Chinese brokers tighten margin requirements

Thursday, May 28, 2015

Chinese brokers have tightened margin loan rules as concerns of a bubble in the stock market force stricter controls from market participants. GF Securities together with Changjiang Securities and Haitong Securities have all increased their margin requirement with Changjiang pushing its requirement up to 80% from 60% previously. With other brokers expected to follow suit we could see some pull back as liquidity constraints limit risk taking ability. The Shanghai Composite and CSI 300 both experienced a sharp correction overnight on the news, ending a seven day rally as both indices lost between 2.9-3.3%. 

The yen dropped to a twelve year low against the dollar trading at an intraday high of 124.07 yesterday as contrasting policies between the US Federal Reserve and the Bank of Japan saw significant flows into the greenback. After spending much of the month under pressure, capped by resistance towards 120.00 the yen has lose 3.6% against the dollar in the past eight sessions as investors positioned themselves for an impeding rates rise in the US while loose monetary conditions look set to continue in Japan. Activity overnight and early this morning has seen the yen trade briefly towards 124.30 before pulling back to yesterday’s settling level. The weaker yen compounded gains for Japanese benchmark equity indices offering additional support to exporters.

European stocks rose on Greek optimism as it emerged that an official involved in the negotiations stated that Greece and its creditors were in the process of drafting a final agreement on its debt restructuring. Stocks across the eurozone rallied on the rumours with the Athens Stock Exchange closing at its highest levels since early-March. However, European Commission VP Valdis Dombrovskis soon after denied that any agreement had been reached but that both sides were working towards a conclusion as quickly as possible. European stocks managed to hold onto their gains despite the rebuff while the euro managed to stem additional outflows, rising for a second day early on this morning towards 1.0950.

JPY extends declines against USD

JPY Curncy Japanese Yen Spot 2015 05 28 07 20 36

ASE index closes at highest level since early March

ASE Index Athens Stock Exchange 2015 05 28 07 39 39

Events for today

1000

EZ

May

Bus Climate & Cons. Sentiment

1330

US

w/e

Jobless Claims

1500

US

Apr

Pending Home Sales

1600

US

w/e

EIA Energy Stocks

OE:

Jun

Natural Gas (NYMEX)

Copper & Gold (COMEX)

All times UK Local Time

Topics: Equities, ECB, Yen, Greece
More from: Kash Kamal