IS SHIBOR INDICATING A CHINESE BANKING SYSTEM COLLAPSE IN NOVEMBER?

SHIBOR

Is Peking panicking again?

Do you recall the June panic in the Chinese banking sector? Rumor of defaults of a secondary bank resulted in the SHIBOR, equivalent of LIBOR for China, spiking abruptlyIn the span of a few hours, a “Credit Freeze” developed. The Chinese government has forbid the media to write more on the subject and then, opened credit lines to avoid defaults wherever it was needed, saving banks, industries and speculators.

On the 4th of June,  Wei Yao, the SG Cross assets Research’s China economist wrote that China may be on the verge of a “Minsky moment.”

A few days later, Beijing panicked, the SSE crashed and it seems that many speculators were forced to close their contracts on commodities (soybean mealsoybeansoybean oil, ) bringing to a real disruption of these markets. Gold and Silver also suffered, both bottomed at the end of June.

If the sudden spike in the SHIBOR is any indication, it seems that the Chinese banking sector fears the second part of November.

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