Shanghai Gold Exchange Hikes Silver Margin By 20%

SEPTEMBER 26, 2011

Wondering what caused the dramatic plunge in gold and silver earlier? Wonder no more: the CME's counterpart in China, the Shanghai Gold Exchange, decided to follow through with an identical, if more substantial, action to that undertaken by the CME on Friday, and announced an increase in the Silver T+D contract margin from 15% to 18%, a 20% bump; the SGE also noted an increase in the price range limit from 12% to 15%, which will be promptly fulfilled, as margin hikes traditionally tend to lead to a sudden spike in vol, contrary to well-meaning expectations. There was a second announcement, slightly more cryptic one, noting that if volatility were to persist, the SGE would outright halt silver trading (although the Google Translation of this previously unseen form announcement is a little sketchy). Expect to see more exchange intervention in precious metals today. Regardless, those who bought silver 15% lower a whopping, oh, two hours ago, courtesy of the out and out sheer panic, are quite grateful to the Chinese.

The Margin hike announcement - link:

Member Unit:     silver Ag (T + D) contract Sept 23 close to seal the lower limit. According to "Shanghai Gold Exchange Risk Control Measures" of the relevant provisions, such as Ag (T + D) contract on Sept 26 (Monday) close to limit the same direction (ie, a second consecutive unilateral City), end of the day from the date of liquidation from the Ag ( T + D ) contract margin increased from 15% adjusted to 18% , the next trading day Ag ( T + D ) contract price limits range limit from 12% adjusted to 15% .

And the more cryptic one - link:

Silver Ag (T + D) contract Sept 23 close to seal the lower limit. If Sept 26, Sept 27 days Baiyin Yan swap transactions to limit the same direction, namely to reach the daily limit for three consecutive days, there will be the third consecutive unilateral City. According to "Shanghai Gold Exchange Risk Control Measures," the relevant provisions of Chapter II, once the third consecutive unilateral City, Spet 28 Exchange will suspension of silver Ag ( T + D ) the contract day, and the implementation of the following two measures to resolve any of the market risk.

    Measures one: 9 months 28 days to decide whether to take unilateral exchange or bilateral, in the same proportion or in different proportions, some members or all members to improve trading margins, some members or all members suspended new positions, adjust the up (down) circuit breakers rate to restrict some or all members of the withdrawal of funds, the deadline open, forced open, suspension and other measures to resolve in one or more of the market risk. Exchange of relevant measures will be Sept 28 12 -point first through the exchange website, Spet 28 at end of day settlement will go into effect.

    Measures II: Setp 28, the Exchange's trading positions held by members of Baiyin Yan period open for an agreement. Specific methods are: Exchange of the Sept 27 (third unilateral City) daily limit price at closing time to declare the transaction Baiyin Yan swap transactions did not open declaration to Sept 26 (second unilateral City) settlement The contract price and the net profit of customers by profitability position to match the size of the transaction, not in Sept 27 to declare open daily limit price does not enter the agreement positions open range. Recommended to prepare closing out of long positions will, in Sept 27 prior to the closing price to sell positions to declare the daily limit, once the exchange using measures two positions will serve as a basis for agreement. Positions held by the same customer-way, the first level their positions, then the method open.

    City in the event of three consecutive cases of unilateral, which measures the specific use, the exchange will be based on market conditions, in the Sept 28 12 -point first through the exchange website, please access the Member in a timely manner, and to prepare preparations.

    Such as Sept 27 closed, the Bai Yinyan swap transactions did not appear for three consecutive unilateral City, Sept 28 normally open for trading, and maintenance margin ratio 18% , Change stop range limit of 15% unchanged.

Exchange Special Note: As the silver market price volatility and uncertainty of exchange to take measures, in order to safeguard the interests of investors in their own, reminding investors carefully about the risks of exchange control measures, prudent market.

Asian markets slump for second day

HONG KONG - Asian markets plummeted for a second straight day on Friday and the dollar rose against regional units on growing fears that the global economy is on the verge of slipping back into recession.
Seoul dived 4.05 per cent, Hong Kong was 1.67 per cent lower by the break, Taiwan slumped 3.05 per cent while Shanghai was 0.91 per cent lower.
Sydney, which fell more than two per cent in morning trade, briefly bounced back into positive territory the afternoon and was down just 0.27 per cent.
Manila slumped 5.13 percent, or 210.14 points, to end at 3,885.96. Tokyo was closed for a public holiday.
The Asian sell-off followed heavy losses in the United States and Europe, which were caused by the Federal Reserve's comments on Wednesday that the US economy faced "significant downside risks", with the economy struggling with
slow growth, high unemployment and a depressed housing market.
The warning came after the Fed announced a US$400 billion plan to boost the economy that would see it shift its shorter-term debt portfolio to longer-term bonds in a bid to lower long-term interest rates, a move that disappointed markets.
On Wall Street the Dow slumped 3.51 per cent -- marking its worst two-day fall since November 2008 -- the S&P 500 sank 3.19 per cent and the tech-heavy Nasdaq Composite shed 3.25 per cent.
The Fed's forecast piled the pressure on already nervous investors, who were selling assets earlier in the week amid fears Greece is on the verge of default, which could spread to other economies and lead to another global financial crisis.
"The selloff in risk assets threatens to become disorderly," Tim Condon, economist at ING, told Dow Jones Newswires.
The dollar extended its rise against regional currencies as dealers shifted their attention away from risker assets.
The Australian dollar was at 98.31 US cents, from US$1.0017 late Thursday. The Aussie hit a record high above US$1.10 just two months ago.
The greenback, which in recent months was languishing near record lows against several Asian currencies, was up at SGD$1.3017 from SGD$1.2878, to 1,194.47 South Korean won from 1,179.57 and to Tw$30.61 from Tw$30.34.
The euro edged up to US$1.3546, from US$1.3464 late Thursday in New York, while it was also at 103.21 yen, from 102.64.
The dollar fetched 76.20 yen, from 76.25 yen.
On oil markets New York's main contract, West Texas Intermediate for November extended its losses, dropping US$1.09 to US$81.60 in morning Asian trade, and Brent North Sea crude for November tumbled 0.85 cents to US$106.34.
Gold fetched US$1,747.10 an ounce by 0200 GMT, down from the US$1,765.40 it was at by 0900 GMT Thursday.

Marc Faber to Reuters- You dont need the fed to tell you something is wrong

Glut In Penang?

Is Penang in danger of turning into one big property speculation hotbed?

Is Penang in danger of turning into one big property speculation hotbed? The question now being asked is, amid the furious construction activities going on, are there enough takers?

A startling revelation recently by chartered valuer C.A. Lim & Co proprietor Lim Chien Aun that the return on investment (ROI) for properties on the island over the last 5 years had dropped by half, while the value had doubled does not bode well for the industry.

“As it is, the bulk of properties purchased over the past five years were for speculation purposes. If the ROI keeps decreasing, as property values increase correspondingly, then no one would buy property in Penang for investment purposes. The market would then become purely speculative,” Lim has reportedly said.

The affordability factor also comes in. “How many households are there with income between RM8,000 – RM10,000 monthly to be able to afford properties priced over RM300K?” he said.

IRRESISTIBLE HOTSPOT

There isn’t a doubt that Penang is proving to be an irresistible hotspot for developers, attracting them from all over especially the big boys from Kuala Lumpur. The list increases all the time. The latest entrant to the Penang property sector is giant Sime Darby via a 30% share acquisition in Eastern & Oriental Bhd (E&O). The latter is undertaking the RM12 billion Seri Tanjung Pinang 2 project which involves reclaiming 740 acres of land in Tanjung Tokong to develop two islands for mixed development projects.

Another high profile recent entrant from KL is Berjaya Land Bhd which has acquired 23ha of land in the famed Penang Turf Club area for RM459 million cash, or RM184 psf for a high-end residential property development.

Other big boys from KL are SP Setia Group, Sunway City Bhd, Mah Sing Group Bhd and IJM Land Berhad. IJM Land is well-established in Penang for many years and is considered by some to be the biggest developer in Penang. Add that to the increasing number of local Penang developers with big projects such as Suiwah Corporation Bhd, Ivory Properties Group Bhd, MTT Properties and Development Sdn Bhd, and you have a potential oversupply situation for both residential and commercial properties, argued some industry observers.

Recent reports have estimated Penang’s planned projects to be close to RM30 billion over the next 10 – 15 years. At 2010 take-up rates of between RM1.8bil to RM2bil, it would take some 10 – 11 years to sell them off, according to expert estimates.

“PIE BIG ENOUGH”

IJM Land’s CEO and Managing Director, Dato’ Soam Heng Choon was not worried however when asked recently about a possible glut. The chieftain said IJM Land has positioned itself as a market leader and is unperturbed with other developers emerging on the island.

“The pie is big enough, and our product offerings will set us apart from others. Our properties are located near the Penang bridge and have premium waterfront position,” he added.

As always, the big boys will always be able to ride out whatever downturn or oversupply situation that might arise. Optimism was even expressed on the land reclamation works that some quarters believe will increase demand for workers and contractors, and by extension rental properties, food and et cetera. In short, the “frenzied” construction work will actually generate economic activities for the island with its many spillover effects and is thus something that is healthy for the state.

As always the demand and supply will work itself out over time. If the state government manages it well, Penang might well turn out to be “Paradise Revived”.