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Depositors are storming Chinese banks. No money back?

USD/CNH, currency, Shanghai Composite, index, USD/CNY, currency, Depositors are storming Chinese banks. No money back?

Chinese investors come out to mass protests. For example, on July 10, thousands of people came to the branch of the People's Bank of China in Zhenzhou, since their deposits in 4 banks have been frozen since April:

  • Yuzhou Xinminsheng Village;
  • Zhecheng Huanghuai Community;
  • Shangcai Huimin County;
  • New Oriental County Bank.

How it happened: why depositors lost access to their savings

There are a lot of regional private banks in China, they are also called "rural". According to the law, they must carry out their activities exclusively "at the place of residence". But in practice, this did not prevent them from attracting deposits from people from all over the Middle Kingdom through online platforms - including Du Xiaoman Financial and JD Finance, owned by Baidu and JD.com . And the authorities just turned a blind eye to it.

However, recently the national regulator accused a major shareholder of the four listed banks, Henan New Fortune Group, of illegally attracting depositors' money.

Did Covid hit the discontented?

The authorities, alas, are clearly not on the side of the victims.

The first protests took place back in May, the next action was to take place in mid-June - cheated depositors from all over China were going to come to it. But then their electronic "health codes" suddenly changed from green to red, which means that a person is sick with covid and must stay at home in quarantine. So it didn't work out to get together.

Well, at the rally on July 10, the security forces, both in uniform and in civilian clothes, penetrated into the crowd and began beating the protesters.

But what about deposit insurance?

In banks, customers were told that deposit products were legal and protected by the deposit insurance system. In China, deposits of 500,000 yuan (~$75,000) are guaranteed in case of bank bankruptcy. But if a government investigation finds the deposits "not in accordance with the law," then the depositors will never see their money.

It is also unknown who exactly has to pay the debts of "rural" banks: local authorities or central ones? However, after the latest protests, it was reported that the first payments to victims of the banking industry should take place this Friday.

What is happening in China in July 2022?

Social tension in China is growing, and more and more often you can hear about the clashes of the population with the authorities: people are locked up in factories, then they do not give out deposits. But the 20th Party Congress is on the nose.

China is not such a communist country. When it comes to financial pyramids and the interests of banks, such a draconian version of capitalism is flourishing in the country that Wall Street is resting.

So far, the protests are centered around four small banks. In total, there are about 4,000 such "banks" in China, which collectively control assets worth $14 trillion. But who are they lending to? What if the problems of the first 4 swallows are directly related to problems in the real sector?

For example, the combined sales of 100 leading developers have already "collapsed" by half, the construction sector (30% of China's GDP) can pull the entire Chinese economy with it.  And this, in turn, is able to "test the strength" of a larger number of banks and the entire deposit insurance mechanism.

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What's up with the global economy and where to invest?
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And because of this, China's market growth may slow down. China is now highly dependent on Western demand and it is the main beacon for the Celestial market.What will happen to the yuan in 2023The yuan is also a headache and uncertainty. Will China be able to successfully open up? Will there be a global recession? It is still unclear how China will survive U.S. restrictions. The decline in trade with the U.S. is negative for the renminbi.But a big positive could be the use of the RMB in international trade. First of all oil. The more countries move away from the dollar and euro to the yuan, the stronger it will be.In the near future the yuan is unlikely to strengthen - there is nothing to strengthen it on. Even it will gradually decline: demand for Chinese goods is decreasing and geopolitical tensions are growing.World economic outlook for 2023The outlook for the global economy is not good. Growth is slowing - the problems are starting in the West and dragging the East with them. After all, economies are still very closely integrated, no matter what political slogans about the "polarity" of the world say.Markets behave ambiguously. And at such moments, distortions and inefficiencies appear - someone doesn't know something, someone doesn't understand something. You can make money or lose money on this.We make forecasts because we are constantly watching macroeconomics and market data. Don't take them as a signal to act, but as the opinion of our team. But don't forget - look at the economy and markets more broadly, don't let short-term fluctuations distort your perception and your actions. 
Feb 20, 2023
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Forecasts for 2023 - who can we trust?
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Feb 08, 2023
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Oct 03, 2022
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Tesla shipments fell short of expectations
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Oct 03, 2022
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The World Bank expects recession and stagflation in Europe. Is euro growth impossible?
EUR/USD, currency, The World Bank expects recession and stagflation in Europe. Is euro growth impossible? According to some experts, the coming years could be very difficult for the EU. It is possible that his economy will have to rebuild fundamentally. What will happen to the euro is also a question.What worries the World Bank?Its head David Malpass has named the factors that increase the risk of recession in Europe - weakness of the euro and high inflation. There are risks of a long-term decline in the growth of the European economy.The most important problem is the energy crisis. According to Malpass, it will take years for the global industry to replace Russian energy sources. And the EU is unlikely to solve the energy crisis quickly. The same LNG terminals in Germany are not expected to be built until the second half of 2023.All of this raises the risk of prolonged stagflation. It's all according to the formula: economy doesn't grow - stagnation, but prices go up anyway - inflation.Moreover: the main trading partners are not doing well either, and as a result, demand for European exports may be lower, and it will be harder to import. After all, China's growth is slowing sharply, and production in the U.S. shrank in the first half of the year.Negative forecasts multiply: crisis, recession, GDP declineDeutsche Bank is lowering its outlook for the European market because of the worsening energy crisis. The recession may be deeper and prolonged, analysts say.In addition, from the middle of 2022 to the middle of 2023, the real GDP of the Eurozone will fall by 3%, according to estimates of Deutsche. Of strong concern is winter, where there could be "an even steeper decline."ECB head Christine Lagarde also said that eurozone GDP could fall in late 2022 and early 2023. In the baseline scenario, the regulator still expects GDP growth of 0.9% in 2023, although it is still a strong slowdown: since the beginning of 2022, we have seen growth of 4-5%. And under the unfavorable scenario there will be a decline of GDP by 0.9%. And some of the conditions for such a scenario have already materialized.Not only Europe is under attack: what will happen to the world economy in 2023?It is possible that the entire global economy at risk of recession next year, say the World Bank. The wave of tightening of central bank policy may not be enough to curb inflation, but it may hurt economic growth. As a result, global GDP growth will slow to 0.5% in 2023, already on the verge of a global recession. And despite record growth in 2021, the global economy will never recover to pre-decline levels.What will happen to the euro in 2022/2023?If the EU economy slows down and is on the verge of recession and stagflation, the currency will inevitably weaken as well. Capital from around the world is now fleeing to the U.S., trying to find a safe haven there. And given the projections, the euro may not soon return even to parity with the dollar. And while, for example, the yuan is still supported by a resilient Chinese economy, in Europe the situation is worse.The energy crisis in the EU also plays into the hands of the dollar, but will weaken the euro. After all, the U.S. is one of the countries now supplying energy to Europe instead of Russia. They mostly import LNG, although higher prices on the domestic market may slow down these exports.Not only that, but European companies are shifting production to the U.S. because of expensive energy at home, the WSJ says. And if this continues, the European economy and currency could weaken even further in the long term. But the "greenback" will be just strengthening.In this case, the euro may not return to pre-crisis values in the coming years, it will continue to lose to the dollar.What to expect from the Euro in 2023?Most likely, in 2023 we should not expect to see a significant strengthening of the euro. And then we are in for more uncertainty. Although long-term trends are also against the EU currency. More about EUR/USD tradingIf you are interested in EUR/USD analytics, we recommend you to visit the analytics page, where you can find the latest analytics on Forex from top traders from all over the world. These analytics will be useful both for beginners and professional traders. The Forex signals service makes it much easier for beginners to make their first steps in trading on the financial markets. The latest EUR/USD forecasts and signals contain support and resistance levels, as well as stop-loss levels.
Sep 30, 2022
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Amazon will spend nearly $1 billion on hourly wage increases in 2023
Amazon, stock, Amazon will spend nearly $1 billion on hourly wage increases in 2023 Major online retailer Amazon.com announced a wage increase for hourly workers in the U.S. that will increase the average starting wage for most front-line warehouse and transportation employees to more than $19 an hour.The company said the increase carries an additional cost of nearly $1 billion over the next year. Amazon is the second-largest private employer in the United States after Walmart Inc. Amazon employed more than 1.1 million people in the U.S. at the end of 2021. As of June 30, the company had more than 1.5 million total employees. Most of those employees are hourly workers who pack and ship merchandise or work in retail stores such as Whole Foods Market and Amazon Fresh.The company is also expanding access to a program that allows employees to get paid more often than once or twice a month, according to the statement.Amazon is facing employee activism and unions at some of its facilities, including a warehouse in Albany, N.Y., where a vote is scheduled for next month. The company is contesting an election last April in which more than 8,000 workers at the warehouse in Staten Island, N.Y., won the right to be represented by a union.Amazon shares on NASDAQ rose 3.15% to $118.01 a share in trading on Sept. 28, and are momentarily losing 1.47% ($116.28) in premarket trading on Sept. 29.
Sep 29, 2022
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