• Tag Archives Hong Kong
  • What a Gold-Backed Yuan and Cryptocurrencies May Mean for the Dollar

    Amoungst all the crypto news this, and crypto news that, was a tiny item appearing in the Nikkei Asian Review on September 1st. Reporting from Denpasar, Indonesia, Damon Evans wrote, ‘China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry.’
    Not bitcoin backed, not ethereum backed, g-o-l-d backed. How low tech of the Chinese. For the moment, oil is priced in dollars, whether it’s Brent or West Texas Intermediate.
    Evans explained,
    China’s move will allow exporters such as Russia and Iran to circumvent U. S. sanctions by trading in yuan. To further entice trade, China (the world’s largest oil importer) says the yuan will be fully convertible into gold on exchanges in Shanghai and Hong Kong.
    This will be China’s first commodities futures contract open to foreign companies such as investment funds, trading houses and petroleum companies.

    This post was published at Ludwig von Mises Institute on October 20, 2017.


  • Global Markets Shaken By Sudden Equity Sell-Off: Hong Kong Crashes, VIX Surges

    Has the market’s “melt-up” levitation finally ended? Of course, it could be much worse: as Bloomberg’s Paul Jarvis recalls, thirty years ago on this day traders around the globe were staring at their screens in disbelief as stock markets turned to a sea of red: the Dow, S&P 500, FTSE, DAX and CAC fell -23%, -20%, -10%, -9% and -10% respectively.
    Fast forward to 2017 and the day known as Black Monday appears as little more than a blip in U. S. and European stock markets’ relentless progress. Having closed above the 23,000 mark for the first time on Wednesday, the Dow Jones Industrial Average has led markets back from the abyss, rising more than 13-fold since falling 23% in a single trading session on Oct. 19, 1987. Then again, “all” it took was central banks collectively buying a little over 30% of global GDP in debt over the past 3 decades, and especially in the past 8 years, to create the world’s most artificial “bull market” and “recovery” in history, and one day there will be hell to pay, but not just yet. Instead, on “Not Green Thursday”, traders wake up today to a modern day version of mini Black Monday, in which a sudden “risk-off” equity selloff has swept across global markets during early European trading, before gradually running out of steam, following a day in which the Dow Jones closed at one of its most overbought levels in the past 100 years.

    This post was published at Zero Hedge on Oct 19, 2017.


  • Own this currency [no, it’s not a cryptocurrency]

    With the nearly daily moves to record highs among the hundreds of cryptocurrencies that currently exist, talking about ‘regular’ currencies seems about as out-of-fashion as that hideous shoulder pad trend from the 1980s.
    [Millennial readers: see here if you’re confused.]
    But there are actually a few currencies out there worth talking about right now.
    And top among them, especially for anyone holding US dollars, is the Hong Kong dollar.
    The Hong Kong dollar is different because it is ‘pegged’ to the US dollar at a pre-determined rate.

    This post was published at Sovereign Man on October 18, 2017.


  • The World Turned Upside Down

    Thoughts from the Frontline The World Turned Upside Down BY JOHN MAULDIN
    OCTOBER 14, 2017
    Options Email Print Where Has the Volatility Gone?
    A Bull Market in Complacency
    San Francisco, Denver, Lugano, and Hong Kong
    Strange things did happen here
    No stranger would it be
    If we met at midnight
    In the hanging tree.
    – Lyrics from the theme song of The Hunger Games
    If buttercups buzz’d after the bee,
    If boats were on land, churches on sea,
    If ponies rode men and if grass ate the cows,
    And cats should be chased into holes by the mouse,
    If the mamas sold their babies
    To the gypsies for half a crown;
    If summer were spring and the other way round,
    Then all the world would be upside down.

    This post was published at Mauldin Economics BY JOHN MAULDIN OCTOBER 14, 2017.


  • “My Watch Is Off”: HSBC Traders Used Code Words To Trigger Front-Running Trades

    According to prosecutor Carol Sipperly, former HSBC currency trader Mark Johnson used just four words to trigger a massive, international front-running operation that netted his firm some $8 million in illicit profits: “my watch is off.”
    The bank’s former global head of foreign exchange alerted the traders around the globe via a phone call in December 2011 that was recorded, a prosecutor said Thursday. The gambit was designed to take advantage of a $3.5 billion client order to buy sterling, the U. S. says.
    After Johnson’s trial recessed for the day, prosecutor Carol Sipperly asked that the jury hear the recordings on Friday, in which Johnson allegedly tipped off a trader in Hong Kong. That signal eventually reached others on both sides of the Atlantic, she said. Johnson was in New York that day, speaking to Stuart Scott, the bank’s former head of currency trading in Europe, who was in London, just before the transaction for its client, Cairn Energy Plc.
    Prosecutors say Johnson and Scott, along with other traders, bought pounds before the transaction. Johnson is on trial in federal court in Brooklyn, New York, accused of a scheme that produced a $8 million profit for his bank.

    This post was published at Zero Hedge on Oct 6, 2017.


  • Market Talk- October 6th, 2017

    The end of a holiday week for markets in Asia. We have to wait until Monday to see mainland China, South Korea and Hong Kong’s reaction to the US NFP’s release and also the reaction to the turn of the US Dollar Index. Markets that were opened were seeing futures initial response trading firmer as the US number is ‘accepted’. Lets just concentrate on the afternoons events, as it only feels the markets just smelt the coffee and woken-up – now that the weekend is upon us!
    The alarm clock came in the shape of a negative headline number to the US No-Farm Payrolls at -33k, with a 13k upward revision to previous release. Unemployment rate (September) came in 4.2%, participation rate 63.1% and a +0.5% average hourly earnings increase. The response was higher bond yields, stronger US Dollar, weaker oil (probably because of the USD strength), marginally weaker gold price – although the bias remains negative. Still, many question this US rally and even more are awaiting (or hoping for) a pullback. This remains the most unloved rally in years and now the market questions, ‘Is the FED about to get the blame for ending the anguish’! We won’t hear until December, but meanwhile the continued speculation on who gets next FED Chair remains a top talking point.

    This post was published at Armstrong Economics on Oct 6, 2017.


  • Here Are The Cities Of The World Where “The Rent Is Too Damn High”

    In ancient times, like as far back as the 1990s, housing prices grew roughly inline with inflation rates because they were generally set by supply and demand forces determined by a market where buyers mostly just bought houses so they could live in them. Back in those ancient days, a more practical group of world citizens saw their homes as a place to raise a family rather that just another asset class that should be day traded to satisfy their gambling habits.
    But, thanks to the efforts of global central banks, the days where home prices roughly reflected the ability of the marginal local buyer to afford those homes, is long gone. As a general rule of thumb, a house was historically considered “affordable” if it was less than 2.5 times a family’s annual gross income…by those metrics, at least according to the UBS Global Real Estate Bubble Index released earlier today, the median buyer can’t afford housing in pretty any of the major cities of the world.
    Buying a 60m2 (650 sqft) apartment exceeds the budget of people who earn the average annual income in the highly skilled service sector in most world cities. In Hong Kong, even those who earn twice the city’s average income would struggle to afford an apartment of that size. House prices have also decoupled from local incomes in London, Paris, Singapore, New York and Tokyo, where price-to-income multiples exceed 10. Unaffordable housing is often a sign of strong investment demand from abroad, tight zoning and rental market regulations. If investment demand weakens, the risk of a price correction will increase and the long-term appreciation prospects will shrink.

    This post was published at Zero Hedge on Sep 29, 2017.


  • Bond Market Bulls Embrace China Debt Downgrade

    It appears credit ratings agencies simply get no respect…
    Four months after Moody’s downgraded China to A1 from Aa3, unwittingly launching a startling surge in the Yuan as Beijing set forth to “prove” just how “stable” China truly is through its nationalized capital markets, S&P followed suit this week when the rating agency also downgraded China from AA- to A+ for the first time since 1999 citing risks from soaring debt growth, less than a month before the most important congress for Chiina’s communist leadership in the past five years is set to take place. In addition to cutting the sovereign rating by one notch, S&P analysts also lowered their rating on three foreign banks that primarily operate in China, saying HSBC China, Hang Seng China and DBS Bank China Ltd. are unlikely to avoid default should the nation default on its sovereign debt. Following the downgrade, S&P revised its outlook to stable from negative.
    ‘China’s prolonged period of strong credit growth has increased its economic and financial risks,’ S&P said.
    ‘Since 2009, claims by depository institutions on the resident nongovernment sector have increased rapidly. The increases have often been above the rate of income growth. Although this credit growth had contributed to strong real GDP growth and higher asset prices, we believe it has also diminished financial stability to some extent.”
    According to commentators, the second downgrade of China this year represents ebbing international confidence China can strike a balance between maintaining economic growth and cleaning up its financial sector, Bloomberg reported. The move may also be uncomfortable for Communist Party officials, who are just weeks away from their twice-a-decade leadership reshuffle.
    The cut will ‘have a relatively big impact on Chinese enterprises since corporate ratings can’t be higher than the sovereign rating,’ said Xia Le, an economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. ‘It will affect corporate financing.’

    This post was published at Zero Hedge on Sep 23, 2017.


  • S&P Downgrades China To A+ From AA- Due To Soaring Debt Growth

    Four months after Moody’s downgraded China to A1 from Aa3, unwittingly launching a startling surge in the Yuan as Beijing set forth to “prove” just how “stable” China truly is through its nationalized capital markets, moments ago S&P followed suit when the rating agency also downgraded China from AA- to A+ for the first time since 1999 citing risks from soaring debt growth, less than a month before the most important congress for Chiina’s communist leadership in the past five years is set to take place. In addition to cutting the sovereign rating by one notch, S&P analysts also lowered their rating on three foreign banks that primarily operate in China, saying HSBC China, Hang Seng China and DBS Bank China Ltd. are unlikely to avoid default should the nation default on its sovereign debt. Following the downgrade, S&P revised its outlook to stable from negative.
    ‘China’s prolonged period of strong credit growth has increased its economic and financial risks,’ S&P said. ‘Since 2009, claims by depository institutions on the resident nongovernment sector have increased rapidly. The increases have often been above the rate of income growth. Although this credit growth had contributed to strong real GDP growth and higher asset prices, we believe it has also diminished financial stability to some extent.”
    According to commentators, the second downgrade of China this year represents ebbing international confidence China can strike a balance between maintaining economic growth and cleaning up its financial sector, Bloomberg reported. The move may also be uncomfortable for Communist Party officials, who are just weeks away from their twice-a-decade leadership reshuffle.
    The cut will ‘have a relatively big impact on Chinese enterprises since corporate ratings can’t be higher than the sovereign rating,’ said Xia Le, an economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. ‘It will affect corporate financing.’
    ‘The market has already speculated S&P may cut soon after Moody’s downgraded,’ said Tommy Xie, an economist at OCBC Bank in Singapore. ‘This isn’t so surprising.’

    This post was published at Zero Hedge on Sep 21, 2017.


  • Pension Storm Warning

    Thoughts from the Frontline Pension Storm Warning BY JOHN MAULDIN
    SEPTEMBER 16, 2017
    Options Email Print Storms from Nowhere
    Blood from Turnips
    Promises from Air
    Chicago, Lisbon, Denver, Lugano, and Hong Kong
    This time is different are the four most dangerous words any economist or money manager can utter. We learn new things and invent new technologies. Players come and go. But in the big picture, this time is usually not fundamentally different, because fallible humans are still in charge. (Ken Rogoff and Carmen Reinhart wrote an important book called This Time Is Different on the 260-odd times that governments have defaulted on their debts; and on each occasion, up until the moment of collapse, investors kept telling themselves ‘This time is different.’ It never was.)
    Nevertheless, I uttered those four words in last week’s letter. I stand by them, too. In the next 20 years, we’re going to see changes that humanity has never seen before, and in some cases never even imagined, and we’re going to have to change. I truly believe this. We have unleashed economic and technological forces we can observe but not entirely control.
    I will defend this bold claim at greater length in my forthcoming book, The Age of Transformation.
    Today we will zero in on one of those forces, which last week I called ‘the bubble in government promises,’ which I think is arguably the biggest bubble in human history. Elected officials at all levels have promised workers they will receive pension benefits without taking the hard steps necessary to deliver on those promises. This situation will end badly and hurt many people. Unfortunately, massive snafus like this rarely hurt the politicians who made those overly optimistic promises, often years ago.

    This post was published at Mauldin Economics on SEPTEMBER 16, 2017.


  • Former JPMorgan Quant On Evading Chinese Capital Controls Via Bitcoin

    Mainland Chinese buyers have become a dominant force in real estate markets across the world. The Chinese government crackdown on outflows earlier this year severely throttled that money.
    While this money has been throttled, it’s still appearing in certain markets, most notably the United States.
    We wanted to know how exactly this is still happens, so we connected with Dr. Joseph Wang – a Bitcoin and Chinese capital outflow expert.
    Hong Kong-based Dr. Joseph Wang is an OG of monitoring China’s capital flows and Bitcoin. He currently serves as Chief Science Officer at BitQuant, a fintech that specializes in technologies for the upcoming China yuan renminbi equities option market, as well as options and futures for digital currencies. He previously served as Vice President of Quantitative Research for JP Morgan, the sixth largest bank in the world – whose CEO is now an outspoken critic of the cryptocurrency. He’s got a ton of street cred, but even more important – he monitors China’s capital outflows to seek business opportunities.

    This post was published at Zero Hedge on Sep 14, 2017.


  • Bitcoin’s Biggest Bull Isn’t ‘Long Crypto’, He’s ‘Short Government’

    Six years ago, Kyle Bass provided a crucial context for the debt-laden world of ever-increasing sovereign debt:
    “Buying gold is just buying a put against the idiocy of the political cycle. It’s That Simple”
    And now, as interest in Bitcoin surges, Arthur Hayes, a former CitiGroup trader who runs BitMEX – a Hong Kong-based crypto exchange – asks an interesting question – In the coming war between digital currencies, which side will your money be on?
    As CoinDesk reports, Hayes thinks blockchain is lighting a fuse that will ignite open combat between “true cryptocurrencies” (like bitcoin) and a new “digital fiat” controlled by central banks.
    These two parallel currency systems are the inevitable outcome of his core investing thesis:
    “A digital society needs digital cash.”

    This post was published at Zero Hedge on Sep 12, 2017.


  • Details Of Steve Bannon’s “Closed To The Press” China Speech Leak

    Earlier this morning former White House Strategist Steve Bannon spoke at the CLSA investor forum in Hong Kong. While the event was originally intended to be open to the press via a live stream, CLSA officials later closed the interview to outsiders…presumably Bannon’s flare doesn’t quite fit with China’s desire to control media narratives. That said, luckily one local NEAsia correspondent, Wei Du, was kind enough to live tweet portions of Bannon’s speech for our reading pleasure.
    Ironically, what was billed to be an “anti-China” speech turned out to be anything but that with Bannon repeatedly praising U. S.-China relations and saying “there isn’t a world leader he (Trump) respects more than the President of China.” Bannon went on to say that Trump will visit China in November and that the downside of an “economic war” with China is so huge that it has to be worked out.

    This post was published at Zero Hedge on Sep 12, 2017.


  • Gold-Backed, Yuan-Denominated Oil Futures Could Dethrone US Petrodollar

    A recent move by China could take a big step toward dethroning the US petrodollar.
    The Chinese have announced the launch of a gold-backed, yuan-denominated oil futures contract. The move potentially creates a way for oil exporters to circumvent US dollar denominated benchmarks by trading in yuan. The contracts will be priced in yuan, but convertible to gold. An article in the Nikki Asian Review explains the significance of the move.
    The contract could become the most important Asia-based crude oil benchmark, given that China is the world’s biggest oil importer. Crude oil is usually priced in relation to Brent or West Texas Intermediate futures, both denominated in US dollars. China’s move will allow exporters such as Russia and Iran to circumvent US sanctions by trading in yuan. To further entice trade, China says the yuan will be fully convertible into gold on exchanges in Shanghai and Hong Kong.’
    The stability of gold is the key to China’s drive to dethrone the petrodollar

    This post was published at Schiffgold on SEPTEMBER 11, 2017.


  • Dollar Bloodbath Continues Across Asia, Gold Tops Election-Night Spike Highs

    Having plunged by the most in 6 months during the US day session, the dollar is continuing to get pounded across AsiaPac with Hong Kong Dollar and Yuan surging. Gold is extending gains, breaking above the spike highs from election night…
    The Dollar Index is in free fall…This is the 7th straight down day for the USD Index…
    ***
    There is not much support below here…

    This post was published at Zero Hedge on Sep 7, 2017.


  • Market Talk- September 4th, 2017

    Stock markets were spooked by North Korea’s sixth nuclear test over the weekend which had the usual effect of rallying safe-haven such as gold and treasuries. The US dollar also found a bid with the Japanese yen benefiting as money scattered from the risk. The Nikkei ended the day around 1% lower with exporters being hit but the currency appreciation was responsible for much of this move. Hong Kong’s Hang Seng was also around 1% weaker but interesting to see that mainland market closed higher (+0.4%). A few markets were closed today (Malaysia and Vietnam) but the obvious one was the US closed for Labour Day. All this weekend news came after the US jobless number released on Friday but was probably more subdued because of the thin trading volumes.

    This post was published at Armstrong Economics on Sep 4, 2017.


  • China Begins To Reset The World’s Reserve Currency System

    It’s a strategic move swapping oil for gold, rather than for U. S. Treasuries, which can be printed out of thin air. – Grant Williams
    A report released by the Nikkei Asian Review indicates that China is prepared to release a yuan-denominated oil futures contract that is convertible (backed by) physical gold. The contract will enable China’s largest oil suppliers to settle oil sales in yuan, rather than in dollars, and then convert the yuan into gold on exchanges in Hong Kong and Shanghai.
    This is a significant step in removing the global reserve currency status of the dollar and resetting the the global economic and geopolitical ‘landscape.’ Over the past several years, China has quietly established yuan-based currency exchange facilities, which has set up the ability to implement this new non-dollar trade settlement financial instrument. According to the Brookings Institute, 34 Central Banks around the world have signed bilateral local currency swap agreements with the PBoC as of of the end of September 2016, including the major oil-producing countries. With this new contract, China’s largest oil suppliers will now be able to transact directly with China, and other oil importing countries, using yuan which are directly convertible into gold to settle the trade.

    This post was published at Investment Research Dynamics on September 3, 2017.


  • De-Dollarization Accelerates: China Readies Yuan-Priced Crude Oil Benchmark Backed By Gold

    The world’s top oil importer, China, is preparing to launch a crude oil futures contract denominated in Chinese yuan and convertible into gold, potentially creating the most important Asian oil benchmark and allowing oil exporters to bypass U. S.-dollar denominated benchmarks by trading in yuan, Nikkei Asian Review reports.
    The crude oil futures will be the first commodity contract in China open to foreign investment funds, trading houses, and oil firms. The circumvention of U. S. dollar trade could allow oil exporters such as Russia and Iran, for example, to bypass U. S. sanctions by trading in yuan, according to Nikkei Asian Review.
    To make the yuan-denominated contract more attractive, China plans the yuan to be fully convertible in gold on the Shanghai and Hong Kong exchanges.

    This post was published at Zero Hedge on Sep 3, 2017.


  • Chinese Shares Surge As Beijing “Plunge Protection Team” Boosts Stock Holdings

    Having repeatedly met with resistance around 3,300, over the past week China’s Shanghai Composite finally broke out, and overnight rose another 0.9% to 3,362.65, its highest level since December 2015, following a sharp move higher in both the Chinext small-caps index, but mostly due to a spike in Chinese broker stocks.
    ***
    There have been various explanations for this move, with Bloomberg focusing on recent strong earnings, mostly out of China’s big caps, where recent consolidation has pushed profits and ROE higher.
    Companies on MSCI’s China and Hong Kong indexes have beaten earnings estimates by the most among major emerging markets this year, underpinning rallies of 40 percent and 25 percent respectively… Profit at China Shenhua Energy Co. more than doubled in the first half as coal prices soared. Shenhua’s Hong Kong-traded shares have provided a 58 percent return to investors so far in 2017, aided by a bumper special dividend declared in March. There are plenty of other examples. In the liquor industry, Wuliangye Yiban Co. and Kweichow Moutai Co. now control more than 60 percent of the high-end market, giving them oligopoly power over retail prices. Their shares have soared 61 percent and 48 percent.

    This post was published at Zero Hedge on Aug 28, 2017.


  • Market Talk- August 25, 2017

    Main talking point out of Asia this morning were the continued strong earnings reports and the subsequent buying conviction. In Hong Kong the Hang Seng gained over 1.2% whilst the domestic Shanghai index rallied near 2% after earnings beat expectations to finish the week well bid. We saw solid gains in Financials, energy, communications and even retailers even before waiting for central bankers at Jackson Hole. The Nikkei added a little positivity to the region (+0.5%) but is obviously still wary as the currency remains clued to the 109 level, even after we saw the Jly CPI data rise +0.5%. Australia’s ASX was unable to join the party, closing small down whilst the Indian SENSEX was closed for holidays.

    This post was published at Armstrong Economics on Aug 25, 2017.