Liquidity Thread

Discussion in 'Economics' started by Stockolio, Apr 17, 2019.

  1. I am gonna try and track India Interbank and Chinese Interbank liquidity until the Collapse happens... Soros focuses on Liquidity lending betweens banks, once that slows up or vanishes, trouble awaits hundred percent of times. As of End March, Chinese liquidity been drying up fast, so far have not cut RRR which everyone assumed they would do since liquidity already dry, PBOC seems to have a hawkish tone and may have finally thrown in the towel... They will cut RRR again no doubt, but why haven't they done it yet

    Others please add any liquidity troubles they see brewing, it seems to be best indicator before institutions pull out, I will dig into India Interbank rates, ill report back
  2. Subscribed

    Debt concerns have pushed funding costs for non-bank financing companies to multi-year highs in recent weeks. That’s bad news for all the borrowers who rely on the lenders in the world’s fastest-growing major economy -- from poor entrepreneurs getting micro loans for food delivery businesses to property tycoons looking to roll over debt that fueled a construction boom. Read more on that here.

    The development will make money more expensive for a huge range of enterprises and individuals, at a crucial time for policy makers. Teetering economic activity is already pressuring the central bank to deliver on expectations for a back-to-back interest rate cut in April. And Prime Minister Narendra Modi must avoid any economic turbulence ahead of elections next month.

    Spreads on top-rated five-year bonds of Indian non-bank lenders have risen 75 basis points from the end of August to near their widest levels since 2012, according to data compiled by Bloomberg.

    The problems started late last year following shock defaults at shadow lender IL&FS group. Things looked better briefly earlier this year after authorities stepped in to increase liquidity, but more surprises popped up in the past few months. Debt concerns at conglomerate Essel Group and troubles for mortgage lender Dewan Housing Finance Corp. have since pushed financing costs higher.

    “Recent issues with a few non-bank lenders created a second wave of worry, the issues we thought were dissipating early January are now resurfacing," said Prakash Agarwal, head of financial institutions at India Ratings. “The cost of funds for lower-rated NBFCs will become disproportionately higher as we go forward."
  4. India CB flooding stimulus, panic has set in... 19 Billion US equivalent due from April to June by Shadow Banks, a good portion can default. Let's see if they counter it well, consequences already being shown but Election time, they will peddle to metal until Elections are done

    China liquidity is ok, there CB injecting every other week, or ells collapse... They haven't slowed down injections, but rates trending higher then average on 10 year, 3.44 ish

    Argentina liquidity approaching Oct 2018 levels ( crisis ), Turkey is broke and too indebted... They are buying the S400 from Russia, which means no IMF bailout, Lira crashing, the interbank rates are high, likely to shoot up soon even with CB intervention. Net foreign reserves around 12 Billion

    Note that these Chinese firms have been borrowing new dollar-debts from Chinese banks so that they can stay solvent.

    But now – it looks like the dollar-funding problem has found its way into China’s banking sector. . .

    Meaning: Chinese banks are running low on U.S. dollars also, preventing them from funding both domestic and abroad activities.

    As the Wall Street Journal (WSJ) recently shared – the combined dollar-liabilities at China’s four largest commercial banks now significantly exceed their dollarassets.

    Banker Uday Kotak Tuesday warned of more liquidity crisis plaguing the financial sector, which is already passing through "turbulent times", for the next two quarters and stressed on the need to have strong balance sheets to withstand difficult times.

    The next six months are crucial for the financial sector, Kotak, the executive vice-chairman of Kotak Mahindra Bank said, adding the fear this time is the financial sector impacting both itself as well as the real sector.

    Comments come days after smaller rival Yes Bank under a new chief executive warned that up to ₹10,000 crore of assets existing on its book as standard assets can slip into NPAs and massively provided for the same, resulting in a maiden loss of over ₹1,500 crore.

    "We are in the midst of one of the significant challenges in the financial sector and I think the next few months are crucial in the sense how the financial sector shapes up across various segments.
  7. ironchef


    Let me get this straight, according to ET: China (debt bubble), India (debt bubble), Canada (housing bubble), Australia (housing bubble), Turkey (liquidity), Argentina (liquidity), Japan (Gov debt bubble), UK (Brexit mess) ... US? according to MMT, not to worry, we can just print money. :D
  8. Hong Kong Interbank Rates rising again...

    That’s according to Carie Li, an economist at OCBC Wing Hang Bank Ltd., who says the city’s shrinking cash pool is making banks more reluctant to lend. The one-month interbank rate, known as Hibor, has climbed to 2.11 percent, up from a low of 0.91 percent in late February. She cited dividend payments lenders make from May to July and a need to hold cash near the end of the first half to meet ratio requirements as likely to put further upward pressure on borrowing costs.

    Rates have risen after the Hong Kong Monetary Authority spent HK$22.1 billion ($2.8 billion) buying local dollars in March as the local currency fell beyond the weak end of its trading band against the greenback. The intervention reduced the aggregate balance, the city’s pool of cash, to almost HK$55 billion. The previously wide gap between Hong Kong and U.S. rates had made the city’s currency attractive to short.

    "The aggregate balance has fallen to a level that’s not comfortable for some banks," Li said. "They’ve tried to hoard cash and they won’t want to lend much in the interbank market so they are well prepared for upcoming seasonal events."
    #10     May 1, 2019