If China had hoped it would root out intervention by eliminating Citadel’s rigging algos, and unleash a buying spree it was wrong: the Shanghai Composite opened negative, and never managed to cross into the green, despite the usual last hour push higher, ending down -1.1% and down for 6 of the past 7 days.
Worse, the high-beta Chinext tumbled 8% from Friday’s late day highs upon opening. Surprisingly, this happened even as China’s final Caixin/Markit manufacturing PMI tumbled to 47.8, the lowest since July 2013 as reported previously, a collapse which normally would have been very bullish for stocks as it guarantees even more PBOC intervention. The trouble is that with the PBOC losing the market’s faith, not to mention control, bad economic news are becoming even worse news for stocks.
Adding commodity insult to stock injury, earlier today copper plunged to a fresh 6 year low, and like crude, is back in its second bear market of the past year.
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The real action, however, was not in Asia but in Europe, and specifically Greece, where the stock market finally reopened after a 1+ month “capital control” hiatus. Granted, numerous conditions still remained, such as no short selling, and extensive limitations to just what could be sold, but despite the attempt to micro manage the reopening, the result was not pretty, with stocks crashing 23% at the open and staging barely a rebound trading -17% as of this moment, even as banks promptly traded down to the -30% limit as the realization that an equity-eviscerating recapitalization (or bail-in) is now inevitable.
Worse, just as the Greek stock market reopened, the Greek Markit data and at 30.2, down from 46.9 the month before, the best reaction anyone could muster to this complete shutdown in the Greek economy was laughter. The chart below hardly needs commentary…
