Stocks Tied To China’s SWIFT Alternative Are Soaring

As the Western world still obsesses with how Russia’s expulsion from SWIFT will impact the Russian economy, commodity prices and the global funding markets, a quick note on how forward looking markets are reacting.

While we wait for US cash markets to open (as futures reverse a modest bounce and trade at session lows), China’s micromanaged “market” is already up and running in what so far appears a boring session where the SHCOMP is flat, but where shares tied to China’s Cross-Border Inter-Bank Payments System (CIPS) are surging after Saturday’s decision by Western nations to exclude some Russian lenders from the SWIFT messaging system. Why? Because of what Bloomberg notes is growing speculation that China’s CIPS could become an alternative for those banks.

What is CIPS? It is a payment system which offers clearing and settlement services for its participants in cross-border yuan trades. Indeed, it is a Chinese version of SWIFT, and one which most Russian banks will likely soon be forced to adopt.

As a result, stocks such as Orient Group, and HyUnion Holding jump by the 10% daily limit..

… while Infosec Technologies and Forms Syntron Information surge by the 20% daily limit.

And since China will quickly brush off any threats of sanctions if it were to accept Russia banks into its orbit, it is now clear that instead of driving a wedge between Russia and the country that is true the biggest US challenger on the global scene, China, the West has succeeded into bringing the two powers even closer together while putting the fate of the world’s reserve currency in jeopardy, as Dylan Grice explained earlier…

never seen weaponization of money on this scale before…you only get to play the card once. china will make it a priority to need no USD before going for Taiwan. it’s a turning point in monetary history: the end of USD hegemony & the acceleration towards a bipolar monetary order

— Dylan Grice (@dylangrice) February 27, 2022