Along with S&P, Moody's makes up two of the world's most crooked ratings agencies bar none. Back when the financial crises started (2008-2009) these two "stalwart" companies were assigning AAA ratings to the sub-prime shite that was being peddled all over the globe by investment banks large and small. All so that they could continue raking in the fat fees that they were being paid to assign top-notch ratings to pig shite,
So, anything that comes from these two firms should be rendered meaningless from the get-go and maybe the action in the Chinese markets post the DG proved that for now.
The following is what Moody's said regarding the downgrade:
"The downgrade reflects Moodys expectation that Chinas financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows.
While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt and the consequent increase in contingent liabilities for the government.
Moodys expects that economy-wide leverage will increase further over the coming years. The planned reform program is likely to slow, but not prevent, the rise in leverage. The importance the authorities attach to maintaining robust growth will result in sustained policy stimulus, given the growing structural impediments to achieving current growth targets. Such stimulus will contribute to rising debt across the economy as a whole."
Most importantly did Moody's let that information leak out or even more importantly, did they leak the information out to preferred clients here at home yesterday? If one looks at the Chinese basket of stocks that trade on our exchanges, almost every single one of them got hit hard in trading yesterday for no news that was apparent at the time.
However, now we know that Moody's was getting ready to downgrade China's sovereign credit rating. Maybe Moody's and their clients expected the Shanghai and Hong Kong markets to get hit?
I think Moody's did leak the news out regarding the downgrade to their preferred clients yesterday who then turned around and shorted the Chinese stocks that trade on our exchanges hoping that overnight Shanghai, Shenzhen and Hong Kong markets fall apart given the downgrade.
However, both those market proved more resilient and also proved that savvy investors the world over are wise to the ways of unscrupulous firms like S&P and Moodys.
A bit conspiracy theorist, I know. Just something to think about, nonetheless.