Bank Indonesia Governor: Rates Could Potentially Continue to Rise

March 20, 2014, 9:42 a.m. ET
Bank Indonesia Governor: Rates Could Potentially Continue to Rise
By Farida Husna
JAKARTA, Indonesia–Bank Indonesia Governor Agus Martowardojo said Thursday that interest rates in emerging markets, including Indonesia, could potentially continue to rise if borrowing costs in the U.S. Increase.
“Such a condition is the new norm. Interest rates can’t fall too much,” Mr. Martowardojo told reporters.
Bank Indonesia last year increased interest rates by a total of 175 basis points since June as inflationary pressures increase and the country’s current-account deficit widened to a level it won’t be able to sustain for a long period.

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Bond Investors Are Skittish Over Chinese Property Developers; Prices, Volume Have Fallen After Reports of Potential Defaults

Bond Investors Are Skittish Over Chinese Property Developers
Prices, Volume Have Fallen After Reports of Potential Defaults
March 20, 2014 8:29 a.m. ET
Growing worries over the health of Chinese property developers are driving down bond prices and drying up trading volumes in the $47 billion market that had been a favorite of global investors.

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Foreign Investors Rush to Sell Japanese Stocks; Worries Grow That the Government Won’t Spur the Economy

Foreign Investors Rush to Sell Japanese Stocks
Worries Grow That the Government Won’t Spur the Economy
March 20, 2014 8:12 a.m. ET
After pushing Japan’s stock market to its biggest gain in more than 40 years in 2013, the bulls are having second thoughts.
Foreign investors are selling Japanese stocks at the fastest pace in almost a decade, government data show, as worries grow that the country’s government won’t be able to follow through on its promises to spur the economy. Hedge funds and other speculative investors lifted the ratio of bets against Tokyo shares this week to the highest in five years, according to the Tokyo Stock Exchange.
That has helped drive down the Nikkei Stock Average 13% in 2014, after a 57% jump last year. By contrast, the S&P 500 index had eked out a 1% gain through Wednesday.

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Falling Chinese Stocks, Alibaba IPO Loss Dim Hong Kong’s Luster

Falling Chinese Stocks, Alibaba IPO Loss Dim Hong Kong’s Luster
Hang Seng Among Worst-Performing Major Stock Indexes This Year
March 20, 2014 6:14 a.m. ET
Hong Kong’s stock market, a longtime gateway to China for global investors, is losing its luster as signs of financial stress mount on the mainland and the exchange reels from the loss of Alibaba Group Holding Ltd.’s initial public offering.

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Dropping Like Flies: Largest Steel Maker In China’s Shanxi Province Defaults On CNY 3 Billion In Debt

Dropping Like Flies: Largest Steel Maker In China’s Shanxi Province Defaults On CNY 3 Billion In Debt
Tyler Durden on 03/20/2014 09:09 -0400
When we started discussing the upcoming onslaught of corporate defaults in “Minsky Moment” China, now that the bankruptcy seal has been broken, we warned that the worst is about to come.


Well, it’s coming.
Overnight, Hong Kong’s The Standard reported that in addition to the solar, coal and real-estate developer companies that are on everyone’s radar as potential future bankruptcy candidates, one can also add steel makers to the list, with its report that Highsee Group, the largest private steel makers in Shanxi province has defaulted on CNY3 billion of debt, unable to repay its bonds on time.


According to The Standard, “Highsee Group’s 3 billion yuan debt was overdue last week,” the 21st Century Business Herald reported yesterday. “The company is running in red, and has failed to pay workers for months. Many of its furnaces have stopped operating.”
The reason for this most recent collapse: the plunge of domestic steel prices , which have fallen to their lowest level in more than eight years in mid-March as a result of weak demand and a surge in output.
Earlier, Shanxi coal miner Liansheng Resources Group went bankrupt while its loans, which were packaged into a wealth management product distributed by China Construction Bank (0939), are likely to be bailed out. UBS Securities securities analyst Chen Li said it is the peak season for corporate debt dues. Up to 80 percent of the nation’s trusts have obligations to meet within the second quarter, he added.
IBT adds that “Highsee Iron and Steel Group … is just one of numerous steel mills facing issues in the country. Data from the National Bureau of Statistics revealed that China produced 2.22 million tonnes of crude steel a day over the first two months of 2014, Reuters reports. This record amount was manufactured even though demand wasn’t as strong.”
It remains to be seen if Highsee is bailed out, however now that pretty much any corporation with exposure to the commodity and real estate space that has maturing debt is on the rocks, the PBOC may be better suited just to let the system cleanse itself, even if that means the collapse in both the Chinese stock market, which unlike the US is largely irrelevant (especially since it once again dropped below 2000 while the Hang Seng entered a bear market), but the bigger issue is that the Chinese housing bubble is set to burst both domestically and abroad,as we reported yesterday.
And lest readers are left with the impression that merely operational companies with direct exposure to the deleveraging carnage that is taking place in China – at least until such time as China unleashes another multi-trillion stimulus – are exposed, also overnight financial firm Southchina Futures announced it is terminating it business on “major operation risks.”
From the company’s website:
About South China Futures Brokerage Co. closure announcement

As the Company has significant business risks, some of the bank account was frozen Guizhou Court of Justice, in order to protect the legitimate rights and interests of investors, the company passed a resolution to stop the shareholders’ meeting brokerage business futures, now specific announcement is as follows:

First, the announcement issued by the date, the South China Futures Brokerage Co., Ltd. (hereinafter referred to as “the South China Futures”) is no longer accepting new customers open positions instructions.

Second, within five working days of the date of this announcement, make customers to handle the South China Futures cancellation procedures.

Third, the five working days after the publication of the notice, did not apply for cancellation procedures futures customer account funds will be transferred to the unified Huatai Great Wall Futures Co., Ltd. (hereinafter referred to as “Huatai Great Wall Futures”).

Fourth, since the date of this announcement within ten working days from customers willing to open an account at Huatai Great Wall Futures, futures and South China Huatai Great Wall Futures will jointly provide customers with convenient handle channel, during the South China Huatai Great Wall Futures futures and customer acceptance , Tel: South Futures, (020) 38791617 ; Huatai Great Wall Futures, 4006280888.

Notice is hereby given.
Dropping like flies now.
We wonder how long until the US stock market, floating in its cloud of manipulated, centrally-planned oblivious innocence, realizes that a China on the verge of all out deflationary recession is not a good thing?

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