Tag: World News

Breaking: The Moscow Exchange Bans Short Selling

Moscow bans short selling

(Bloomberg) Moscow bans short selling, indicating officials are preparing to reopen the market.

Russia is banning short selling in some of the country’s biggest companies.

The power to ban a strategy used by hedge funds to inflict damage on a company’s stock raises curiosity.

Is this Russia’s way of raising capital?

And should more countries like the U.S. also ban short selling?

Let’s break it down together.

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Moscow bans short selling in some of Russia’s biggest companies

Moscow exchange bans short selling
Moscow exchange bans short selling

Investors won’t be allowed to bet on declines in about 30 Russian companies, according to Bloomberg sources.

Most of which are petroleum and coal companies.

The decision went into effect on Tuesday.

Russia’s stock market has been closed since February28th, the longest shutdown in Russia’s modern history.

There has not been any confirmation as to when stocks will begin to trade in the Moscow Exchange.

The head of portfolio strategy at Toronto Dominion Bank in London says the Russians might want to remove residual risk on falling prices.

Other exchanges have used short-selling bans to limit volatility during a crisis.

Back in March 2020, at the peak of the Covid pandemic-fueled selloff, Italy, France and Belgium also banned shorting selling.

In other places such as mainland China, investors have limited ability to short stocks.

In the United States investors have what seems like an unlimited ability to short company stock, which in some cases results in bankruptcy.

Let’s use Hong Kong as another example.

Only stocks specified by the lit exchange in Hong Kong may be eligible for shorting.

Investors say its near certainty that stocks will tumble when Russia’s stock market opens.

Should the U.S. ban or limit short selling?

The U.S. on the other hand has a real issue with abusive short selling practices.

A collective of institutions such as banks and hedge funds collude to drive the share price of a company’s stock down for profit.

Financial institutions will even go as far as to bankrupting a company to avoid paying taxes on the bets.

The Justice Department is currently investigating banks and hedge funds relating to market manipulation and other injustices in the market.

If Moscow can ban short selling, and other countries can too, do you feel the U.S. should as well?

Due to the capitalistic nature, banning short selling in the U.S could prove to be difficult, which raises the question; should it be limited?

I’d love to hear your thoughts below.

Is this ban temporary?

Moscow exchange short selling
Moscow exchange bans short selling

It seems like Moscow’s short selling ban may only be a temporary strategy for the country to begin stabilizing again after its economic turmoil.

Russia was removed from the SWIFT system in February when it invaded Ukraine.

This escalated tension worldwide as Russia was no longer able to access money outside the country.

The biggest companies in the world also pulled out from Russia which further crippled its economy.

What the ban on short selling in Moscow shows us is that governments have the power to remove the same predatorial short selling that we see happening in recovering companies such as AMC and GameStop.

While short selling has its use in the market to balance volatility, limiting the use of short selling on a group of companies wouldn’t be such a bad idea.

I’d love to hear what you think.

Leave your thoughts in the comment section below.

Stick around for more market news

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Chinese Tycoon Gets Bailed Out From $8 Billion Margin Call

Chinese Tycoon gets bailed out from $8 billion margin call
JP Morgan bails out Chinese tycoon Xiang Guangda after receiving an $8 billion margin call for sorting Nickel – Long Metal Exchange halts continue

Chinese tycoon Xiang Guangda has been bailed out by JP Morgan after receiving a whopping $8 billion margin call.

The margin call came about as he was shorting Nickel.

The commodity short squeezed leaving the Chinese tycoon with an $8 billion margin call.

Xiang told banks he wanted to keep shorting Nickel and shrugged off suggestions to reduce his short positions, Bloomberg.

Should this even be allowed?

Let’s discuss it.

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Chinese tycoon gets away with $8 billion margin call

London Metal Exchange
London Metal Exchange

The tycoon whose big short bet on nickel helped trigger one of the most dramatic price spikes in history has told his banks and brokers that he doesn’t intend to reduce his position, according to Bloomberg.

The London Metal Exchange halted trading in nickel after prices spiked as much as 250% in two days.

 Xiang has told the roughly 10 banks that he still believes prices will fall and that he would like to keep his short position.

The LME acknowledged that short sellers weren’t going to voluntarily reduce their short positions.

It said there were “considerable differences in view on the appropriate price.”

Apparently big net worth short sellers make the rules.

They Chinese Tycoon secured a deal with JP Morgan and China Construction Bank that would allow it to avoid defaulting on its $8 billion margin call.

LME halts Nickel trades

The LME cancelled $4 billion in transactions as Nickel prices began to surge.

The exchange said: “Nickel will be deemed a disrupted session and all agreed trades during this session will be null and void.”

In other words, they took away the ‘buy’ button and are allowing short sellers to either close their positions or profit on the way down.

Dave Lauer says the exchange is ruining their credibility by protecting very wealthy and powerful people/firms.

“You can’t run a market like this, busting trades at someone’s whim.”

The halts are similar to those that occurred last year during the ‘meme stock’ frenzy when Robinhood froze the purchasing of GameStop, AMC, and other heavily shorted stock.

At some point, the people will cause an uproar.

What are your thoughts on the matter?

Big banks are beginning to bail out wealthy people and firms.

What can be done about it and what should be done about it?

The Chinese tycoon is only one example, but what will happen when heavily shorted stock begin to squeeze again?

Leave your thoughts in the comment section below and share this article to raise awareness to the injustices in the markets.

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Evergrande Gets Suspended from Trading in Hong Kong

Evergrande halts trading in Hong Kong
Evergrande halts trading in Hong Kong

(Bloomberg) China Evergrande Group was suspended from trading in Hong Kong pending an announcement containing “insider information”.

The developer is said to be holding a call this week to brief investors on its debt restructuring plan.

Here we have yet again another global suspension that may potentially affect the entire markets and we’re going to discuss it today.

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Welcome to Franknez.com – Evergrande is being suspended from trading in Hong Kong as investors push for their money. This is crazy!

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Hong Kong halts trading of Evergrande

Hong Kong Stock Market
Hong Kong Stock Market

Evergrande and its other units suspended stock trading in Hong Kong (3/21).

The company’s offshore bonds were also halted in the process.

Evergrande has been at the center of a crisis among Chinese property developers following Beijing’s crackdown on borrowing.

It said in January that it aimed to present a preliminary restructuring proposal in the next six months.

Evergrande has been on the brink of default for months now since last year.

Its bondholders approved a payment plan regarding overdue yuan-bond interest, so investors aren’t giving up.

Massive selloff of Nanjing unit

Evergrande Group’s onshore unit will sell its 30% stake in Nanjing property company for an undisclosed sum.

The Nanjing property company, focused on valuation and management services, was set up in June 2020 with registered capital of 66.7 million yuan.

Chinese property firms listed in Hong Kong face a March 31 deadline to file annual results and an auditor resigned to delay the Evergrande’s report.

Transparency and governance concerns have grown alongside worries about Evergrande’s ability to repay debt despite a record number of defaults last year.

Investors are still looking to squeeze the company from its debts.

Who is largely affected by Evergrande in the U.S.?

BlackRock Evergrande Holdings
BlackRock Evergrande Holdings

BlackRock, HSBC, and UBS are the largest institutions holding Evergrande in their portfolios.

BlackRock added 31.3 million notes of Evergrande’s debt between January and August 2021 alone.

That pushed its stake to 1% of the assets in its $1.7 billion Asian High Yield Bond Fund.

HSBC increased its positions in the company by 40% through July, while UBS increased its position by 25% through May.

BlackRock was recently hit by a $17 billion loss due to its exposure in Russia.

While these numbers don’t compare to the giant’s overall AUM of $9.46 trillion, they are still relatively large losses.

We can see how these global investments affect our stock market too.

The DOW is currently down -152% and the NASDAQ -49%.

The SPY is just keeping up despite breaking its monthly downtrend.

What are your thoughts on the scale of Evergrande’s losses?

How long do you think the developer will be leading its investors around?

Leave your thoughts below.

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Peabody Receives a $534 Million Margin Call: Goldman Steps In

Peabody Margin Call
Peabody Margin Call – Global margin calls will happen in every corner of the financial sector

Leading global pure-play and Fortune 500 company Peabody received a $534 million margin call.

The Australian benchmark coal price is up more than 400% in the past 12 months, hitting $425.

Peabody was not prepared and got slammed with a $534 million margin call.

The sum is more than half the cash the company had at the end of December 2021.

Margin calls are beginning to happen left and right and we’re going to discuss it.

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Margin calls in the coming weeks

The Russian-Ukraine conflict is affecting global markets sparking margin calls in every corner of the finance sector.

Russia’s war in Ukraine has further fueled a rally in coal driven by a squeeze on global energy supplies.

Chinese tycoon Xiang Guangda is currently facing an $8 billion margin call after Nickel prices skyrocketed to $100,000 per ton.

Nickel surges to $100,000 per ton

Xiang Guangda tells banks he has no intention in reducing his positions.

The short seller is requiring a coordinated bank bailout including the participation of JP Morgan.

The London Metal Exchange halted trading in nickel on Tuesday morning after prices spiked as much as 250% in two days, driven by brokers rushing to close out short positions after holders of bearish bets struggled to make margin calls.

Credit Suisse News: Margin call tension rises

Credit Suisse margin call

The Swiss bank Credit Suisse is also imposing margin calls on investors exposed to Russia.

The invasion of Ukraine has left wealthy individuals invested in Russian assets with frozen accounts and demands for more collateral.

Tension really began to pick up when Russia was removed from SWIFT.

Banks in the United States are losing cash quick.

Citigroup disclosed in its annual report that it has nearly $10 billion in exposures to Russian counterparties, including loans, reverse repo agreements and cash deposits. 

Morgan Stanley’s next gen emerging markets fund (MFMIX) has also been exposed to Russia with nearly $16.6 million frozen due to Russian sanctions.

Schwab’s fundamental emerging markets large company index ETF (FNDE) has also been affected with 12.7% being exposed to the Russian stock market.

Peabody receives a 10% loan from Goldman

Peabody receives a 10% loan from Goldman Sachs
Goldman Sachs steps in with 10% loan – Peabody Margin Call

Peabody shares plunged 17% after announcing the margin call, taking a chunk out of the gains they had made in recent months as the coal market boomed.

Margin calls could increase if the coal market moves higher.

Senior VP for coal markets at Rystad Energy Steve Hulton says prices could reach $500 per ton.

Peabody arranged a $150 million credit line with Goldman Sachs although the bank announced in 2019 that it would phase out financing for coal.

Peabody’s margin call is only a glimpse of what’s coming to various institutions in the markets worldwide.

And in the states, retail investors are waiting for hedge funds’ number to be called.

Will banks be able to inject liquidity into hedge funds?

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As banks and hedge funds’ assets continue to lose their value, will banks be able to inject liquidity into hedge funds when they need it?

Leave a comment below with your thoughts.

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Russia Exposure Leaves BlackRock with $17bn in Losses

BlackRock Losses in Russia $17bn
BlackRock Losses in Russia amount to $17bn

BlackRock, the largest asset manager in the world has taken a $17 billion loss due to its exposure with Russia.

The Russia-Ukraine conflict is affecting global markets and BlackRock is no exception.

Clients held more than $18.2bn in Russian assets at the end of January.

Following worldwide sanctions imposed after Russia invaded Ukraine have made the vast securities unsaleable.

How is BlackRock managing?

Let’s discuss it.

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Welcome to Franknez.com – if you haven’t already joined the newsletter be sure to do that below. I’m publishing daily market news to keep you informed.

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BlackRock suspends purchase of Russian assets

BlackRock losses in Russia
BlackRock losses in Russia

While BlackRock never opened an office in Russia, it invested in Russian stocks for its clients that wanted exposure to the market.

The world’s largest asset manager suspended the purchase of Russian assets on February 28th.

BlackRock disclosed losses in Russia had only fallen to less than 0.01 percent of their total AUM.

A spokesperson said the total value was about $1 billion on February 28th, when the markets were effectively frozen.

However, BlackRock’s losses in Russia depicts just how large the asset manager is.

They hold roughly $10 trillion in assets globally.

A $17 billion loss could wreak havoc for majority of asset managers but for BlackRock it’s only a scratch on the surface.

Related: Ukraine: These famous brands have pulled out from Russia

What assets did BlackRock lose in Russia?

BlackRock Russia Stock Market

According to sources, BlackRock declined to give a breakdown of its Russian securities or details about which funds had losses.

However, the asset manager did mark down the value of its largest Russian exchange traded fund.

ERUS has gone from about $600 million at the end of last year to a total value of less than $1 million.

BlackRock has suspended trading and waived the management fees on all of its Russian ETFs as well as an emerging Europe fund that was heavily exposed to Russia.

BlackRock chief executive and chairman Larry Fink has praised sanctions and condemned Russia’s invasion.

“Capital is being pulled by investors and companies that have long done business in Russia,” he wrote in a LinkedIn post.

“We stand with the Ukrainian people and condemn the brutal aggression of the Russian government,” Fink added.

Other financial institutions who have been exposed to Russia include Citigroup ($10 billion in losses) and Morgan Stanley ($16.6 million in losses)

Related: Ukraine: These famous brands have pulled out from Russia

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SWIFT: U.S. and Allies Target Russian Banking System, Yachts, Mansions

SWIFT: US and Allies Target Russian Banking System, Yachts, Mansions
US and Allies remove Russia from SWIFT banking system amidst Ukraine Conflict

The U.S. and its allies are targeting Russian’s banking system along with physical assets through SWIFT.

The Biden administration announced on Saturday they’ll hunt down the assets of sanctioned Russian oligarchs.

Some of these assets include their yachts, mansions, luxury apartments, and ability to send money to their kids in prestige colleges out west.

I’m going to break down what SWIFT is and how this is going to impact Russia’s finances below.

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What is SWIFT and why does it matter in Ukraine-Russia conflict?

what is SWIFT?
What is SWIFT?

SWIFT stands for Society for Worldwide Interbank Financial Telecommunications.

It is a global payments system used by more than 11,000 financial institutions and companies around the world, across 200 countries.

In short, it is a messaging system for money transfers between banks and institutions globally.

SWIFT essentially acts as the middleman for money transfers between a foreign sender and a receiver.

This worldwide bank system counts central banks of countries like the US, UK, Germany, France, Japan, India, China, Singapore, and others on its list.

The EU, UK, Canada, and US have pledged to remove Russia from SWIFT.

US and Allies cut Russian banks from SWIFT

How will SWIFT ban affect Russia?

Vladimir Putin How will SWIFT Ban affect Russia?
Vladimir Putin – Russia-Ukraine conflict – how will SWIFT affect Russia?

If Russia is removed from SWIFT, they would have to look for alternative options to send and receive money.

The ban would force Russia to isolate from most of the world and to sustain itself and its economy without the aid of other countries.

How does SWIFT affect Russia’s stock market?

Investors are bracing for volatility though economist Anders Aslund says the stock market and Russian bonds will collapse.

In the U.S., we can expect ongoing volatility as well.

Credit cards and other international means of payment will also cease for the Russian people.

Russian President Vladimir Putin is causing serious distress not only for Ukrainians but for his own country and people.

The strategy is to prevent Russia from further investing in war by eliminating its global financial networks.

US and European Union begin to remove Russian banks from SWIFT banking system

Russia gets removed from SWIFT

WASHINGTON — The U.S., European allies and Canada agreed Saturday to remove key Russian banks from the interbank messaging system, SWIFT, an extraordinary step that will sever the country from much of the global financial system.

It’s official.

The U.S. said this will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally.

Iran was removed from SWIFT in 2014 following developments of their nuclear program.

Russia’s top 10 largest financial institutions holding nearly 80% of the banking sector’s total assets have been targeted.

World leaders are also limiting the sale of “golden passports”, also known as loopholes that have allowed wealthy Russians to become citizens in other countries.

The Biden administration said they’re going after their yachts, their luxury apartments, their money, and ability to send their kids to fancy colleges in the west.

What do you think of these restrictions?

Are they enough?

Be sure to leave a comment below.

How is the world reacting to the Ukraine invasion?

Ukraine protests around the world

Many Russians disagree and fear for both Ukrainian and Russian lives.

There’s a lot of negative reaction towards the government’s decision in Russia.

Russians have been rushing to withdraw US dollars at ATMS these past few days as the ruble hit a record low.

Very few have been able to obtain foreign cash with many out of luck.

The world is saying no to Putin and people on social media are representing Ukraine’s flag to show their support to the Ukrainian people.

Protests have broken out in Moscow against war with Ukraine with many Russians being arrested.

Vladimir Putin has been in power for 22 years now.

A former U.S. ambassador says Putin has become increasingly unhinged and disconnected from reality.

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The world reacts to Russia-Ukraine conflict.

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