June 28th 2018 Market Minute
The Shanghai Composite (2,812) slid in to official ‘Bear Market’ territory this week now that it is down over 20% from it’s January 24th 2018 high (3,587). It is now down from it’s June 2015 high (5,178) by over 45%.
Philippines SSE is down 19% and Indonesia’s JSX is down 14% year to date. Vietnam’s Ho Chi Minh VSE is down 20% from a high it hit earlier this year too.
The Chinese Yuan also dropped to it’s lowest level since December 19, 2017 this week. Intervention by “Big Mama”, a nickname used by many in China to describe the Chinese Central Bank, in to the currency was noted in multiple news sources in the US, Europe and Hong Kong.
The Chinese Central Bank also lowered reserve requirements for many of its banks this week. This is the 3rd such action this wear. Usually such a move will result in increasing liquidity and lowering interest rates in the countries financial system.
China’s National Development and Reform Commission banned property companies from issuing bonds outside of China unless those proceeds will be used to repay maturing debt and or to prevent defaults. The commission noted, “These companies have varied ratings and low sales and profits,…some of them don’t have enough foreign-exchange income, and their ability to guard against foreign-exchange volatility is quite week.”
Source: Wall Street Journal, Thompson One Financial, South China Morning Post, Bloomberg News, Financial Times. Business Insider
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