Australian Market Crashing and Iron Ore

Posted: April 29, 2014 in Uncategorized

China is starting to implement tougher rules on Steel Mills and Iron Ores crashes….bringing down the Australian Share Market.

While in April the Western Media were fantasizing on Chinese Mini Stimulus we read the market correctly that the Chinese Government this time was serious.

The Financial Times reports that the China Banking Regulatory Commission warned banks to tighten controls over letters of credit for iron ore imports in a document that caused iron ore futures in China to drop 5 per cent on Monday. Rumours of the stricter measures, which are expected after the May 1 holiday, have been circulating in China for at least two months, after a hasty stock sale caused ore prices to tumble in late February.

The biggest issue for the markets that all these loans in the iron ore are very “creative” and nobody knows what or who will be hit next. Hopefully no domino effect. Even the Chinese Authorities are scared as the tightening of rules on the loans decrease also the collateral (actually iron ore collateral has been used also to buy Australian Property).

It is like a sequential margin call in the stock market …with the difference that everything is extremely murky.

This could be the crack in the bull mark …Sell in May and go Away!

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