/biz/ - Business & Finance

If you're wondering what in THE ACTUAL FUCK just happened....
>pic related

>>16422924
Why does the Chinese Communist Party bend all of China's billionaires over in order to fuck them in the ass in exchange for a little wealth?

>>14230999
>refers to binance wallets as "brother" wallets
which team are ya batting for, OP?

>>14058025
1/2 But wall Street cares. Thats why Wall Street has been whining like a bunch a bitch-made cunts over "Orange Man's Trade Wars".

WHY?

Because, their risk overexposure to the Chinese market (through pension and endowment portfolios) is astronomical seeing as they're essentially the Investor Relations department for the fucking Communist Party.

That aside, Trump has Brussels, London, Wall Street and China by the fucking gonads.

Can ya guess why?
>China desperately short dollars
>Chinese companies borrowed 1.1 Trillion last year alone
>China raises dollars through Chinese [state] companies IPO listing in Hong Kong
>Hong Kong Dollar has an antiquated currency peg
>Hong Kong has spent 86% of reserves propping up the HKD
>HK Bank's credit exposure is 900% of it’s GDP and their household leverage is 300% of GDP
Its only a matter of time until this bubble pops and Trump can hasten it (if China doesnt play fair) by ending the US/Hong Policy Act of 1993, causing a revaluation of the HK dollar to the downside, effecting ALL SE Asian currencies including RMB.

And Wall Street pension and endowment portfolios are exposed to all of it.

Lets discuss China and why President Trump has all the leverage he needs to bring the Chinese Communist Party to heel.

1/2 Powers That Be & their Wall Street investment firms, hate Trump tariffs because their endowment and pension portfolios are overly exposed to Chinese/SE Asian markets: Wall Street fuels bulk of China’s domestic US dollar accumulation via IPO listings in Hong Kong.

The reasons why such exposure is risky are numerous, but reconciling them illustrates why Trump’s trade war is being waged: currently, great leverage exists in the US’s long term favor despite short term Wall Street pain.

See, China claims to have an economy that represents 15% of global GDP despite not even making up 1% of cross-border currency settlement: we take them at their word for their domestic RMB based economy converted at a rate they stipulate is the rate.

Yes, China runs the Printing Press, the police, the narrative and the price of goods (aside from real estate). They control their own economy domestically, but what they can’t control is their dollar reserves.

That’s right, China is desperately short US dollars, dollars they require in order to interface with the global economy; Chinese corporations collectively borrowed 1.1 trillion USD last year alone....

Here’s why (and no, it’s not Trump’s trade war, though such is a related component)....

China claims to have an economy that represents 15% of global GDP despite not even making up 1% of cross-border currency settlement: we take them at their word for domestic RNB based economy converted at a rate they stipulate is the rate.

Yes, China runs the Printing Press, the police, the narrative and the price of goods (aside from real estate). They control their own economy domestically, but what they can’t control is their dollar reserves.

That’s right, China is desperately short US dollars, dollars they require in order to interface with the global economy.

This is why Chinese companies primarily list in Hong Kong; in order to raise money (mostly dollars) in Hong Kong, Europe & the US through equity and bond offerings: when American pensions and endowments invest in China, they send the money to Hong Kong because HK has a free trade agreement with the US per the US Hong Kong Policy Act of 1992 requiring HK to maintain an autonomy in their economy, judicial system and government...though such is increasingly not the case.

Now here’s the problem: Hong Kong’s banks are 900% of it’s GDP and their household leverage is 300% of GDP. They’re the most levered developed country in the world and they’re running out of their reserves, spending 86% of it defending the 36 year old currency peg thats likely to drop in value because their economy is more integrated with China’s than it is with the US economy.

Bottom Line: This antiquated HK Dollar pegging has created a pressure cooker poised to go off, the ultimate outcome being a revaluation of all SE Asian currencies to the down side, including the RNB and HKD.

>>13739608
Exposure to Chinese markets is very risky. If I may explain...

China claims to have an economy that represent 15% of global GDP, despite not even making up 1% of cross-border currency settlement; we just take them at their word for their domestic RNB based economy converted at a rate they stipulate.

Alas, China is desperately short US dollars.

And sure, they run the RNB Printing Press, the police, the narrative and the price of goods (aside from real state). They control their own RNB economy domestically, printing more money than any country in the history of the world. What they can’t control is their dollar reserves.

See, Chinese companies primarily list in Hong Kong in order to raise money (mostly dollars) in Hong Kong, Europe & the US, through equity and bond offerings: when American pensions and endowments invest in China they send the money to Hong Kong because Hong Kong has a free trade agreement with the US per the US Hong Kong Policy Act of 1992 that requires Hong Kong to have an autonomy in their economy, judicial system and government...though such is increasingly not the case.

The Problem: Hong Kong’s banks are 900% of it’s GDP, their household leverage is 300% of GDP. They’re the most levered developed country in the world and they’re running out of their reserves, spending 86% of it defending the 36 year old currency peg thats likely to drop in value because their economy is more integrated with China’s than it is with the US economy.

This antiquated pegging has created a pressure cooker poised to go off, the ultimate outcome being a revaluation of SE Asian currencies to the down side, including China and Hong Kong.

In other words, OP’s post should be no surprise to anyone.