Hong Kong Stocks Tumble Erase 2014 Gains, Volatility Soars As Protests Freeze City: Full Summary

The Hong Kong protests, which we covered over the weekend, and which took a dramatic turn for the worse overnight when thousands of students camped out and demand universal suffrage on the city streets and were in turn tear-gassed and arresteden masse by the local riot police demanding students disperse or else, and where the leader of the student protest, Joshua Wong – who had been previously arrested and was released on Sunday night – has openly called for the resignation of Hong Kong Chief Executive Leung Chun-ying in an interview with Hong Kong Cable TV, have done the unthinkable: they have impacted financial markets and the “wealth effect” transmission mechanism of the local billionaires.
Here as a summary of the latest market activity via Bloomberg:
Hang Seng Index declines 2.25% after falling as much as 2.5%, most since Feb. 4; erases YTD gains MSCI Hong Kong Index drops as much as 3.2%, most since Nov. 2011 HSI Volatility Index surges as much as 27%, most since Aug. 2011 HKD weakens as much as 0.09% against USD to HK$7.7648, most since Dec. 2011 Hong Kong 1-yr rate swap rises 3 bps, most since June 2013 Chinese Yuan falls 0.24%, most since March 20, to 6.1415 per dollar. Yuan 12-mo. forwards drop 0.25% to 6.2596 per dollar after falling by as much as 0.34%, most since March 12 Fitch says events in past 24 hrs won’t significantly affect ratings; says unlikely that protests will be on wide enough scale and last long enough to have material effect on H. K.’s economy and financial stability: Fitch’s Colquhoun

This post was published at Zero Hedge on 09/29/2014.

Lawrence Williams: Hong Kong-China gold exports weak again, but does it matter?

Reported Hong Kong net exports of gold to mainland China were again at an extremely low level in August at a mere 21.1 tonnes.  In previous years the Hong Kong figures have been taken by global gold analysts as something of a proxy for total Chinese gold imports, even though gold was known to have entered the Chinese mainland by other routes, but this had been assumed to be in relatively insignificant quantities.  This year, though, China has eased the path to passage of gold through other ports of entry – notably Shanghai and Beijing – for which no data is forthcoming and given that this easing coincides with the apparent downturn in the Hong Kong figures, it could well be the case that imports via these alternative routes have been replacing gold which had previously come in via Hong Kong.
On the face of things, if one takes the Hong Kong figures for net gold exports to China alone (see table below), Chinese demand appears to have fallen by a massive 33% this year from 725 tonnes to 485 tonnes.  But this is belied by figures for withdrawals from the Shanghai Gold Exchange which are only down by around half this percentage, and which have been particularly strong in the past few weeks.  This has also coincided with price premiums over the London gold price again appearing in Shanghai.

This post was published at Mineweb

Equity Futures Unchanged As Dollar Surges To Fresh 4 Year Highs

It has been a relatively subdued session, with not much action in either stocks or bonds – European stocks rise for the second day on US market momentum from yesterday; Asian stocks are mixed advance while metals decline with Brent, WTI crude, U. S. equity index futures. The biggest highlight in overnight action, however, was once again the Dollar whick climbed to a fresh 4-year high, on pace to strengthen for 2 straight months for first time since March. The reason: ongoing sentiment that there will be a major dispersion between central banks, with the USD tightening just as other central banks join the liquidity fray. To wit, ECB data showed that lending decline in Europe slowed to -1.5% y/y in Aug. vs -1.6% in July and the latest statement from Draghi who said in Lithuania that economic reform possible without devaluing currency.
We are seeing a slightly more mixed performance in the Asian session overnight. The Nikkei is over 1% higher helped by further weakness in JPY. Chinese equities are just barely firmer too with the Shanghai Composite up about one-tenths of a percent despite news reports of potential change of Governor at the PBOC. The WSJ first reported the story during yesterday’s US session saying that Chinese leaders are discussing replacing the current Governor Zhou Xiaochuan amid disagreements over the direction of financial policy and as part of a wider personnel shuffle that comes after internal battles over economic overhauls. The WSJ said that these changes are expected around a major party meeting in October although no final decision about Zhou has been made. Zhou has been leading the move to liberalising interest rates and market reforms so any changes there would be followed closely by the market. Away from China, equity markets in Korea, Taiwan and Hong Kong are all weaker. In brief: Asian stocks mixed the TOPIX outperforming and Taiwan’s TAIEX underperforming. MSCI Asia Pacific up 0.1% to 143.3. Nikkei 225 up 1.3%, Hang Seng down 0.6%, Kospi down 0.1%, Shanghai Composite up 0.1%, ASX up 0.1%, Sensex down 0.7%. 5 out of 10 sectors rise with consumer, industrials outperforming and energy, financials underperforming.
European equity markets have gained further today after the strong close on Wall Street, however the benchmark DAX remains lower by approx. 0.6% on the week. Gains today have been further cemented by the market’s underlying belief that the ECB will be backed into a corner by the market and conduct sovereign bond purchases in order to lift credit to southern Europe. Airbus Group perform strongly today, as their 20yr jet demand forecast was raised, lifting shares by as much as 2.8%. Nonetheless, retailer H&M temper the gains in Scandinavia as poor a sales update knocked shares lower by close to 4%. 16 out of 19 Stoxx Europe 600 sectors rise; travel & leisure outperform, basic resources, retail underperform. 70% of Stoxx 600 members gain, 26.5% decline. Eurostoxx 50 0.3%, FTSE 100 0%, CAC 40 0.3%, DAX 0.4%, IBEX 0.7%, FTSEMIB 0.4%, SMI 0.4%
Looking at the day ahead, durable goods orders, initial jobless claims, flash Markit services PMI and the Kansas Fed manufacturing survey are the key releases in the US. We also have a 7yr UST auction. In Europe we expect a relatively quiet day for data watchers with the Eurozone money aggregates for August perhaps noteworthy. Draghi will speak this morning on ‘Single Market, Single Currency, Common Future’ at a ECB conference in Lithuania.

This post was published at Zero Hedge on 09/25/2014.

Gold Price Outlook For 2014 And 2015

In a recent presentation, Dundee’s Martin Murenbeeld explained the bullish and bearish forces at work in the gold market with some 50 charts. The slideshow is available below.
Looking back to 2013, it appeared that investors went heavily into equities which resulted in a massive negative correlation between stocks and gold. On the other hand, Chinese net imports from Hong Kong set record volumes.
More importantly, however, Murenbeeld looks into the gold price expectations for 2014 and 2015.
Bearish factors for 2014 and 2015 Basically, in sum, Murenbeeld sees the following bearish factors for gold’s price in the coming 18 months:
The Fed must inevitably tighten policy The Fed is currently ‘tapering’ QE will end late 2014 And the Fed will raise rates in 2015 US dollar will remain firm in 2014-15!? The world economy is sluggish Gold typically weakens during recessions Inflation pressures remain subdued There is often a need for ‘liquidity’ Equity markets will continue to draw investment interest away from gold Investors still have gold to sell – and ‘technicals’ bearish This is only the summary of this view. Readers are recommended to study the accompanying charts which are available in the presentation below.
Bullish factors for 2014 and 2015 As for the bullish forces at play, this is what Murenbeeld expects in the coming 18 months:

This post was published at GoldSilverWorlds on September 23, 2014.

Established rivals may keep Shanghai trade zone’s gold exchange in check

China's launch of an international gold exchange in the Shanghai Free-Trade Zone 11 days ahead of schedule last week, may not be much help as it seeks to compete with established gold markets such as New York, London or Singapore.
While China is the largest physical gold consumer in the world, the financial infrastructure may lag that of Singapore and Hong Kong in handling a gold market.
Gold traders believe the gold market in the FTZ would attract domestic and foreign investors to trade, but catching up with the major international players will not come quickly.

This post was published at South China Morning Post

Gold Investors Weekly Review – September 19th

In his weekly market review, Frank Holmes of the USFunds.com nicely summarizes for gold investors this week’s strengths, weaknesses, opportunities and threats in the gold market. Gold closed the week at $1,216.98 down $12.76 per ounce (-1.04%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, fell 5.44%. The U. S. Trade-Weighted Dollar Index rose 0.63% for the week.
Gold Market Strengths China officially opened the Shanghai Free Gold Exchange on Thursday. By giving foreign investors direct access to its gold market for the first time, China is seeking to obtain more influence over prices while simultaneously boosting the global use of its currency, the yuan. In addition to the deregulation of the gold market in Shanghai, Hong Kong’s Chinese Gold and Silver Exchange Society was given permission to set up a precious metals vault in Shenzhen this week. The continued deregulation of the gold market by the world’s largest consumer is a huge boost to the precious metal.
In the first eight months of this year, Shanghai imported $15.98 billion of gold, a staggering indicator of demand in China. Furthermore, last Thursday, two tonnes of gold was imported into Shanghai, indicating that gold imports into the city are not slowing down.
China is planning on boosting its gold reserves. The country’s reserves, a mere 1.1 percent of total reserves, have plenty of room to grow if when compared to nations such as the United States and Germany, which hold roughly 70 percent of their reserves as gold. The increase in gold demand from Chinese central bank purchases should place upward pressure on gold prices.

This post was published at GoldSilverWorlds on September 21, 2014.

China Goes For The Gold As Beijing Gold Demand Goes Parabolic

It’s Official: China consumed, mined and imported the most gold ever in 2013. In all three gold categories the Sino nation is Number One Worldwide. Here are details.
China has been officially crowned the world’s largest gold market for the first time in history, according to fresh industry figures. The country overtook India as the world’s largest consumer of gold in 2013, with consumer demand soaring 32 percent to 1,066 tonnes for 2013. That’s the most gold ever demanded annually by one country’s consumers in bars, coins and jewelry, topping India’s previous 2010 record of 1,007 tonnes.
China is already the world’s top producer of gold, mining 437 tonnes in 2013 on industry estimates, with the largest annual increase globally for 2013. It displaced South Africa as the world’s largest gold producer in 2007. The country also imported a record 1,108 metric tons in 2013, up 33 percent from a year ago, via Hong Kong. That’s more gold imports than any other country.
‘The impact on the Chinese gold industry of the extraordinary growth in 2013 demand has been marked, with significant growth in both manufacturing and retail network capacity,’ reads the World Gold Council’s latest quarterly demand report.
‘The gold market has really taken off in China over the last five years: from being quite small to now being the largest in the world,’ World Gold Council managing director Marcus Grubb told IBTimes in a phone interview.
Without a doubt: We ain’t seen nothing yet…as the GLOBAL GOLD RUSH IS ON…especially in China.
Recent international gold news headlines shout: CHINA To Boost Gold Reserves Amid Imbalances in Holdings HONG KONG Gold Bourse Approved to Build Vault in China SINGAPORE : New gold contract to set Singapore up as a global gold hub INDIA gold imports rocket 176%

This post was published at Gold-Eagle on September 21, 2014.

Gartman Letter cites Koos Jansen and Gold Newsletter on Chinese gold demand

Regarding Chinese gold demand, which we wrote about yesterday, it is open to debate and our old friend, Brien Lundin of the Jefferson Companies in New Orleans, wrote to share his insights. We’ve chosen to share them further with our readers, with his approval. Brien wrote:
* * *
Hi, Dennis:
In your letter this morning, you noted that Chinese gold demand was recently reported to be down about 50 percent year over year. This is erroneous information from the World Gold Council, as I’ve been noting in Gold Newsletter — that there’s a lot of misinformation on this topic. The mainstream financial media keeps parroting numbers from the World Gold Council and other sources, which typically rely on import statistics from Hong Kong.
However, China has recently opened up new ports of entry for gold, a move that has correspondingly reduced the import numbers from Hong Kong.
"Much more relevant are gold delivery statistics from the Shanghai Gold Exchange, which directly indicate wholesale gold demand in China. Koos Jansen is today’s leading reporter of Chinese gold demand dynamics, and he relies on the Shanghai Gold Exchange numbers for his analyses. Using the SGE reports, Jansen notes that Chinese gold demand year to date is down about 17 percent from last year’s torrid pace.

This post was published at GATA

Export Growth to Lift Italian Gold Jewellery Demand and Bullion Imports to Six-Year High

Metallis are releasing this snapshot on Italy’s export-focused gold jewellery fabrication to coincide with the recent conclusion of the Vicenza Fair as this marks a good opportunity to review developments so far this year and prospects for the rest of 2014 for Italy and its main overseas markets.
The key findings of the consultancy’s recent research is that Italian gold jewellery demand is on track to rise 11% in 2014 to a six-year high of 128 tonnes. This marks a continuation of the growth seen in 2013, when fabrication made a historic turnaround; then a 24% rebound began a recovery from a decade or so of consecutive losses.
Domestic scrap is also forecast to finish 2014 down 22%, while inflows of scrap could fall by almost 30%. All this is slated to lift gross gold bullion imports by 15% to just over 105 tonnes, their highest level since 2008.
Even stronger growth of 39% for the first half is reported in shipments to China/Hong Kong. Meader noted, “this boom is interesting as it shows the 18-carat segment in China is still going strong, even if the far larger 24-carat sector, which Italy doesn’t serve, couldn’t match 2013’s heady results”.

This post was published at Sharps Pixley

China Holds ‘Gold Congress’ – Positioning Itself As Global Gold Hub, ‘In China, Gold Is Money’

China Gold Congress in Beijing

The China Gold Congress is currently in full flight in Beijing. The three day Congress is China’s biggest gold industry event of the year, drawing in participants from across the Chinese and international gold sectors including central banks, mining companies, bullion banks and refiners.
The event, co-sponsored by the World Gold Council (WGC) and the China Gold Association, showcases China’s gold industry and acts as a focus point for what is now the world’s largest gold market in terms of demand and product innovation.
Discussions and forums during the event cover everything from reserve asset management for the official or central banking sector, through to investment products and mining supply. One of the key themes this year is the internationalisation of the gold market.
China’s gold market accounts for one third of global demand, and according to the WGC, is expected to grow another 20% cumulatively from now until the end of 2017.
In what is still a very centrally planned economy despite many market related reforms, nearly all reported gold activities in China flow through the Shanghai Gold Exchange (SGE) in one form or another.
Both the China Gold Association and the Shanghai Gold Exchange were established with government backing and their growth and success reflect a very deliberate pro-gold strategy on the part of the Chinese Government.
Even though the China Gold Association is a non-for-profit member association, it still primarily acts as a conduit and coordination group between the government and the gold producers.
The Shanghai Gold Exchange is the government’s second central hub in China’s gold market.
SGE approved refiners take in production from China’s fragmented gold mining industry and in imports from Hong Kong and other countries.
The gold then flows through the Exchange after which SGE deliveries flow out to the banking sector, the official government sector, and additionally to the jewellery and technology industries.
The development of the Shanghai Futures Exchange also provides an additional venue for hedging and gold price discovery.
In China gold is money and is accepted as such by the general population.
There really does not seem to be a debate about this in Chinese government circles, and another part of the government’s strategy has been to advocate the increased innovative usage of gold by the Chinese banking sector.

This post was published at Gold Core on 11 September 2014.

The Top 10 Questions Everyone Should Ask About Alibaba

With the Alibaba roadshow kicking off this week, ConvergEx’s Nick Colas reviews the second-order implications of this historic transaction. Over the next two weeks investors will have to consider important issues, such as which stocks money managers will sell to fund their BABA purchase and what securities (stocks and ETFs) hedge funds may short to pair against an Alibaba long position. And consider: “Do big IPOs signal a market top?” Also, with an estimated $7 billion in fresh cash and a valuable public stock post-IPO, BABA will also be able to play the M&A game aggressively. Just consider its corporate North Star: “Our mission is to make it easy to do business anywhere” (the first line of the S-1 summary). In short, Colas concludes Alibaba really is a big deal (at 27.3x trailing EV/EBITDA).
Via ConvergEx’s Nick Colas,
Some 22 years ago I stood on the floor of the New York Stock Exchange with the management of the first Chinese company to come public in the U. S. Brilliance China Automotive made minivans in Shenyang under license from Toyota as well as producing its own somewhat older designs. The initial public offering was for shares in a Bermuda based holding company that owned shares in a Hong Kong business which in turned owned a piece of a charitable trust that held stock in the auto business. Despite that complexity, the allure of owning a piece of the Chinese car market generated tremendous investor interest. The IPO priced at $16, the first trade went off at $20, and the stock eventually doubled.

This post was published at Zero Hedge on 09/08/2014.

SILVER SQUELCHERS PART 1: And Their Interesting Associates

(By Charles Savoie)
HSBC USA in recent years was listed on the roster of the Silver Users Association (circa 2006). HSBC, with over 8,000 offices, appears to remain at the ‘centre’ of silver price suppression.
Sir Ewen Cameron whose family traced back into the 13th century, joined the Caledonian Bank in 1859 and afterwards was with the Bank of Hindustan, China and Japan, after which he joined the Hong Kong & Shanghai Banking Corporation – Britain’s opium bank for China, and a major conduit for looting silver out of Chinese hands into the possession of the silver squelchers of The Pilgrims Society.
The Silver Squelchers ‘It is a burning shame in the eyes of all the world that the United States, the greatest producer of silver, will not protect her own precious metal product. It is a case without a parallel in the history of nations down through all the ages.’

This post was published at SRSrocco Report on September 5, 2014.

Everything that’s wrong with banking summed up in one bonehead advertisement

If you’re looking around right now for a new bank account that pays a reasonable rate of return, ANZ bank has a hell of a deal for you: 0%!
That’s right. ANZ is offering its depositors absolutely zero interest.
Now, a bank paying 0% isn’t exactly abnormal in today’s banking environment. But what’s really strange is that ANZ actually took out an ad in an Australian newspaper to advertise this.
Yesterday’s page 10 of the Australian Financial Review (AFR) had a quarter-page ad from ANZ boasting about 0% interest rates for accounts denominated in number of foreign currencies, including Hong Kong dollars, Japanese yen, British pounds, and more.
Curiously, in order to qualify for this bargain 0% rate, you have to meet a rathersignificant deposit minimum.
For the 0% Japanese yen account, for example, you have to deposit 23.5 million yen (currently about $223,000 US dollars).
So basically some manager at ANZ actually thought that paying 0% interest on substantial account minimums would be an attractive offer…so attractive, in fact, that they should brag about it in the newspaper.
This is so completely ridiculous. But it really crystalizes what’s wrong with the entire financial system.

This post was published at Sovereign Man on September 4, 2014.

Bloomberg Reports on Ruin in Hong Kong But Leaves Out the Larger Picture

To Save the Rich, China Ruins Hong Kong … When they meet on Sunday, legislators from China’s rubber-stamp National People’s Congress are expected to disregard even the most moderate proposals to open up Hong Kong’s political system. In all likelihood the decision will provoke street protests, drive moderates into the more radical pro-democracy camp and call into question the former British colony’s standing as a global financial center and bastion of free enterprise. And for what? The good of Hong Kong, of course. – Bloomberg
Dominant Social Theme: Capitalism creates prosperity, but the Chinese don’t understand.
Free-Market Analysis: What’s going on in China and Hong Kong is ironic because it seems to mimic much that has held the West back in modern times. In fact, much that China suffers from at its current level of development corresponds to a similar evolution in the West.
Bloomberg resolutely avoids making the comparison – though in our view, this article would have provided a perfect opportunity. Instead, Bloomberg tries to treat Chinese authoritarianism as an Asian problem.
Here’s more:
Wang Zhenmin, a Chinese law professor who sat on the committee overseeing Hong Kong’s constitution, laid out the case most blatantly on Thursday, when he told journalists that the interests of the city’s powerful tycoons had to be safeguarded from unchecked democracy.
“If we just ignore their interest, Hong Kong capitalism will stop,” he said. “Democracy is a political matter and it is also an economic matter.”

This post was published at The Daily Bell on September 02, 2014.

IMF: Risk of Another Housing Crash

The International Monetary Fund is warning that the world is at risk of ‘another devastating housing crash.’
This is true for instance for Australia, Belgium, Canada, Norway and Sweden,’ he said.
In the wake of the global recession central bankers have cut interest rates to record lows, pushing house prices to a level that the IMF regards as a significant risk to economies as diverse as Hong Kong and Israel.
In Canada, for example, house prices are 33 per cent above their long-run average in relation to incomes and 87 per cent above their long-run average compared with rents. The figures for the UK are 27 per cent relative to incomes and 38 per cent relative to rents.

This post was published at Mises Canada on August 27th, 2014.

Major Support At These Levels

Sprott Asset Management has issued a Gold Alert, showing six “key developments in the physical gold market” in the past couple weeks which indicate that there is strong demand for precious metals at these levels.  One of those developments is the huge increases of Hong Kong gold exports to China.