Black Monday in China goes almost unreported in New Zealand. It looks as if the crash is happening.
Have a look below for what is happening to world shipping. Ships are full and nowhere to go.
China
stocks in morning freefall as pension fund rules fail to inspire
China
major stock indexes collapsed on Monday morning, with traders saying
market disappointment over the lack of a liquidity move by the
central bank during the weekend triggered a fresh selloff.
Main
indexes tumbled more than 11 percent last week as investors began to
worry that the central government was backing off on plans to prop up
the market.
The
worry was aggravated by a strong injection of short-term liquidity
into the interbank market that many read as a substitute for deeper
easing.
The
CSI300 index fell 6.7 percent to 3,349.20 points at 0149 GMT (12.49
a.m. BST), while the Shanghai Composite Index (.SSEC) lost 6.6
percent to 3,277.94 points, its lowest level since March.
China
CSI300 stock index futures for September fell 7.1 percent, to
3,233.6, or 109.37 points below the current value of the underlying
index, and all other futures contracts were also negative.
China
shares wipe out 2015 gains as stocks tumble 8.5% MarketWatch q 11
mins ago
Asia
markets rattled to join in global equity rout MarketWatch q 3 hrs ago
"The
market is in a downtrend. There's no good news, stocks are still
expensive, and there's no fresh money coming in," said Qi
Yifeng, analyst at consultancy CEBM.
"With
no RRR (reserve requirement) cut over the weekend, the market will
directly head south."
The
Hang Seng index (.HSI) dropped 3.7 percent, to 21,586.98 points.
The
Hong Kong China Enterprises Index (.HSCE) lost 4.5 percent, to
9,732.62.
Investors
failed to take inspiration from the formalisation of rules allowing
pension funds to invest in the stock market over the weekend.
"The
pension fund news will not help, because the money is limited, you
don't know when the money will come in, and the purchase is not
sustainable," said Qi.
"Black
Monday" - Shanghai Composite Goes Red For The Year, Wiping Out
60% In Gains, 2000 Stocks Limit Down
Judging
by the first few minutes of trading in the first thing to open this
evening on the mainland, the CSI 300 Index Futures which immediately
tumbled by 4% to 3340, China's attempt to deflect attention from the
fact that it did not do
a 50-100 bps RRR cut is not doing too well.
Some
other indicative levels which are in line with the CSI:
Shanghai
Composite to open -3.8%, some 130 points below the 3,500 "hard
line" support level below which it is a nothing but air back to
2000
Shenzhen
down 4.3%
ChiNext
down 5.1%
That
said, we expect the National Team to not give up without a big fight,
and forcefully step in any minute and do everything in its power to
prevent the resultant plunge in the Shanghai Composite which is set
to open shortly, or else SHCOMP 2000 beckons, and with it lots and
lots of social unrest.
* *
*
Update:
Shanghai Composite now down -5.7%
And
the 3,500 support is now gone.
Update
2: Shanghai
Composite crashing, now down 7%
Update
3 and final: SHANGHAI
COMPOSITE INDEX ERASES YEAR'S GAINS
This news has gone unreported so far on Radio NZ; there is this from the more business-minded NZ Herald.
New
Zealand share market slumped 2 per cent and almost $60 billion has
been wiped from Australia's share market as concerns about China's
economy shake global investors.
The
S&P/NZX 50 Index was down 115 points at 5635, wiping about $2
billion off the NZ market
As
other markets took a tumble, and Australia faced a bloodbath, experts
said the New Zealand share market was more resilient to overseas
falls.
If this isn't an indication of a rapidly tanking economy then nothing is.
Global
Trade In Freefall: Container Freight Rates From Asia To Europe Crash
60% In Three Weeks
Three
weeks ago, when we
last looked at
the collapse in trade along what may be the most trafficked route
involving China, i.e., from Asia to Northern Europe, we noted that
while that particular shipping freight rate Europe had crashed some
23% on just one week, there was some good news: at least the Baltic
Dry index was still inexplicably rising, and at last check it was
hovering just above 1,100.
That
is no longer the case, and just as with everything else in recent
months, the Baltic Dry dead cat bounce is now over, with the BDIY
topping out just above 1200 on August 4, and now back in triple digit
territory, rapidly sliding back to the reality of recent record lows
which a few months ago we suggested hinted that much more is wrong
with global trade, and the global economy, than artificially
manipulated stock markets would admit.
More
importantly, a major source of confusion appears to have been
resolved. Recall that as we
noted on August 3,
"many were wondering how it was possible that with accelerating
deterioration across all Chinese asset classes, not to mention the
bursting of various asset bubbles, could global shippers demand
increasingly higher freight rates, an indication of either a tight
transportation market or a jump in commodity demand, neither of which
seemed credible. We may have the answer."
We
did. To wit:
"Should
the dead cat bounce in shipping rates indeed be over, and if the
accelerate slide continues at the current pace, not only will
shippers mothball key transit lanes, but the biggest concern for
global economy, the unprecedented slowdown in world trade volumes,
which we flagged a week ago, will be not only confirmed but is likely
to unleash yet another global recession."
As
expected, on Friday, we got confirmation that the BDIY has indeed
become a lagging indicator to actual demand, when Reuters
reported in its latest weekly update using
data from the Shanghai Containerized Freight Index, that key shipping
freight rates for transporting containers from ports in Asia to
Northern Europe fell
by 26.7 percent to $469 per 20-foot container (TEU) in the week ended
on Friday.
The
collapse in rates is nothing short of a bloodbath: "it
was the third consecutive week of falling freight rates on the
world’s busiest route and rates are now nearly 60 percent lower
than three weeks ago.
Freight
rates on the world’s busiest shipping route have tanked this year
due to overcapacity in available vessels and sluggish demand in goods
to be transported. Rates
generally deemed profitable for shipping companies on the route are
at about $800-$1,000 per TEU.
Other
Europe-focused freight rates did even worse, with container freight
rates from Asia to ports in the Mediterranean plunging 32.1%, while
those to the US West and East coast slid by 7.9% and 9.9%,
respectively.
Well,
some, such as the world’s largest container shipping company,
Maersk Line, will desperately try to no longer lose money on every
transit, with a plan to raise spot freight rates by $1,000 from ports
in Asia to ports in northern Europe, with effect from Sep 1. Other
major container shipping companies have similar plans.
The
virtually guaranteed outcome of this "strategy", as there
is simply not enough demand as the world careens off the global
recession cliff to offset a surge in freight costs, will
be an even greater collapse in trade volumes.
The
alternative, is just as bad: as we sarcastically hinted first
in March:
...
none of the above should alarm anyone: remember - central
banks can just print trade with just the flick of a CTRL-P switch.
And
then again three
weeks agowhen
we said no need to worry because it is just a matter of time before
"central
planners learn how to print trade."
For
now, however, printing money no longer equates to boosting global
trade. In fact, easy monetary policy now appears to be backfiring, as
even the "market" has figured out.
So,
sarcasm aside, what really happens next, to both shipping, trade, the
global economy and markets? Sadly, unless central planning
finally works after
7 years of failing ever upward... this.
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