The Chinese regulator's intervention made victims on the Shanghai Stock Exchange (-7,76% at the close), which was moreover vulnerable to a correction after the stellar increases of the last 12 months. At the origin of the crash is the decision of the authorities to prohibit the disbursement of new loans to three large brokers.
Chinese authorities suspended Cetic Securities, China's leading broker by stock value, Haitong Securities and Guotai Junan Securities for three months. In the last six months, the Shanghai Stock Exchange has risen by 60% and according to some analysts, the decision of the market supervisory authorities is also linked to fears of the rapid growth of share prices in the financial sector.
The weakness of the Chinese stock market has made the yen strengthen, and the explanation is that the risks in the market have increased and therefore capital flows go into safe-haven currencies, one of which is the Japanese one. The yen, however, has weakened by 20% or more over the past year. The Nikkei strengthens and passes 17 thousand again.
The euro is weak, at 1,155 against the dollar, and the wait, of course, is for the ECB meeting on Thursday the 22nd. Draghi is trying to forge a consensus around QE, but the decision will probably be taken by a majority. Gold continues to be strong in these turbulent days, trading at $1277/oz. Crude oil is fluctuating, and the latest quotation sees it at 48,4 $/b WTI (Brent still below 50, at 49,8). Iraq is pumping oil at record levels and markets continue to dominate a crude surplus over demand. The Swiss franc is in full parity with the euro; at this point it would be advantageous for the Swiss to join the single currency as the twentieth country! Stable equity futures on Wall Street.
