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Geographical Risk and Chaos at Market: The Reign of Uncertainty



The continuation of the conflict between Russia and Ukraine, along with the financial sanctions against Russia by Europe and the United States, has induced a shock in the international capital market. International energy prices, including oil and natural gas, together with commodity market prices, rose distinctly. In particular, the price of nickel has increased significantly in the past two days. There are market rumors that Chinese private enterprises have started to experience short positions, which might incur huge losses.

After raising more than 76% on Monday, the London Metal Exchange (LME) nickel price rose more than 110% on March 8 to USD 101,351 per ton, setting a new high again. Two causes are expected to contribute to the unexpected spike in nickel prices. First, Russia, as a major producing country, was kicked out of the LME because of financial sanctions. Because the LME was unable to supply nickel, it resulted in a significant supply deficit.

Data show that in 2021, Russia’s supply accounted for about 9.3% of global nickel ore output, and Russia’s production was more than 23% of global refined nickel output. After the Russian products were banned, liquidity in the nickel market deteriorated remarkably, creating an advantage for the bulls. Second, global nickel inventories are already low, with nickel inventories in LME-registered warehouses falling nearly 70% to 83,328 tons since April last year. Market activity forces its price higher due to low supply, signaling more price volatility and potential for speculators to benefit.

As a result, this might have ramifications for the Chinese market. According to certain media sources, the 200,000-ton nickel short order made by Tsingshan Group, a Fortune 500 business in Wenzhou, may not be available in stock since Russian nickel was taken off the LME because of the Russia-Ukraine crisis and financial penalties. Some market rumors are circulating that Glencore might squeeze Tsingshan on LME Nickel for its 60% stake in a nickel mine in Indonesia.

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Tsingshan Group is the partner of Huayou that develops the nickel project. At present, it is not clear how risky Tsingshan’s position is from the rising nickel prices. According to certain media reports, Tsingshan’s floating loss might exceed USD 8 billion based on the scale of the lack of supply of 200,000 tons of nickel. If the price rally persists, Tsingshan’s short position could wipe out some of its production profits. Tsingshan declined to comment in multiple requests for inquiry, and Swiss financial trader Glencore responded that the claims were baseless.


There have been rumors that Chinese companies have encountered short-squeeze in the market. Bloomberg did report that Tsingshan started building short positions last year, in part to hedge against rising production with the belief that the nickel price rally would fade. Tsingshan’s production costs in Indonesia are less than USD 10,000 a ton, while the LME’s benchmark price is more than USD 23,000.

It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price falls during nickel production. The LME data shows that there is an unidentified nickel inventory holder who holds at least half of the LME inventory (as of February 9, 2022). The unidentified stockist holds between 50% and 80% of the nickel warehouse receipts monitored by the LME, according to LME daily data. Holder of LME warehouse receipt could withdraw the spot according to the warehouse receipt.

The rival of this magnitude, it is believed, could be Glencore. Most important of all, the concern is whether Tsingshan will continue to compete with the bulls (Glencore) or close out the short positions. Bloomberg’s report pointed out that since Tsingshan’s nickel products are not eligible for delivery with the LME futures contract, its futures shorts are not a perfect hedge against its products. This reveals that if Tsingshan is forced to increase margin or move positions, these short positions would consume a lot of its cash flow.

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Although there have been warnings through news reports, unfortunately, under the aggravated geographical risks due to the Russia-Ukraine crisis, extreme market deals have further exacerbated the Tsingshan Group’s position. This reveals that Tsingshan Group has not been able to effectively control risks and cease losses promptly. Some Chinese companies and investors, who often treat market risks with conventional thinking, are lacking effective early warning and risk control for external risks that cause an adjustment in the trading environment.

Under the current aggravated geography risks, its impact often exceeds the market fluctuations in the normal state, bringing an unexpected influence on companies and investors. The condition recalls the rare phenomenon of “negative oil prices” in international crude oil futures during the COVID-19 pandemic. At that time, the acute contraction of crude oil demand as a result of the pandemic caused a rare negative value of crude oil futures prices. This extreme condition led to the liquidation of trading products including Yuan You Bao, causing huge losses to investors and financial institutions.


In the case of nickel, the LME had to suspend nickel market trading at 4 pm on March 8, Beijing time. It explained that the decision on the suspension was made due to the impact of the Russia-Ukraine crisis and the price trend in Asia. At present, margins on the LME nickel contract were based on the closing price on March 7, 2022. The LME Clearing would consider additional measures, if any, based on a risk management perspective.

Market closures caused by such extreme transactions are rare not only in the LME but also in international commodity markets. This demonstrates that not only private enterprises were unable to take timely measures to deal with the aggravated geographical risks, but the market too had no effective solution on this. The latest information shows that the LME would delay the delivery of all spot nickel contracts originally scheduled for March 9, 2022. The LME also cancels all nickel trades executed on or after 12 am U.K. time on March 8, 2022 on OTC and LME select screen trading systems.

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This means that Tsingshan Group might recover some of the losses on the transaction. Because of the increased geopolitical risks, the futures trading market should have some control over risky transactions, but should not follow usual norms at this time. For example, for some extreme actions that may pose systemic risks to the market, the management should apply some limits so that the market and critical institutions do not collapse easily, given the implications for the entire industry. This is the sort of difficulty that the LME is facing at the moment. As a result, it is legitimate for the LME to interfere as needed.

Regardless of whether Chinese companies could recover their losses afterwards, it has become a lesson because the impacts are profound and painful. More important is that in the future, these companies must always be prepared in advance, rather than merely observing despite various early warnings. Researchers at ANBOUND point out that investors should learn the lessons and enhance their macro-judgment of geopolitical risks.

The current rise in geographical risks has not only brought chaos to the commodity and energy markets but also affected the global capital market which could cause a major global financial turmoil. The overall market environment has undergone dramatic changes. Under this circumstance, enterprises and investors can no longer invest and operate merely from the perspective of market transactions, nor evaluate market risks under conventional thinking.


The various market extremes exhibit that the current market is anything but a “normal” market now. Therefore, under the aggravated geopolitical risks, investment strategies and trading arrangements will require prudential contemplation.

Via MD

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Unveiling China’s Diplomatic Strategy: How Funding Fuels Influence in the Global South




In the realm of international relations, China’s approach to diplomacy has been a subject of intrigue and analysis. With a keen focus on the Global South, Beijing’s strategic manoeuvring in merging funding with diplomacy has reshaped traditional power dynamics. This article delves into how China leverages financial resources to bolster its influence in regions like Latin America and Africa, shedding light on the implications of this approach.

1: The Evolution of China’s Diplomatic Strategy
China’s diplomatic strategy has undergone a significant evolution over the years, transitioning from a policy of non-interference to proactive engagement with developing nations. By intertwining funding initiatives with diplomatic efforts, Beijing has effectively positioned itself as a key player in shaping global discourse.

1.1: The Belt and Road Initiative (BRI)
At the forefront of China’s diplomatic endeavors is the Belt and Road Initiative (BRI), a massive infrastructure development project spanning multiple continents. Through the BRI, China extends financial support to countries in need of infrastructure development, fostering closer ties and enhancing its geopolitical influence.

1.2: South-South Cooperation
China’s engagement with the Global South is characterized by a commitment to South-South cooperation, emphasizing mutual benefit and shared development goals. By offering funding assistance without imposing political conditions, Beijing has cultivated strong partnerships with countries in Latin America and Africa.


2: Beijing’s Engagement with Latin America
Latin America has emerged as a key battleground for China’s diplomatic ambitions, with Beijing actively seeking to deepen economic and political ties with countries in the region. Through strategic investments and funding initiatives, China aims to solidify its position as a leading partner for Latin American nations.

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2.1: Economic Investments
China’s economic investments in Latin America have surged in recent years, encompassing sectors such as infrastructure, energy, and technology. By providing funding for critical projects, Beijing not only stimulates economic growth in the region but also strengthens its influence over key decision-making processes.

2.2: Political Alliances
In addition to economic investments, China has forged strategic political alliances with countries in Latin America, leveraging its financial resources to garner support on international issues. By aligning interests and offering funding assistance, Beijing cements its position as a trusted partner for regional governments.

3: China’s Engagement with Africa
Africa represents another focal point of China’s diplomatic outreach, with Beijing actively engaging with African nations through a combination of funding initiatives and strategic partnerships. By investing in key sectors and promoting cooperation, China seeks to enhance its presence on the African continent.

3.1: Infrastructure Development
China’s investments in infrastructure development across Africa have been instrumental in driving economic growth and connectivity within the region. Through initiatives like the Forum on China-Africa Cooperation (FOCAC), Beijing channels funding towards critical projects that benefit both Chinese interests and African development goals.


3.2: Resource Diplomacy
Resource diplomacy plays a crucial role in China’s engagement with Africa, as Beijing seeks to secure access to vital resources through strategic partnerships with African nations. By offering funding for resource extraction projects and infrastructure development, China strengthens its foothold in key sectors like mining and energy.

China’s fusion of funding and diplomacy represents a nuanced approach to global engagement, one that prioritizes economic cooperation and mutual benefit. By strategically leveraging financial resources to build relationships with countries in the Global South, Beijing is positioning itself as a formidable player on the world stage. As we witness the unfolding dynamics of international relations, it becomes evident that China’s push to lead the Global South is not merely about funding projects but about shaping a new era of diplomatic influence.

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Rising from Adversity: Kharkiv’s Tech Start-Ups and the Art of Business Resilience in Ukraine



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In the bustling city of Kharkiv, Ukraine, a remarkable story of resilience and innovation is unfolding. Despite facing extreme disruption, the region’s tech start-ups have defied the odds, showcasing the indomitable spirit of Ukraine’s entrepreneurs and engineers. This article delves into the extraordinary journey of Kharkiv’s tech ecosystem, exploring how it has emerged as a testament to unwavering determination and adaptability in the face of adversity.


The city of Kharkiv has long been a hub of technological advancement and entrepreneurial fervour. Home to a burgeoning community of start-ups and tech companies, it has rapidly gained recognition as a hotbed of innovation in Ukraine. However, the region’s resilience has been put to the ultimate test in recent years, as it grappled with unprecedented challenges ranging from political unrest to armed conflict. Despite these adversities, Kharkiv’s tech start-ups have not only survived but thrived, offering invaluable lessons in business resilience.

The Genesis of Kharkiv’s Tech Ecosystem

To understand the remarkable resilience of Kharkiv’s tech start-ups, it is essential to delve into the origins of the region’s burgeoning ecosystem. The city’s rich legacy of academic excellence and scientific research laid the groundwork for a vibrant culture of innovation. With a strong emphasis on STEM education and a pool of talented engineers and developers, Kharkiv became an ideal breeding ground for tech entrepreneurship.


Navigating Adversity: The Impact of Political Unrest and Armed Conflict

The outbreak of political unrest and armed conflict in Ukraine cast a dark shadow over Kharkiv’s burgeoning tech scene. The region found itself grappling with economic instability, infrastructure disruptions, and an uncertain business environment. In the face of such formidable challenges, many would have expected Kharkiv’s tech start-ups to falter. However, what transpired was nothing short of extraordinary.

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Adaptability in Action: Pivoting Strategies and Innovation

Faced with extreme disruption, Kharkiv’s entrepreneurs and engineers demonstrated remarkable adaptability, swiftly pivoting their business strategies to navigate the tumultuous landscape. From embracing remote work models to diversifying their product offerings, these companies showcased an unparalleled ability to innovate in the face of adversity. The rapid adoption of cutting-edge technologies and agile development methodologies further underscored their commitment to staying ahead of the curve.

Forging Resilient Partnerships: Collaborative Ecosystem and Global Outreach


Central to Kharkiv’s resilience was the spirit of collaboration that permeated its tech ecosystem. Start-ups, established companies, academic institutions, and government agencies joined forces to provide mutual support and foster innovation. Furthermore, despite the challenging geopolitical climate, Kharkiv’s tech community actively pursued global partnerships and market opportunities, showcasing an unwavering commitment to growth and expansion.

The Human Element: Nurturing Talent and Well-Being

Amidst the chaos and uncertainty, Kharkiv’s tech leaders recognized the importance of prioritizing the well-being and professional development of their teams. Initiatives focused on mental health support, skill enhancement programs, and inclusive work cultures played a pivotal role in sustaining morale and driving productivity. The emphasis on nurturing talent underscored the human-centric approach that defines Kharkiv’s tech ecosystem.

Looking Ahead: Lessons in Business Resilience for a Global Audience

As Kharkiv’s tech start-ups continue to chart an inspiring path of recovery and growth, their journey offers invaluable insights for businesses worldwide. The principles of adaptability, collaboration, innovation, and human-centric leadership that have underpinned their success serve as a compelling blueprint for building resilience in the face of extreme disruption. By studying the experiences of Kharkiv’s entrepreneurs and engineers, organizations across the globe can glean actionable strategies to fortify their business resilience.



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In conclusion, Kharkiv’s tech start-ups have emerged as beacons of hope and inspiration in the face of unprecedented challenges. Their unwavering resilience, innovative spirit, and collaborative ethos have not only sustained their businesses but also propelled them towards new heights of success. As Ukraine’s entrepreneurs and engineers continue to defy adversity, their story stands as a testament to the transformative power of resilience in business. The world can undoubtedly draw profound lessons from Kharkiv’s remarkable journey—a journey that epitomizes the triumph of human ingenuity in the most trying times.

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The Looming Crisis: Bad Property Debt Exceeds Reserves at Largest US Banks




The commercial real estate market has been a significant contributor to the US economy, but it is now facing a looming crisis. The largest US banks are struggling to manage bad property debt, which has exceeded their reserves. Despite regulators highlighting the risks, loan loss provisions have thinned, leaving banks vulnerable to potential losses. In this article, we will explore the reasons behind this crisis, its potential impact on the economy, and what steps banks can take to mitigate the risks.

The Current State of the Commercial Real Estate Market

The commercial real estate market has been booming for the past decade, with low interest rates and a strong economy driving demand. However, the COVID-19 pandemic has disrupted this trend, leading to a decline in demand for office and retail spaces. This has resulted in a rise in vacancies and a drop in rental income, putting pressure on property owners and investors.

The Impact on Banks

Banks have been heavily invested in the commercial real estate market, with loans to property owners and investors accounting for a significant portion of their portfolios. However, the decline in demand has led to a rise in defaults and delinquencies, resulting in bad property debt. According to a report by the Federal Reserve, bad property debt at the largest US banks has exceeded their reserves, leaving them vulnerable to potential losses.


The Role of Loan Loss Provisions

Loan loss provisions are funds set aside by banks to cover potential losses from bad loans. However, in recent years, loan loss provisions have thinned, leaving banks with inadequate reserves to cover potential losses. This has been a concern for regulators, who have highlighted the risks of the commercial real estate market and urged banks to increase their reserves.

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The Potential Impact on the Economy

The commercial real estate market is a significant contributor to the US economy, and a crisis in this sector could have far-reaching consequences. A rise in defaults and delinquencies could lead to a decline in property values, resulting in a drop in investment and a rise in unemployment. This could, in turn, lead to a decline in consumer spending and a slowdown in economic growth.

Mitigating the Risks


To mitigate the risks, banks need to take a proactive approach. They need to increase their loan loss provisions to cover potential losses from bad property debt. They also need to work with property owners and investors to restructure loans and avoid defaults. Additionally, they need to diversify their portfolios and reduce their exposure to the commercial real estate market.

The commercial real estate market is facing a crisis, and the largest US banks are struggling to manage bad property debt. Loan loss provisions have thinned, leaving banks vulnerable to potential losses. This crisis could have far-reaching consequences for the US economy, but banks can take steps to mitigate the risks. By increasing their reserves, working with property owners and investors, and diversifying their portfolios, banks can avoid a potential catastrophe and ensure the stability of the US economy.

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