Global financial markets remain on tenterhooks after last week’s extraordinary decision by the London Metal Exchange to freeze nickel trading, allowing major banks and Chinese officials to cobble together a rescue plan for Tsingshan Holding Group, the world’s biggest producer of nickel and stainless steel.
With rumours sweeping through the market about the ability of Tsingshan and its brokers to meet margin calls and avoid default, the LME intervened. According to the Bloomberg report, “Tsingshan’s difficulties paying its margin calls have put its banks and brokers in a bind, as they have had to make hefty margin calls of their own at the LME to cover their short positions on the exchange. If Tsingshan walks away from its commitments, the banks stand to lose billions of dollars.”JPMorgan is playing a leading role in discussions between Xiang and the roughly 10 banks and brokers through which his nickel short position is held.
Still, the Tsingshan episode has raised serious questions about the huge systemic risk lurking on commodity exchanges.Xiang Guangda, the billionaire owner of Tsingshan Holding Group.Tsingshan, for instance, has a short position of 30,000 tonnes of nickel directly on the LME, which is held through brokers.
Owned by HKFE..its that simple.
You'd think Xi would have given them a heads up on the impending invasion!
What happened to Evergrande?