Monday, April 14, 2014

Chinese Yuan (And Gold & Copper) Tumbles As Money Supply Growth Plunges To 13-Year Lows .... keep an eye on USD/ CNY ( 6.25 an interesting inflection point ) , copper trying to bust through 3.00 again.....Liquidity to Banks withdrawn by PBOC but still squishing out somewhere ( shadow banking ? )

Copper Joins Precious Metals Rout, Tumbles Below $3.00

Tyler Durden's picture

The fears over ongoing commodity-financing restrictions and slowing money supply growth are contagiously spilling over into other collateral. Copper prices are in free fall this morning, crashing through critical levels (especially Dennis Gartman's "long punt") and back below the Maginot Line of $3.00. These are near 3-week low levels and the biggest drop since the cash-for-commodity financing deals came under real pressure.

Smashing it back near 3-week lows...

Gold Tumbles Most In 4 Months On China Demand Slowdown Fears

Tyler Durden's picture

Gold prices are down almost 2% this morning (over $25) as last night's slowdown in Chinese money-supply growth and fears that China's insatiable gold demand has become less insatiable send the barbarous relic back towards $1300. Slowing GDP expectations, increasing restrictions on shadow-banking commodity-backed financing, and a need for liquidity are all factors weighing on the precious metal this morning.

China's appetite for gold is waning after a decadelong buying spree, suppressed by the country's economic slowdown and constrained credit markets.

Demand in the world's biggest gold consumer is likely to stay flat in 2014,according to estimates from the World Gold Council. Gold demand in China has expanded every year since 2002, when it declined, according to the industry group, whose forecasts are closely watched in the gold market.

Chinese consumption has helped to underpin gold prices since 2001, when many price and trading restrictions were relaxed.Last year saw frenzied buying as Chinese investors and jewelry buyers sought to capitalize on low prices. Chinese demand jumped 32% in 2013, vaulting the country past India to first place in the rankings of the world's gold consumers. But it is unlikely that record pace can be maintained, even if prices turn lower, according to the World Gold Council.

"We're looking at best for it to be on par with 2013," said Albert Cheng, managing director for the Far East at the World Gold Council. The council is releasing its latest report on China's gold market Tuesday.

Although the report doesn't offer a figure for estimated Chinese gold demand this year, it says 2014 will be a year of consolidation."Chinese consumers brought forward jewelry and bar purchases, which may limit growth in demand in 2014," the report said.


"We're not seeing the kind of crazy buying we saw last year," said store manager Karone Huang. Last year, "we couldn't even fill our orders fast enough. That's how busy we were."

Chinese Yuan (And Copper) Tumbles As Money Supply Growth Plunges To 13-Year Lows

Tyler Durden's picture

Today's 'bounce' in US equity markets is not translating into Asian equity market strength as China, India, Indonesia, and Thai stocks are fading. Copper is crumbling and just stopped out Dennis Gartman's long. In China, the PBOC withdrew 172bn Yuan (highest since Feb 2013) and pushed the currency back towards its weakest since Feb (which is the weakest since the PBOC began its erstwhile carry-killing-policy. Lots of odd moving-parts in Chinese data tonight with M2 YoY growth tumbling to 12.1% (missing expectations) - its slowest since Jan 2001 but Total Social Financing smashed expectations at 2.07tn Yuan (vs 1.86tn expected). It seems, try as the PBOC might to control it, credit creation continues to balloon in China.
China's Yuan is rapidly heading back towards 15-month lows... (despite Jack Lew's insistence that it strengthen)

Copper futures plunged below Dennis Gartman's long stop - closing out another losing trade (or winning if you faded him?)

M2 Growth tumbles to its lowest since Jan 2001...

But Total Social Financing soared above expectations...

And the PBOC pulled 177bn Yuan liquidity from the market via Repo
The most since Feb's lows in Yuan...

Charts: Bloomberg

Wonder how the total Social Financing grew as large a it has , this may explain in part what's happening.....

From Want China Times

China's local govt debt sparks fears of Lehman-style collapse

  • Staff Reporter
  • 2014-04-13
  • 16:12 (GMT+8)
A Chinese renminbi note among US dollars. (Photo/CFP)
A Chinese renminbi note among US dollars. (Photo/CFP)
China's snowballing local government debt has investors concerned about a Lehman Brothers-style collapse triggering a new financial crisis, reports our Chinese-language sister paper Want Daily.
Apart from major cities such as Shanghai, local governments in China are in principle not permitted to issue local government debt. But economic difficulties have led to many local governments issuing "urban investment debt" through their state-owned enterprises for infrastructure development.
According to statistics from the International Monetary Fund, China's urban investment debt has escalated to a level equal to 26% of the country's GDP and continues to grow at an alarming rate.
Last month, Shanghai Chaori Solar Energy Science & Technology became the first company to default in China's onshore bond market when it failed to make a full coupon payment. The medium-sized building-materials maker Xuzhou Zhongsen Tonghao New Board also barely avoided default, while China Credit Trust and Baoding Tianwei Baobian Electric are said to be in serious trouble.


Number of non-performing loans in China continues to grow

  • Staff Reporter
  • 2014-04-12
  • 09:24 (GMT+8)
The Beijing offices of Industrial and Commercial Bank of China. (File photo/CNS)
The Beijing offices of Industrial and Commercial Bank of China. (File photo/CNS)
In January and February this year, the amount of non-performing loans increased significantly by 60 billion yuan (US$9.65 billion) in Guangzhou and Foshan, with Industrial and Commercial Bank of China, China Construction Bank, China Merchants Bank and China CITIC Bank reporting a higher amount of bad loans, the Chinese-language Guangzhou Daily reports, citing industry insiders.
Guangzhou regulators are investigating the matter with representatives from the banks.
The newly-added non-performing loans mostly came from the metal manufacturing sector, including the steel, iron and aluminum industries and metal trading firms.

A market observer said that the non-performing loan ratio in one of the banks in Guangzhou had reached 50% because the bank mostly loaned to small and medium-sized firms.
Given the rise in the amount of non-performing loans, banks have become stricter in extending loans. Some banks have stopped issuing loans on credit and reduced the amount of mortgages they approve as well.
A man working at a state bank, who identified himself only by his surname, Chen, said that his bank was not extending loans on credit for now and that its threshold for granting mortgages has been raised.
Given the slowing economic growth this year, the number of bad loans reported by banks is expected to continue increasing.
A total of 76.3 billion yuan (US$12.3 billion) worth of non-performing loans was added by 12 listed banks in 2013 and 100 billion yuan (US$16.1 billion) in such loans were added during the same period for the entire banking sector.
Among the "big five" banks in China, their combined non-performing loans rose from 11 billion yuan (US$1.8 billion) in 2012 to 46.8 billion yuan (US$7.5 billion) in 2013.