.7 pct, wiping out $6 billion worth in market value, since last Wednesday.

Some analysts think that sell-off has been overblown.

Investment bank Jefferies, which has a "buy" rating on the stock, said in a research note on Wednesday that the bank's supporters feel that management are risk takers who can manage risks. " is not for the faint of heart, but we see reward outweighing risk," the note said.

Minsheng itself said on Wednesday that the spike in the Shanghai interbank offered rate (Shibor) had not disrupted its operations and it was confident it could control credit risks despite a slowing economy. In a filing to the Hong Kong stock exchange on Tuesday, the bank said it told a conference call with investors that its asset quality was under control.

SELLING SHORT

Short sellers are betting on a further drop in Minsheng's shares. As much as 61.8 percent of Minsheng's Hong Kong stock that can be borrowed -- a measure of interest from short sellers -- was out on loan on June 25, according to data provider Markit, compared with a market average of around 15.3 percent.

Minsheng, the country's ninth-largest bank by assets and the only private bank among the country's 10 largest commercial lenders, debuted on the Hong Kong stock exchange in 2009.

At the time, Beijing was forcing banks to pump loans into the market to help companies ride out a downturn caused by the global financial crisis.

The stimulus spending pushed up inflation, prompting an order from Beijing to pull back on loans beginning around 2010. The consequence was that banks started looking for new lending mechanisms, while customers sought products that promised a better return than a state-mandated 3 percent interest rate.

With a market value of around $36 billion, Minsheng is considered mid-sized by China's standards. It is one of the thousands of small to medium sized lenders across China that seek to lend to the legions of Chinese companies operating inside the country.

To offer such loans, banks can get money in a number of ways: collecting deposits from customers; borrowing from other banks; issuing bonds and issuing equity.

Resumen de las operaciones monetarias del PBOC en lo que va de año frente a 2012.

PBOC weekly open market operations at a glance | Reuters

Y a medida que se acerca el final del h1, la banca a sudar la gota subida de peso, vamos, como estudiantes en junio. Incluso algunos de los cuatro grandes.

Some Chinese Banks Halt Lending - Business Insider

Two Of China's Biggest Banks Have Stopped Lending At Some Of Their Branches


Branches of Bank of China and the Industrial and Commercial Bank of China (ICBC) have stopped lending amid the country's current liquidity squeeze, according to Caixin Online.
The two banks, are part of the country's Big Four. Bank of China was reportedly having a hard time meeting loan-to-deposit requirements before the liquidity squeeze and it plans to resume lending on July 15.

Meanwhile, ICBC's headquarters set a cap on lending, but what was unusual was that "headquarters had cut down on the quotas to make room for its own operations," according to Caixin. Other sources however said this wasn't a major problem.

Chinese interbank rates, or the rates at which banks lend to each other, began spiking before the Dragon Boat festival earlier this month.

The People's Bank of China alleviated some of the pressure by injecting liquidity into some banks and saying that it would use various tools like short-term liquidity operations to help stabilize rates.

But it's important to remember that the "PBOC promised more liquidity but not enough to support the equity markets or enough to drop rates below 4%," according to Robert Savage at FX Concepts.

And the Chinese central bank's initial decision to let rates peak is still being interpreted as its way of punishing certain banks that had runaway credit growth. From Société Générale's Wei Yao:

The PBoC makes clear that it wants more responsible and less risky behavior from financial institutions, including the strengthening of liquidity and asset-liability management, and calls on large banks to help stabilize markets. Secondly, the PBoC calls on financial institutions to balance liquidity and profitability and other business objectives according to macroprudential requirements. Lastly, it calls on financial market participants to strengthen market discipline, particularly related to Shibor.

Jim O'Neill said China was never at risk of a genuine liquidity crunch. But there definitely are concerns of a credit bubble so we will be amowing these developments closely.

 

[Serpiente_Plyskeen]

China Out of 10 Biggest Stocks as PetroChina Ousted - Bloomberg

China Out of 10 Biggest Stocks as PetroChina Ousted

By Ye Xie, Newley Purnell & Whitney Kisling - 2013-06-27T15 :21 :18Z

Chinese companies have dropped out of the ranks of the world’s 10 biggest stocks by market value for the first time since 2006 amid a cash crunch, slower growth and the biggest U.S. stock rally in a decade.

PetroChina Co., (PTR) the state oil producer that was the world’s sixth-biggest company in May, lost $35 billion in market value this month to $214 billion, dropping to 12th, according to data compiled by Bloomberg based on closing prices yesterday. Industrial & Commercial Bank of China Ltd. fell four places to 13th after losing $28 billion. All of the 10 largest stocks are from the U.S. after Johnson & Johnson (JNJ), the top maker of health-care products, and Wells Fargo & Co. (WFC) overtook the Chinese firms.

Chinese shares are underperforming U.S. equities by the most since 1998 as the American housing and jobs markets improve. Stocks in the world’s second-largest economy, which climbed 345 percent over the past decade and accounted for half of the world’s top 10 in 2007, are falling as the country struggles to develop a consumer market while the government tries to clamp down on a credit boom amid concern that bad loans and bank failures will deepen the slowdown.

“Investors are looking at the U.S. because there are actually signs of growth, versus China where it’s exactly the opposite,” Wayne Lin, a money manager at Baltimore-based Legg Mason Inc., which oversees about $654 billion in assets, said in telephone interview yesterday. “What you see is really the growth expectations flipping.”

Credit Curbs

The Shanghai Composite Index (SHCOMP) of domestic shares fell 0.1 percent to a four-year low today amid concern the government’s curb on credit expansion may damp economic growth. PetroChina rose 0.3 percent in Hong Kong, while ICBC increased 1.3 percent.

The MSCI China Index (MXCN), which tracks shares trading in Hong Kong, has lost 15 percent this year, after more than quadrupling from the end of 2002 to the end of last year.

The Standard & Poor’s 500 index added 0.9 percent as of 11:04 a.m. in New York. It has advanced 13 percent this year, outperforming the Chinese measure by the most for any first half in fifteen years. The U.S. benchmark has climbed 139 percent since March 2009, the biggest advance since the 1990s technology bubble.

PetroChina (857), the most valuable company in the world as recently as March 2010, lost 28 percent this year in Hong Kong trading through yesterday, wiping out $51 billion in value. The company posted an 8 percent decline in first-quarter earnings, its fourth straight drop, as demand fell for oil products. ICBC, the biggest Chinese lender, has tumbled 14 percent this month.

Slower Growth

The seven-day repurchase rate, a gauge of interbank funding availability, jumped to a record high of 12.45 percent on June 20 before falling to 7.3 percent yesterday. It is still almost double this year’s average of 3.8 percent.

“We have had a long-standing concern over balance sheet quality of Chinese banks,” Derrick Irwin, a Boston-based emerging markets money manager at Wells Capital Management, which oversees about $342 billion, said in an e-mail. “If liquidity continues to be tight and growth continues to slow, the effects are difficult to predict.”

Fitch Ratings Ltd. estimates China’s total credit, including off-balance-sheet loans, swelled to 198 percent of gross domestic product in 2012 from 125 percent four years earlier. That exceeded the growth seen before the banking crises in Japan and South Korea in the 1990s, according to Fitch.

State Giants

Goldman Sachs Group Inc. and China International Capital Capital Corp. have cut growth projections for China this year to 7.4 percent, below the government’s 7.5 percent goal. That would be the slowest expansion since 1990 and the first time that the government misses its target since 1998.

China’s economic growth slowed to 7.7 percent in the first quarter, from an average of 10 percent annual growth rate over the last decade, as record loan growth failed to boost productivity.

“You had a credit binge of an unprecedented degree in China,” Ruchir Sharma, the managing director and head of emerging markets at Morgan Stanley Investment Management, said on Bloomberg Radio’s “Bloomberg Surveillance” with Tom Keene and Sara Eisen. “The state-owned companies in China have become too big and they are sort of slow-witted giants.”

Frank Tian, an investment manager at Aberdeen Asset Management, which oversees about $322 billion worldwide, said the recent selloff in Chinese stocks has created buying opportunities. While banks may suffer as their loan quality deteriorates, PetroChina will benefit from demand for energy and the government loosening controls on fuel prices, Tian said.

Biggest Bank

PetroChina’s market value was just $2.2 billion below that of International Business Machines Corp. and $3.8 billion less than Wells Fargo, meaning the rankings could shift again with any rally in Chinese equities.

Expansion in the U.S. accelerated to 1.8 percent in the first quarter, according to revised data released yesterday, from 0.4 percent in the fourth quarter. Consumer spending rose 2.6 percent in the first three months, the fastest in two years.

Federal Reserve Chairman Ben S. Bernanke said last week the central bank may slow its quantitative-easing stimulus program this year if economic growth is in line with projections.

Exxon Mobil, the world’s largest oil producer, has gained 3.8 percent this year, overtaking Apple Inc. (AAPL) as the biggest company in the world with a market value of $398 billion. That is more than the size of Thailand’s economy, data compiled by Bloomberg show.

Export Focus

Johnson & Johnson (JNJ) gained 24 percent this year as first-quarter earnings excluding one-time items beat forecasts.

The top 10 companies include Google Inc. (GOOG), Microsoft Corp. (MSFT), Berkshire Hathaway Inc., Wal-Mart Stores Inc. (WMT), General Electric Co. and Chevron Corp. Wells Fargo, with a market capitalization of $218 billion, became the world’s most valuable bank and 10th biggest company.

Chinese companies made up five of the world’s 10 biggest at the peak of the stock market bubble in October 2007. State-owned enterprises PetroChina, China Mobile Ltd. (941), China Petroleum & Chemical Corp. and China Construction Bank Corp. were all included in the list. China Mobile’s market capitalization has shrunk to $200 billion from $405 billion, Bloomberg data show.

Premier Li Keqiang, who took office in March, has pledged to open the economy and strip power from the government as it turns away from an export-led growth model. While the changes will benefit the economy in the long run, it may depress growth in the short term, according to Steven Sun, a Hong Kong-based China equity strategist at HSBC Holdings Plc.

“The market will continue to struggle,” Sun said in an interview on Bloomberg Television. “The economic challenges are greater than in 2008 and the policy choices are fewer.”

Chinese companies exit global top ten | beyondbrics

Chinese companies exit global top ten

Jun 27, 2013 1:18pm by Stefan Wagstyl

In the far-off days before the global crisis, there were as many as five Chinese companies in the world’s top ten by market valuation. Now there are none.

Even though the Chinese economy is about 75 per cent larger than it was at the end of 2007, the poor performance of the country’s stock market has held back its companies’ advance in the world rankings. Meanwhile, the surge in US equities has propelled American companies back to global dominance. Despite the continuing emergence of emerging markets, all 10 of the top 10 are American.

As Bloomberg reported on Thursday, the last Chinese company to be ousted from the top 10 was PetroChina, the state oil producer that was the world’s sixth-biggest company as recently as May.

Here are our own tables of the change since October 2007, when the Chinese stock market peaked and Chinese companies were on top of the world:

Top global companies by market cap October 2007

Country Sector Market value $bn
1 Exxon Mobil US Oil & Gas Producers 498.0
2 General Electric US General Industrials 409.1
3 China Mobile CHINA Mobile Telecommunications 408.1
4 Industrial & Commercial Bank of China CHINA Banks 372.9
5 Microsoft US Software & Computer Services 332.8
6 Gazprom RUSSIA Oil & Gas Producers 292.1
7 Royal Dutch Shell UK Oil & Gas Producers 277.0
8 China Petroleum & Chemical (Sinopec) CHINA Oil & Gas Producers 270.6
9 China Construction Bank CHINA Banks 267.9
10 China Life Insurance CHINA Life Insurance 259.0
11 AT&T US Fixed Line Telecommunications 251.1
12 BP UK Oil & Gas Producers 244.9
13 HSBC UK Banks 230.0
14 BHP BILLITON AUSTRALIA/UK Mining 228.8
15 EDF FRANCE Electricity 222.1

Top global companies by market cap June 2013

Rank Country Sector Market value $bn
1 Exxon Mobil US Oil & Gas Producers 399.28
2 Apple US Technology Hardware & Equipment 373.65
3 Google US Software & Computer Services 290.02
4 Microsoft US Software & Computer Services 286.86
5 Berkshire Hathaway US Nonlife Insurance 278.34
6 Wal Mart Stores US General Retailers 245.78
7 Johnson & Johnson US Pharmaceuticals & Biotechnology 244.34
8 General Electric US General Industrials 240.41
9 Chevron US Oil & Gas Producers 229.03
10 Wells Fargo US Banks 217.26
11 IBM US Software & Computer Services 216.06
12 Petrochina CHINA Oil & Gas Producers 214.20
13 Industrial & Commercial Bank of China CHINA Banks 212.50
14 Procter & Gamble US Household Goods & Home Construction 212.14
15 Nestle SWITZERLAND Food Producers 208.74

Source: Datastream

In fact, the shift is even bigger than it appears because PetroChina became the world’s largest company by market cap, with a value of $1,000bn, in early November 2007 when it listed its A shares alongside the H shares. Had it done so earlier, it too would have been in the top ten, raising the China total to six.

While US company executives perhaps deserve some credit for the way they have managed their businesses through the global financial crisis, the main reason for the recovery US groups’ market capitalisation is this:

The recent slump in Chinese stocks has been particularly damaging to Chinese companies’ global rankings:

On Thursday, Chinese stocks ended almost flat, down just 0.1 per cent, as the market stabilised amowing its recent battering. Investors took fright at the central bank’s moves to squeeze the interbank money markets and force lenders to slow over-rapid credit growth. Coming hot on the heels of the US Federal Reserve’s announcement of the possible end to QE, investors are concerned that the supply of cash that has washed through world financial markets, including China’s, is drying up.

There are also concerns about the slowdown in the Chinese economy, and its potential impact on company finances. The state-run giants that dominate the equity markets by valuation may struggle to adjust to the changing outlook – as they are not seen as the nimblest of operators. Their position in global market cap tables may be the least of their worries.

 

[Serpiente_Plyskeen]

China’s central bank assures financial markets - FT.com

China’s central bank assures financial markets
June 28, 2013 8 :12 am

By Simon Rabinovitch in Shanghai

Zhou Xiaochuan, governor of the People's Bank of China speaks at the Lujiazui Financial Forum©Bloomberg

China will ensure there is enough money in the economy for the smooth functioning of its financial markets, central bank governor Zhou Xiaochuan said in his first public comments since the country was hit by a cash crunch.

Mr Zhou did not directly mention the cash crunch, which last week sent interbank rates into double digits and stoked antiestéticars that the Chinese financial system was freezing up. But he indicated that the People’s Bank of China did not want to see such dislocations.

“We will use all kinds of tools and methods to appropriately adjust liquidity and to maintain the overall stability of markets,” he said in a speech at a financial forum in Shanghai.

Interbank rates have eased over the past three days since the central bank pledged to provide direct cash injections to overextended lenders, but they still remain nearly twice as high as normal.

Analysts believe the tightening of monetary conditions could act as a major extra drag on Chinese growth at a time when the economy is already weakening. But Mr Zhou was sanguine about the economy, saying it was developing in a steady manner.

“Although growth has slowed somewhat, overall it is still reasonable,” he said.

Bankers and investors in China were frustrated by the central bank’s slow response to the spike in interbank rates and have also criticised its communication policy, saying its lack of transparency exacerbated the feeling of panic. The Chinese stock market plunged as much as 15 per cent in three days before clawing back some of those losses.

“Financial markets have always been very sensitive,” Mr Zhou said. “Markets will respond very quickly to whatever signal they detect. Because of this, they are helpful for discovering problems and they are helpful for resolving problems.”

He also said the PBoC would guide banks towards a “reasonable” level of growth. Chinese credit issuance has risen to more than 22 per cent year-on-year so far in 2013, while nominal gross domestic product growth has dipped below 10 per cent, a sign of diminishing returns on capital.

By allowing money rates to settle into a higher range, many analysts believe the central bank is trying to force banks to rein in their credit growth and to lend more responsibly.

Speaking at the same financial forum, Ji Zhihong, head of research at the central bank, said that it was important that Beijing show “tough love” to the country’s commercial banks rather than “spoiling” them.

China Bad-Loan Alarm Sounded by Record Bank Spread Jump - Bloomberg

China Bad-Loan Alarm Sounded by Record Bank Spread Jump
By Bloomberg News - 2013-06-28T04 :18 :42Z

Borrowing costs for Chinese banks have surged the most in at least six years this month as rating companies say a cash crunch threatens to swell bad loans.

The yield spread for one-year AAA bank bonds over similar-maturity sovereign notes jumped 56 basis points so far this month to 163 basis points, the most in ChinaBond records going back to 2007. The similar AA gap widened 59 basis points to 188. Even as China Construction Bank Corp. (939) President Zhang Jianguo said yesterday cash conditions have normalized, the benchmark seven-day repurchase rate was fixed at 6.85 percent, almost twice the 3.84 percent average for this year.

Money-market rates touched the highest level last week since at least 2003, prompting three of the largest rating agencies to warn banks may run out of cash to pay investors in their wealth management products and to extend new loans, increasing the risk their customers will default. The People’s Bank of China is seeking to wring speculative lending out of the system after total credit approached 200 percent of gross domestic product, according to Fitch Ratings.

“There could be unintended consequences from the central bank’s approach,” said Liao Qiang, a Beijing-based director at Standard & Poor’s. “We expect some deleveraging at banks’ interbank and wealth management businesses to unfold. Credit growth would slow. This could pressure banks’ asset quality.”

Swaps, Bonds

The one-year interest-rate swap, the fixed cost needed to receive the floating seven-day repurchase rate, touched an all-time high of 5.06 percent on June 20, according to data compiled by Bloomberg. The one-day repo rate surged to a record 12.85 percent the same day, according to a daily fixing announced by the National Interbank Funding Center.

The yield on 10-year government bonds rose 13 basis points to 3.60 percent last week, while the one-year borrowing cost jumped 51 basis points to 3.61 percent, inverting the so-called yield curve for the first time in ChinaBond data going back to 2007. The 2023 yield closed at 3.53 percent yesterday.

Bad loans at banks including Industrial & Commercial Bank of China Ltd. have increased for six straight quarters through March 31, the longest streak in at least nine years.

Chinese commercial banks’ outstanding non-performing loans rose 20 percent to 526.5 billion yuan ($86 billion) at the end of the first quarter from a year earlier, accounting for 0.96 percent of total lending, according to data from the China Banking Regulatory Commission.

Those figures don’t reflect the real amount of debt because of the ways banks move loans off their books, Charlene Chu, Fitch’s Beijing-based head of China financial institutions, said in April. Some loans are bundled and sold to savers as wealth-management products, which pay more than regulated deposits, she said. Other assets are sold to non-bank institutions, including trusts, to lower bad-debt levels.

Increasing Risk

Non-performing loans may rise faster as weaker borrowers have difficulty refinancing credit in the coming months, Moody’s Investors Service warned on June 24. The official Xinhua News Agency said in a June 23 analysis that risk is increasing in the financial system as the shadow-banking sector expands and institutions make more highly leveraged investments.

Shadow lending flourishes in China because an estimated 97 percent of the nation’s 42 million small businesses can’t get bank loans, according to Citic Securities Co., and savers are seeking higher returns. The industry may be valued at 36 trillion yuan, or 69 percent of gross domestic product, JPMorgan Chase & Co. estimated last month. The crackdown may damage the economy by shrinking funding for smaller companies, Barclays Plc said on May 20.

Wealth Management

The nation’s outstanding amount of wealth-management products rose by 500 billion yuan to 13 trillion yuan in the first five months of this year, accounting for 16 percent of the nation’s deposits, according to estimates published by Fitch on June 10. That compares with a 4 trillion yuan increase for the whole of 2012.

An estimated 1.5 trillion yuan of wealth management products were to mature in the last 10 days of this month, Fitch Ratings said June 21. Issuance of new products and borrowing from the interbank market are among the common sources of repayment for maturing products, it said.

Fallout from unofficial lending led more than 80 businessmen to commit suicide or declare bankruptcy over six months in 2011-2012 in the southeastern exporting hub of Wenzhou, a city of 9 million residents whose 400,000 small businesses make products ranging from cigarette lighters to eyeglasses.

Disorderly Unwinding

“The problem is that when debt levels have got so high, and it’s more debt that keeps the existing debt afloat, you absolutely have to stop the process, but it’s very difficult to do so in an orderly way,” said Michael Pettis, a finance professor at Peking University “There’s always a risk that the unwinding of the debt becomes disorderly and the PBOC will be blamed for mismanaging the process.”

About 563 new wealth products were issued last week, two-thirds more than the previous period, according to Benefit Wealth, a Chengdu-based consulting firm that tracks the data. China Minsheng Banking Corp., the nation’s first privately owned lender, is marketing a 35-day product that offers an annualized yield of 7 percent. China’s one-year benchmark deposit rate is 3 percent.

Mid-sized banks get an average of 20 percent to 30 percent of their funds from such products, according to Fitch, which didn’t name specific lenders. That makes these banks more susceptible to default risks on the products.

New Curbs

The China Banking Regulatory Commission told banks in March to cap investments of client money in debt that isn’t publicly traded at 35 percent of all funds raised from the sale of wealth management products. The next steps may include tightening that sends some smaller financial institutions into bankruptcy, according to analysts at Nomura Holdings Inc.

“What we will see over the next half year is credit growth overall will slow down a bit,” Stephen Green, head of Greater China research at Standard Chartered Plc, said in a Bloomberg TV interview from Shanghai. “If interbank rates remain quite volatile and at high levels, then that’s obviously going to have a bigger feed through to credit.”

The PBOC’s decision to refrain from pumping “hefty” sums into the financial system last week was a “bold but essential move to discipline unchecked lenders,” Xinhua said in a June 26 commentary, adding that the pain is needed to pave the way for a more sustainable economy.

Proactive Attitude

China Construction Bank president Zhang welcomed what he called the PBOC’s “proactive attitude” to a changing market situation.

“China Construction Bank hasn’t stopped new lending in any sort of period, or to any sort of clients,” Zhang said at the opening of a bank branch in Taipei yesterday. “Recently there was a temporary liquidity squeeze condition, but CCB’s cash is so adequate that we were able to lend money to our peers. The cash shortage condition has eased in the last two days, and by now the situation has already normalized.”

The central bank, which was silent during the worst of the cash crunch, published a statement on June 24 saying there’s a reasonable amount of liquidity in the financial system and that banks should control risks from credit expansion, including those associated with maturity mismatches.

Maintain Stability

The PBOC will use all kinds of tools to appropriately adjust liquidity in the market and maintain the overall stability, Governor Zhou Xiaochuan said at a forum in Shanghai today. China will continue to implement a prudent monetary policy and allow more foreign participation in the interbank money, foreign-exchange and bond markets, he said.

“No policy maker can afford to be blamed for being responsible for an unnecessary, fully-avoidable financial meltdown and growth hard landing,” Bank of America Merrill Lynch economists wrote in a report yesterday. “With a month of mess in the interbank liquidity, it’s time to re-highlight stability and it’s time for markets to calm down.”

The cost of protecting China’s government debt from default slipped five basis points in New York to 116 yesterday and is up 29 basis points this month, according to prices from data provider CMA. The contracts pay the buyer face value in exchange for underlying securities or the cash equivalent if a borrower fails to adhere to its debt agreements. The contract on Bank of China Ltd. (3988) dropped 28 basis points to 165 yesterday and is 51 basis points higher for June.

“Smaller banks short of deposits will face significant pressure from liquidity management,” said Zhou Hao, a Shanghai-based economist at Australia & New Zealand Banking Group Ltd. (ANZ) “If the weakest link breaks, there’s an increase in the likelihood of creating systemic risks.”

No 1997 Asian Crisis Return as China Trembles: Cutting Research - Businessweek

No 1997 Asian Crisis Return as China Trembles: Cutting Research

By Simon Kennedy
June 27, 2013

Asia’s 1997 financial crisis won’t repeat itself, even as a slowing Chinese economy unnerves the region’s financial markets.

So says Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc. He concluded in a June 25 report that current “differences outweigh the similarities.”

While still predicting Asia is headed for slower growth in coming years, Neumann cited several reasons for expecting the continent to avoid another period of turmoil akin to 16 years ago. Then, countries from Thailand to South Korea were forced to devalue their currencies and were propelled into recession.

Current account positions are now mostly in surplus, which should cushion the blow from an outflow of capital, Neumann said. Banking systems also appear more robust, with better regulatory systems, higher capital buffers and lower loan-to-deposit rates.

There are also no “glaring” mismatches between assets and liabilities, he said. In the 1990s, most external borrowing was in U.S. dollars. By contrast, most of the debt that investors have taken on in recent years is in local currency, so a surge in the dollar won’t impose a spike in debt-service costs.

The region also enjoys much higher foreign exchange reserves than in the 1990s and countries have more power to swap currencies at short notice, giving them firepower to fight currency attacks.

Still, there are new vulnerabilities, said Neumann. Financial volatility complicates the ability to pay debts and bond markets are now bigger than they were. Whereas in the 1990s leverage lay in the hands of businesses, now it’s households, small companies and government entities that bear the most debt.

“On balance the dissimilarities with 1997 outweigh the parallels,” said Hong Kong-based Neumann, a former consultant to the World Bank. “Asia’s defenses are more robust nowadays. Most likely, Asia’s growth has just downshifted to a less spectacular pace.”

* * *

The Federal Reserve, on the other hand, could repeat the past by raising interest rates as early as the summer of 2014 if a recent improvement in the labor market is sustained, according to Deutsche Bank Securities Inc.

Chief U.S. Economist Joseph LaVorgna found that the central bank has almost always lifted its benchmark within one year of when the number of Americans first applying for unemployment benefits averaged 350,000 or less for a quarter. With jobless claims just below that, averaging 345,600 in the quarter so far, the trigger could be reached in a week.

LaVorgna himself doesn’t expect rates to rise until early 2015, because this time the Fed has to first unwind its quantitative easing and see how the markets absorb that. The historical relationship means his rate call might be wrong, as might his prediction that it will take several quarters for the U.S. Treasury 10-year note yield to rise above 3 percent, LaVorgna said in a June 24 report to clients.

Jobless claims data are an “excellent intermediate-term predictor of monetary policy,” especially in the case of higher rates, LaVorgna said. “If past is prologue, whereby low and declining claims accurately foreshadow a noticeable pickup in hiring -- and hence a sharp decline in the unemployment rate -- then monetary policy makers will not be waiting until 2015 before raising the Fed funds rate.”

With the exception of the early 1990s, when it took a year, Fed tightening has always coincided with claims reading 350,000, he said.

When the trigger was reached in the third quarter of 1958, the Federal Funds Target Rate (FDTR) went up to 1.32 percent from 0.94 percent, wrote LaVorgna, a former economist at the Fed Bank of New York. In the third quarter of 1961, claims fell 27,000 to 331,000 and the Fed boosted its key rate to 2.4 percent from 1.68 percent. Similar patterns held true in 1984 and 2004.

* * *

A tennis ball used at Wimbledon travels 50,570 miles (81,370 kilometers) before landing on a racket, when its materials are included.

An analysis of the ball’s supply chain by Warwick Business School associate professor Mark Johnson found it involves flying between 11 countries and across four continents to the manufacturing plant in Bataan in the Philippines before heading to London.

Among the materials used to make a ball are clay from South Carolina, wool from New Zealand, silica from Greece, magnesium carbonate from Japan, rubber from Malaysia and sulfur from South Korea.

The balls are made by Slazenger, a brand of Sports Direct International Plc (SPD), the U.K.’s biggest sporting-goods retailer.

“It shows the global nature of production these days, and in the end, this will be the most cost-effective way of making tennis balls,” Johnson said.

* * *

An inability to do basic mathematics may have helped foster the U.S. subprime mortgage crisis.

In a paper published this week by the Proceedings of the National Academy of Sciences, economists tested the numerical skills, cognitive ability and financial literacy of 399 people who had taken out subprime mortgages from January 2006 to August 2007.

Among the questions asked: “In a sale, a shop is selling all items at half price. Before the sale, a sofa costs $300. How much will it cost in the sale?”

The authors found that those who defaulted were worse at simple math than those who hadn’t, wrote Kristopher Gerardi of the Federal Reserve Bank of Atlanta, Lorenz Goette of the University of Lausanne and Stephan Meier of Columbia University.

“Our results indicate possibly large benefits from increased financial education of homeowners,” they said.

* * *

The global economy still has “plenty of room to grow,” according to Goldman Sachs Group Inc. economist Jose Ursua.

He measured output gaps -- the difference between an economy’s actual output and the level at which further growth starts fanning inflation -- for 40 countries.

The results suggested a gap of 2.4 percent between the world economy’s current output and its potential. Developed economies have a 3.4 percent differential and there’s a 1 percent gap in emerging markets, New York-based Ursua said in a June 26 report.

“When the recent bout of market turbulence abates, markets should begin to reflect the view that the world’s ‘room to grow’ is larger than is sometimes perceived, and adapt to a gradual rather than abrupt return to normality,” Ursua said.

* * *

Labor’s share of global income has “significantly declined” since the early 1980s across a majority of countries and industries, according to University of Chicago economists.

The share of income paid to labor has dropped 5 percentage points over the last three decades, estimated Loukas Karabarbounis and Brent Neiman in a paper published this month by the National Bureau of Economic Research in Cambridge, Massachusetts.

Of 56 countries studied, 38 showed downward trends in their labor shares, as did six of 10 major industries.

A decrease in the relative price of investment goods linked to advances in information technology and the computer age induced the shift toward capital, the economists said.

* * *

People may not be happy while they work.

That’s the finding of a study cited in the latest edition of CentrePiece, the magazine of the London-based Centre for Economic Performance at the London School of Economics.

Using smartphone technology, Alex Bryson of the National Institute of Economic and Social Research and the University of Sussex’s George MacKerron were able to tap information on well-being in real time. That differs from previous happiness studies which typically ask people how they feel in retrospect.

They relied on insights from people who downloaded an app that asked them at random times to complete a short survey about how they were feeling. They then were told to pick one of 40 options that best described what they were doing at that moment.

More than 1 million observations from tens of thousands of people showed that paid work ranked lower than any of the 39 other activities with the exception of being sick in a bed. The effect is equivalent to a 7 percent to 8 percent reduction in happiness relative to someone not working.

“People tend to be positive about paid work when reflecting on the meaning and value of their lives,” the CEPR said in a statement accompanying the report. “The analysis of the new ‘Mappiness’ data source indicates that actually engaging in paid work is one of the activities that people least like doing in terms of their immediate feelings of happiness.”

* * *

The International Monetary Fund has become faster in responding to crises since the mid-1980s as policy makers realized local events can have international consequences, according to the Central Bank of Chile.

Focusing on standby arrangements, the main channel of aid, Princeton University’s Ashoka Mody and Diego Saravia of the bank found in a report released this month that the average timeframe between crisis and program shortened from 19 months in the 1977-1986 period to 15 months in the years after 1986.

Their study was based on 300 rescues, 200 of which were associated with turmoil that had occurred in the previous two years. Greater economic and financial stress have accelerated aid programs, while the Latin American debt crisis of the 1980s created more awareness of international spillovers and systemic risks.

“The combination of evidence from different methodologies suggests that this led to faster negotiations of IMF programs after 1986, especially for the more severe crisis or when the crisis country had a fixed exchange rate,” said Mody and Saravia.

* * *

It’s not what Fed chairmen say, it’s the way they say it.

A University of Edinburgh study found the tone adopted by U.S. central bank chiefs has a “small but significant” impact on the price of gold and silver regardless of the policy outlined in the speech. They used gold and silver as proxies for the response of financial markets, according to the report issued June 17.

The research was based on text-analysis software to measure the level of variables such as certainty, optimism and realism in 400 speeches and testimonies from May 1999 to May 2012. They found Alan Greenspan, who led the Fed from 1987 to 2006, was more likely to convey activity and realism in his speeches, while incumbent Ben S. Bernanke is more optimistic.

A 1 percent increase in the amount of certainty in Greenspan’s tone was enough to lift the price of gold by 0.1 percent, said authors Kristjan Thorarinsson and Arman Eshraghi.

Ah, y yahoo mail abandona China - los emails chinos han sido migrados a aliyun.com :
Yahoo China to cease e-mail service | ZDNet

Yahoo China to cease e-mail service

Summary: Alibaba Group says Yahoo China's e-mail service will shut down on August 19, and advises users to start migrating their data to its alternative e-mail service called Aliyun.

By Cyrus Lee for View from China | April 19, 2013 -- 09:32 GMT (10:32 BST)

Yahoo China will cease its e-mail service on August 19 and has advised users to register for an account with Alibaba's e-mail service, called Aliyun, to retain their data.

In an announcement Thursday, titled "Yahoo China's e-mail services start overall migration on April 18, 2013", Alibaba Group said Yahoo's e-mail service will only remain available for the amowing four months. The Chinese Web giant owns Yahoo's operations in China.

With an Aliyun account, Yahoo China e-mail users will be able to retain e-mail messages and continue to receive e-mail sent to their Yahoo Mail account even after it ceases operations in August. However, this e-mail redirect will only be supported until December 31, 2014.

The announcement comes as Alibaba prepares to reduce its dependence on Yahoo's global infrastructure.

Zhang Jianhua, Yahoo China's public relations executive, told Chinese media the company's e-mail services were supported by the U.S. headquarters' global unified mailbox-based systems. As mutual agreements between both companies only allow Alibaba to use the system for four more years--from 2012--the company is making moves now to give users options as early as possible, Zhang said.

Chinese media, however, suggested the termination of agreement between the two companies played only a minor part of the cease of service today. They pointed to Yahoo China's diminishing market presence.

Over the past six years, the market share of e-mail service providers have altered dramatically in the country. Five local services providers including Tencent and NetEase had seized majority share, while Yahoo China slumped to sixth position, according to Hitwise data.

The data also showed that termination of Yahoo China's e-mail services will only affect 2 percent of e-mail users in the country. Market share of Yahoo's e-mail service in China has continued to shrink over the past 12 months to its current 1.9 percent.

Alibaba in 2005 sold 40 percent of its stock to Yahoo in a US$1 billion deal to acquire the latter's China operations. Last year, the Chinese Web giant bought back half of the stake Yahoo owns for US$7.6 billion as it preps for its initial public offering.

 

[arckan69]

Un pequeño análisis en castellano, se agradece después de tanto inglés.

China: no importa la cantidad… ni la calidad | David de Bedoya | Blog personal

China ha vuelto a encender y apagar la luz de alarma de la liquidez en todos los mercados. Hace una semana su curva de tipos del mercado interbancario estaba invertida. Sin embargo, bastaron unas palabras del Banco Central Chino, una inyección controlada de liquidez y la eterna promesa de la intervención si las cosas se ponen antiestéticas para calmar los ánimos y restaurar la confianza entre la oferta crediticia. Sin embargo, la pregunta sigue sobre la mesa y no es otra que si podría explotar China. Para ello, los que más confían en la varita mágica de los reguladores, insisten en que la estrategia del Banco Chino es estupenda. Que es más que razonable la actitud reciente que está adoptando la autoridad monetaria del gigante asiático: mantener los problemas puntuales de liquidez bajo control, instrumentar inyecciones de liquidez y reducir la actividad de la “banca en la sombra. Y es que la reconducción de la estrategia de crecimiento en China pasa por disminuir el recurso al crédito como factor de crecimiento (Banco Santander dixit).

Sin embargo, como ocurre muchas veces, no se están comentando todas las variables. El caso chino da para escribir varios libros y para horas y horas de debates entre los que sostienen que China vive en una gigantesca burbuja y los que sostienen que no hay una gigantesca burbuja. Si bien es cierto que hay muchísimo crédito circulando, y que este es muy superior al que cabría esperar fruto del ahorro del periodo anterior, también es cierto que la capacidad de producción en China parece aún sólida - con los objetos que se producen se pagan las deudas – incluso con los malos datos del PMI recientes la economía parece que puede seguir produciendo lo necesario para pagar sus obligaciones en tiempo y forma.

Dejando de lado la discusión sobre la burbuja o la no burbuja,observemos el mercado de crédito. Se insiste en que el regulador no quiere que la expansión crediticia sea muy grande, no quiere que toda la liquidez del sistema se esparza sin remedio y, por ello, le inyecta dosis mínimas de vez en cuando y de manera muy controlada. Bien, el problema no es lo que esté haciendo ahora, el problema es que el regulador chino ya sedimentó los problemas hace tiempo y ahora, con sus inyecciones, lo único que hace es postergarlo en el tiempo. Impedir la reestructuración (vía estallido crediticio, claro está). Aún así, la situación parece controlada y muchos hablan de crecimiento de calidad. Permítanme dudarlo.

La economía china produce sobre la base de un crédito que viene de tiempo atrás, sobre la base de estructuras muy apalancadas que venían del extranjero (empresas deslocalizadas de otras economías nolow cost) que sin la liquidez a espuertas pueden verse seriamente tentadas a liquidar sus activos. Llegados a este punto se producirían los impagos y, acto seguido, el sistema bancario colapsaría. Al ponerlas sobreaviso de que esto “puede” ocurrir tal vez se eche la mano en el freno de mano, se frena un poco la producción de recursos con el consiguiente ahorro que ello conlleva. Pero ello no implica que lo que se sigue produciendo tenga más calidad. No por el hecho de endeudarme menos y producir menos implica que lo menos que produzca tiene mejor calidad. Los pasivos van a ser los mismos y los activos muy similares, crecerán a menor ritmo únicamente. El Banco Central, inyectando menos dinero y de manera controlada, no consigue que el tejido productivo genere calidad. Si así fuera, Bernanke al dejar de imprimir en 2014 podría elevar a los altares la calidad americana. No. Si hubiera problemas en China esos no se solucionan por imprimir un poco menos o dejar de imprimir. La solución pasa porreestructuración, y sí, la restricción monetaria es un paso importante para permitir la reestructuración. Condición necesaria, pero no suficiente.

 

[kemao2]

Mucha deuda externa para el comercio veo yo. Algo no cuadra en estos datos del mayor exportador del mundo

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La deuda externa china aumenta hasta 765.000 millones de dólares en marzo


La deuda externa de China aumentó hasta los 764.970 millones de dólares a finales de marzo, por encima de la cifra registrada en 2012 cuando sumó 736.990 millones de dólares, informó la Administración Estatal de Divisas (AED).

La mayor parte de la deuda contraída con acreedores extranjeros es a corto plazo y ascendió hasta los 565.680 millones de dólares, un incremento respecto al dato de diciembre del año pasado cuando alcanzó los 540.930 millones de dólares.

Por otro lado, la deuda a medio y largo plazo se incrementó hasta los 199.290 millones de dólares (en diciembre de 2012 fue de 196.060 millones de dólares), según precisaron las autoridades de divisas del país en su página web.

La AED también señaló que los riesgos generados por el ascenso de la deuda externa de China a corto plazo son controlables ya que la deuda pendiente exterior china está relacionada principalmente con el comercio y debido a que la proporción de la deuda externa a corto plazo con respecto al comercio exterior y la reserva de divisas, aún es pequeña.

El volumen de deuda no incluye las cifras de las regiones administrativas especiales de Hong Kong y Macao, ni la correspondiente a Taiwán.


La deuda externa china aumenta hasta 765.000 millones de dólares en marzo - elEconomista.es