UPDATE 1-Chinese money rates, bond yields fall after c.bank rate, RRR cut

29 Jun 2015 | Author: | No comments yet »

Shanghai’s Bull Trend Is Broken: Cash Liquidity Is Tight In China.

The People’s Bank of China’s interest rate and reserve ratio cuts did not help. Today, the Composite Index dipped even lower, below 4,099 (May 8 close), “a critical level” below which “effectively signals larger decline possibility,” said technical analyst Sunil Garg at J.P. HSBC this morning estimates that China’s stock investors that borrow on margin will close another 300 billion yuan of leverage positions in the near future, while Deutsche Bank says Beijing will want to clamp down on margin financing to control systemic risk. UBS estimates that once stocks bought on margin have fallen by a cumulative 30%, margin investors will begin to face liquidation pressure on their entire accounts. In the last two weeks, the Deutsche X-Trackers Harvest CSI 300 China A-Shares Fund (ASHR) dipped 22.1%, the Market Vectors ChinaAMC SME ChiNext ETF (CNXT) fell 22.8%, the iShares China Large-Cap ETF (FXI) and the iShares MSCI China ETF (MCHI) dropped 5.4% and 4.4% respectively.

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