- China Containerized Freight Index Collapses
by Wolf Richter, http://wolfstreet.com/
It could be that Chinese stock market participants have no idea that there is something wrong beneath the officially rosy covers. Or they might already know in granular unofficial detail, and fearing the worst, they’re wagering everything they have, plus some, on stocks to get rich quick while they still can. They’re opening up brokerage accounts at record pace and borrowing on margin to ride the wave. If the limits in China get in the way, they head to Hong Kong to set up trading accounts and borrow even more.
It has worked so far. The Shanghai Composite Index jumped 8.9% this week and 146% over the past 12 months. It closed above 5,000 for the first time since 2008. The valuation of companies with a primary listing in China skyrocketed by $4.7 trillion this year. People are feeling flush and are hoping for a another governmental tsunami of money to bail them out. What transpired in other countries over the past six years is now transpiring in China in condensed form. And the countdown for the crash has started [read… The Dumbest Man in China].
One thing the Chinese authorities cannot do is crank up the global economy and demand for Chinese goods. These goods are shipped by container to the rest of the world. But containerized freight rates from China have totally collapsed.
The China Containerized Freight Index (CCFI), operated by the Shanghai Shipping Exchange and sponsored by the Chinese Ministry of Communications, has not been put through the beautification wringer that other more publicly visible statistics, such as GDP growth, are subject to. It tracks spot and contractual rates for all Chinese container ports. And it plunged 3.2% this week to a multi-year low of 862, down 20% from February.
The trajectory of this terrible 3-month plunge: