In spite of appetite for US banks being healthy and at the top of the S&P upward trend, their CDS keep rocketing, too, at quite a pace (+7,72% on Thursday). The graph pictures the changes from May-June. We fear is a correlation effect from what’s happening to Chinese banks. Details from Barclays Capital:
“China closing for lunch off 37bps, noticeably less phased by the stream of commentary overnight about problems in the shadow banking industry, SMEs, etc., than the H share market, looking at SHCOMP arguably a lot is already priced in. HK a very different story with H shares off 3% and the Hang Seng off 2.1%. H shares selling is across the board and brutal –in the banks Ag Bank off 8%, China Mingsheng off 10%, BOCOM off 5.8%, in the props likes of Evergrande off 15%, Agile off 7.5% and Shimao off 5.7% and FAI plays back on their back.
“Chinese airlines failing to get the usual CNY associated bid and more focused on weak golden week travel forecasts, Air China off 5.8%, China Eastern off 8%. Luxury names getting belted after US China consumption plays hit – Prada off 10%, Luk Fook off 9.5%, Brilliance off 12.4%. Finally Macau getting hit between the eyes on Chinese slowdown fears and US overnights, Wynn off 14%, Sands off 12.8%.”