1/8
A 🧵on the LME situation and why it should bother anyone in mkts.
A blatant disregard for the rules, to protect one Chinese Tycoon against the market.
This is far worse than GameStop.
I tried to keep this as simple as possible. Pls correct in the replies.
A 🧵on the LME situation and why it should bother anyone in mkts.
A blatant disregard for the rules, to protect one Chinese Tycoon against the market.
This is far worse than GameStop.
I tried to keep this as simple as possible. Pls correct in the replies.
2/8
Tsingshan is China’s largest nickel producer. $40B in revenues
It is run by its founder, Xiang Guangda. His moniker is “big shot.” Take that to mean he has a huge ego.
He shorted 100,00 tons of Nickel, yes, that’s a huge amount.
Tsingshan is China’s largest nickel producer. $40B in revenues
It is run by its founder, Xiang Guangda. His moniker is “big shot.” Take that to mean he has a huge ego.
He shorted 100,00 tons of Nickel, yes, that’s a huge amount.
3/8
He was counseled to reign in this massive short. But he’s “big shot” and runs Tsingshen, so he “knows better.”
In retrospect, this position was causing mkt imbalances. This imbalance often shows up when all mkts are stressed, like they were/are with Russia invading Ukraine.
He was counseled to reign in this massive short. But he’s “big shot” and runs Tsingshen, so he “knows better.”
In retrospect, this position was causing mkt imbalances. This imbalance often shows up when all mkts are stressed, like they were/are with Russia invading Ukraine.
4/8
The market moved against him enough to get a margin call. By all accounts he simply said he did not want to pay it.
So, the LME gave him a “reprieve.” In other words, the LME ignore its own rules.
The market moved against him enough to get a margin call. By all accounts he simply said he did not want to pay it.
So, the LME gave him a “reprieve.” In other words, the LME ignore its own rules.
5/8
Why? Maybe because he is “big shot” a major player, and his broker was the state-owned China Construction bank, and the LME is owned by the Hong Kong Stock Exchange. Hong Kong, as of 2020, is now part of China.
Why? Maybe because he is “big shot” a major player, and his broker was the state-owned China Construction bank, and the LME is owned by the Hong Kong Stock Exchange. Hong Kong, as of 2020, is now part of China.
6/8
When he was given his “reprieve” the mkt had a “off-sides” player that could be squeezed. So, prices rocketed 250% to $100k.
A that point he could not pay the margin. Not to worry, the LME halted trading and canceled trades back down to $50k.
When he was given his “reprieve” the mkt had a “off-sides” player that could be squeezed. So, prices rocketed 250% to $100k.
A that point he could not pay the margin. Not to worry, the LME halted trading and canceled trades back down to $50k.
7/8
This got him back to a “mark to market” level he could pay.
So, all those traders that correctly assessed the situation and went long in legitimate trades lost all their profits between $50k and $100k.
This got him back to a “mark to market” level he could pay.
So, all those traders that correctly assessed the situation and went long in legitimate trades lost all their profits between $50k and $100k.
8/8
Now “big shot” wants to stay short and the LME, which initially said Nickel trading would restart tomorrow, put that on hold. The fear is the short imbalance still exists and the price rockets back to $100k and doubles his margin, and then they have to cancel more trades.
Now “big shot” wants to stay short and the LME, which initially said Nickel trading would restart tomorrow, put that on hold. The fear is the short imbalance still exists and the price rockets back to $100k and doubles his margin, and then they have to cancel more trades.
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