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Chinese shares suffer worst run for 19 years amid cash crunch

  • Chinese stocks have closed down for the ninth consecutive session, the worst run since 1994, amid increasing fears of another cash crunch in the short-term money markets.
  • The seven-day repurchase rate soared 100 bps to a six-month high of 7.6%, representing a jump of 328 bps this week.
  • The spike came as borrowing remained difficult despite the People's Bank of China making an emergency cash injection in the financial system yesterday after being inactive for over two weeks. The PBOC didn't provide too many details, although the amount was reported to be 200B yuan ($32.9B).
  • "Market participants have to be able to see it and know the quantity and tenor of liquidity assistance in order to be reassured," says HSBC's Pin Ru Tan. "If they do not, it is natural to remain cautious.
  • The Shanghai composite fell 2% and the Hang Seng -0.2%.
  • ETFs: FXI, PGJ, GXC, FXP, HAO, CYB, YINN, CNY, TAO, CHIQ, CHIX, MCHI, YANG, PEK, ASHR, CQQQ, XPP, QQQC, DSUM, YAO, CHXX, CHII, FXCH, CHXF, KWEB, ECNS, CHIE, YXI, CHIM, KFYP, FCA, TCHI, CHLC, CHNA
Comments (7)
  • Michael Nau
    , contributor
    Comments (972) | Send Message
     
    China's financial system is a house of cards.
    20 Dec 2013, 07:04 AM Reply Like
  • Ohrama
    , contributor
    Comments (506) | Send Message
     
    At least there the people seems to be motivated and willing to work hard and sacrifice present pleasure for the sake of future prosperity counteracting the governmental problems. What about here at the great USA? What does it say about our house of cards?
    20 Dec 2013, 07:16 AM Reply Like
  • Michael Nau
    , contributor
    Comments (972) | Send Message
     
    The US definitely has its own problems, but our financial and household sectors are deleveraging. Our financial sector also has better transparency and is better financed. I'd bet my money on China having a financial crisis before the U.S.
    20 Dec 2013, 08:22 AM Reply Like
  • june1234
    , contributor
    Comments (2499) | Send Message
     
    Except for the $70 trillion not billion of cheap, leveraged , underinsured US issued bond debt out there. Everybody uses the same game plan
    20 Dec 2013, 08:51 AM Reply Like
  • Tao Jaxx
    , contributor
    Comments (1274) | Send Message
     
    Not sure what PBOC is up to. Not sure they themselves know what's going on.
    They started off with the idea that they would "punish" the market by making life (financing) difficult for Wealth management products issuers (aka "Shadow Bankers"). Looks like the market will come back and bite their backside.
    That's typicallly how things start when they get out of hand.
    20 Dec 2013, 07:38 AM Reply Like
  • june1234
    , contributor
    Comments (2499) | Send Message
     
    You can look at any EM from Brazil to Turkey and project the same.With the kind of leverage they play with no surprise;not like western worlds is any better. The Feds belief you can solve a leverage crisis with more leverage is as real as Santa Claus
    20 Dec 2013, 08:49 AM Reply Like
  • racchole
    , contributor
    Comments (309) | Send Message
     
    Borrowing isn't difficult in China. It just costs you 80% interest under-the-table.
    20 Dec 2013, 04:55 PM Reply Like
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