Submitted
by Tyler
Durden on 06/16/2014 07:22
-0400
Another
conspiracy "theory" becomes conspiracy "fact" as
The
FT reports "a cluster of central banking investors has become
major players on world equity markets." The report, to be published this
week by the Official
Monetary and Financial Institutions Forum (OMFIF), confirms
$29.1tn in market investments, held by 400 public sector institutions in 162
countries, which "could potentially contribute to overheated asset prices."
China's State Administration of Foreign Exchange has become "the world's largest
public sector holder of equities", according to officials, and we suspect the
Fed is close behind (courtesy of more levered positions at Citadel), as the
world's banks try to diversify themselves and "counters the monopoly power of
the dollar." Which leaves us wondering where are the central bank
13Fs?
While
most have assumed that this is likely, the recent exuberance in stocks has
largely been laid at the foot of another irrational un-economic actor - the
corporate buyback machine. However,
as The FT reports, what we have speculated as fact for many years now
(given the death
cross of irrationality, plunging volumes, lack of engagement, and of
course dwindling credibility of central planners)... is now
fact...
Central
banks around the world, including China's, have shifted decisively into
investing in equities
as low interest rates have hit their revenues, according to a global study of
400 public sector institutions.
"A
cluster of central banking investors has become major players on world equity
markets," says a report to be published this week by the Official Monetary and
Financial Institutions Forum (Omfif), a central bank
research and advisory group. The trend "could potentially contribute to
overheated asset prices", it warns.
...
The
report, seen by the Financial Times, identifies $29.1tn in market
investments, including gold, held by 400 public sector institutions in
162 countries.
...
China's
State Administration of Foreign Exchange has become "the world's largest public
sector holder of equities",
as the report argues is "partly strategic" because it "counters the monopoly
power of the dollar" and reflects Beijing's global financial
ambitions.
...
In
Europe, the Swiss and Danish central banks are among those investing in
equities. The
Swiss National Bank has an equity quota of about 15 per cent. Omfif
quotes Thomas Jordan, SNB's chairman, as saying: "We are now invested in large,
mid- and small-cap stocks in developed markets worldwide." The Danish central
bank's equity portfolio was worth about $500m at the end of last
year.
So
there it is... conspiracy fact - Central Banks around the world are buying
stocks in increasing size.
To
summarize, the global equity market is now one massive Ponzi scheme in which
the dumb money are central banks themselves, the same banks who inject the
liquidity to begin with.
That
would explain this.
That
said, good luck with "exiting" the unconventional monetary policy. You'll
need it
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