Good Morning,
Having had a late night/early morning, its at times
bewildering to see the latest actions on the Chinese markets. Not only are
insurance companies wading into the market to "assist" with
stability but companies have woken up to requesting trading
halts (Reuters). It’s now approaching near 1/5th of the 2800 on the
Shanghai and Shenzhen Stock Exchanges are now suspended.
How the reduction
in trading costs will assist with the support of the Markets. It was
not restrictive before nor the cause of the volatility. Anyone would have
thought the cause for the fall was the prohibitive costs of trading.
China has also restricted the size of purchases of CSI 500
index futures to 1,200 lots for rise and fall. In a bizarre turn of events, the Central
Huijin Investment Company (CHIC) (financing arm of the Chinese
government) has started purchasing ETF's at an undisclosed rate nor with any
guidance of for how long or what funds etc. Likewise the funding restrictions
in on commodities is not helping Copper et al, on a pivotal $2.50/lb (circa).
China Securities Finance Co. (CSFP) is now cashed up, as per
EMC: PBOC
providing funds to CSFP. So with State Owned Enterprises (SEO) listed
on their markets, the Chinese are merely buying them. Limiting the transfer of
wealth from Government to Comrade/Citizen. Disorderly all the way.
From this morning (EMC
link) (in full in italics)
In looking for a long position, it's likely any such long
trade on trade on the SHCOMP and SZCOMP would be foolish on Chinese markets
(without a good set of indicators)
With the Chinese government attempting a soft landing in
most areas from property, employment and now the stockmarket, it's pertinent to
consider a new dawn approaching for its overheated margin fuelled bull market,
that's now having a contraction.
In 3 months (September) the HK-Shenzhen trading goes
live. This may provide a brief element of support, but the theme is set,
irrespective of whether the Chinese government can halt the selling in the
short-term.
The Chinese government should look at the Hang Seng Index
before any further intervention. Although the wider populous will not like the
results, on comparative weighting the SHCOMP and SZCOMP look positively
overcooked.
China needs a stockmarket, but with so many investors
already torched, at what point does the bubble pop!? It doesn't bode well for
the long term if primary brokers, acting in concert, agree not to sell stocks,
more so create a fund to buy them. Although the terms of such purchases are
unknown currently, one suspects they are not buying the crap!
Cyan Holdings (CYAN) give a trading
update that's so full of jam, anything now above cash value is looking
like jam. A perennial failure to deliver and they appear to have found some
intelligent folk to stump up £4.6M gross. Its now well-funded to seek
to secure more orders and increase revenues. Promise + Placing has so
far not delivered the = revenue.
The placing at 0.2 pence may provide support in the
short-term but as cash burn occurs so will the SP in the absence of an order.
The placees appear totally unaware of the previous promises and lack of
delivery. Having had 3,279,766,136 shares (2014) and 2,797,766,136 share
(2013), the trend isn’t looking good with 6,780,873,628 mid-way through 2015.
Some dilution...
With very limited company news, save for the obvious
commodities debacle with iron ore hitting $52.30-53.15/t Atlas's short
lived recovery may me look like a historic glimmer of hope (dead cat bounce)
with funding. Although, all parties should be congratulated for working so
tirelessly to at least attempt a recovery, the crucial funding phase is
due...soon (well maybe).
With AU$58M committed so far, will the backers take a leap
of faith! Rather them than I! Or at least rather them with someone else's
money! They need a further AU$122M minimum, and their job has just got very
hard indeed with the iron ore price being trashed a further 20%.
With limited support for iron ore, including an absence of
speculation, one has to ask, can iron ore hit $33-37/t? Having thought long and
hard about this, margin/speculation down, demand down, over-supply, reducing steel
mill capacity, its simply not sounding rosy. The road may be merrier
for nickel pig iron as Chinese inventories deplete and a
"normal" market environment starts to appear.
With Nickel floundering around $5.1175-$5.3080/lb
there's limited prospects for producers. In the absence of a recovery in price,
the market will force a recovery by shelving expansion plans. Thus, a
conviction short on Amur Minerals (AMC) is maintained (although still reducing
with wisdom (taking profits)! The nickel market is admittedly fickle with lumpy
trades throwing the price, its wise to be cautiously bullish to $6.15/lbs
How will the liquidity and financing crisis that is
developing impact on Central Rand's $150M (up to) sale.
Atb Fraser
do you have anything on the trade with china negative jmat.L? Anything helpful thanks.
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