Over the past year, China has shed about a trillion from their FX reserves. Part of the loss is due to a slowing economy and weakening global backdrop. But the majority of the losses stems from trying to defend their currency against a precipitous drop — thanks to what many call a ‘capital flight.’
In other words, people are trying to get their money out of China and the government is doing their best to prevent it.
The evidence is laid bare in the FX reserves data — coupled with the fact that CNY is dropping on a daily basis — currently at financial crisis lows.
Earlier today, the Macau authorities announced yet another crackdown on the casinos there — lowering the amount of money gamblers can withdraw from ‘UnionPay’ cards to just $626 per day — or half the previous amount. It is widely believed that people were smuggling money out of China using this method.
As a result, casino stocks cratered lower — as the Chinese government, again, exhibited wanton disregard for any casino operators on the island. This has truly been a hell pit for companies like WYNN and MPEL. Nevertheless, they’re stuck there with multi-billion dollar investments.
“Assuming it’s true, we cautiously view the news as arguably ‘sending a message’ to safeguard against potential capital outflow abuses, amidst the continued decline in China’s foreign exchange reserves,” DS Kim, an analyst at JPMorgan Chase & Co. in Hong Kong, wrote in a note. “We note that this would be the first capital control measure that directly targets Macau, hence may be viewed as a meaningful signal.”
“Nearly 50 percent of Chinese customers in Macau use UnionPay ATM withdrawals as one source of cash for gaming,” Umansky wrote, citing the brokerage’s survey. Other methods include bringing cash into Macau, withdrawing cash from Hong Kong and Macau bank accounts, and through pawnshops, he wrote.
Keep your eyes on HIBOR rates for possible disruptions in the matrix.
1yr HIBOR is now at their highest levels since February of 2016.
Nice move in $ cvi , gots some jump to it still
Great vid from Andreas Antonopolous on Currency Wars and Bitcoin: https://www.youtube.com/watch?v=V5D37mCqIvU
Yep all true. The real frustration for this Bear is the SNB. Swiss is buying EVERYTHING possible to keep their currency lower. They are the biggest currency manipulator out there, and the largest holder of FB and so many stocks around the world. Trump rally came IMHO with the spike up of the CHF over the news. The SNB went crazy buying. EM went crazy trying to buy USD, CHF anything that was not EM. Market Crashes when EM goes full panic and starts to draw on Swiss Accounts.
How do a billion hectares of rice patties and a mindless peasantry become a super power? Printed money. Whatever that is beyond confidence good luck. If it was made by lies it is breakable. See history.