According to Chinese astrology, 2016 is the Year of the Fire Monkey where the Lunar New Year or Chinese Spring Festival will be celebrated on Feb. 8, 2016. Technically, it is still the Year of the Sheep until Feb. 7, 2016. But it seems the mischievous monkey couldn’t wait and has started playing with fire.
If you are superstitious, the first sign of fire or trouble started at 9:30 p.m. on Dec. 31, 2015, less than 3-hours before Dubai unleashed the 2016 New Year fireworks. The Fire Monkey chose The Address Downtown Dubai hotel as its first target, with fire spread from 1-floor to 40-floors within 10-minutes. Its playground in the Middle East spread to Saudi Arabia and Iran.
Two biggest versions of Islam in the world – the Shi’ite Iran and Sunni Saudi – declared their version of Holy War on each other over the weekend after Saudi executed 47 so-called al-Qaeda terrorists, including influential Shi-ite cleric Sheikh Nimr al-Nimr. In retaliation, Saudi embassy in Tehran was attacked while Shi’ite believers across the region took to the street.
The next day on Sunday, Saudi Arabia cut diplomatic ties with Iran after the former’s supreme leader Ayatollah Ali Khamenei said the Saudis would face “divine revenge”. The latest conflicts between Iran-Saudi brings back the memory of Iran-Iraq War, the 20th century’s longest war, running for 8-years from 1980-1988.
The diplomatic rift between Iran and Saudi Arabia isn’t good to the already volatile and low oil price especially if Iran decides to double its oil production from its earlier promise of 500,000 barrels a day to 1,000,000 barrels once Western sanctions are lifted, scheduled early of the Year of the Fire Monkey. Hmm, what did mommy say about don’t play with fire?
If that was not enough to convince you that 2016 is indeed a bad year, the first day of equity markets for the New Year started with a terrible crash. Thanks to China, global stock markets are seeing jaw-dropping losses. Whatever gains from the year-end window dressing were insufficient to cover for the loss on the first trading day of 2016.
The Shanghai Composite ended 6.86% lower while the Shenzhen Composite closed down 8.2% – its worst day since early 2007. Trading on both exchanges was temporarily halted as the authorities implemented a “circuit breaker” for the first time. Reason – latest Caixin China PMI on Monday showed a fall to 48.2 in December from 48.6 in the previous month.
What this means is the world’s second largest economy has been contracting for 10-months consecutively and the reading is below Reuters expectation of 49.0. The fact that China’s manufacturing sector expand only in February last year (2015) is rather disturbing. Two months of improvement in October and November, 2015, before slips again is a sign of troubles ahead.
This shows that the forces driving China economic recovery have encountered obstacles and the economy is facing a greater risk of weakening. More fluctuations in global markets are expected now that the US Federal Reserve has started raising interest rates. And there’s no telling how much the Feds is willing to increase.
Also, ahead of the expiration of a share sales ban on listed companies’ major shareholders; Chinese investors, traders and speculators were dumping their shares at an industrial scale. But the most worrisome problem is this – the Fire Monkey could provoke China to devalue its Yuan or Renminbi currency again, as what we had written earlier.
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January 4th, 2016 by financetwitter
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It is convenient to blame it on the “Fire Monkey”, when these are all acts of greedy people.