The Gray Rhino Rattles Chinese Stocks

In front-page commentary published July 17th, 2017, People’s Daily, the official newspaper of China’s Communist Party, warned of the need to avert highly obvious “gray rhino” risks as well as rare and unpredictable “black swans.” The commentary rocked China’s stock markets and signaled a new policy direction intended to more aggressively address obvious financial risks.

The article said that China should “strictly prevent risks from liquidity, credit, shadow banking and abnormal capital market fluctuations, as well as insurance market and property bubbles.”

Taking the commentary as a sign that regulators would crack down on speculation, investors immediately dumped small-cap stocks, seen as more likely to carry debt that could become unmanageable. “China’s small-cap Shenzhen index plunged 4.3% on Monday. The ChiNext, which focuses on high-tech companies, plummeted 5.1% and closed at its lowest point since early 2015,” noted CNN Money.

The timing of the People’s Daily article was particularly telling, immediately following last week’s National Financial Work Conference, a key policy strategy session that occurs every five years. This year the conference created a “super-regulator,” intended to improve the country’s ability to tackle a financial crisis, that merged four existing supervisory watchdog. It also strengthened the central bank’s powers.

A few hours after the People’s Daily article appeared, new data showed the Chinese economy re-accelerating.

The Chinese government’s embrace of the gray rhino language generated widespread media coverage.

“The unusual zoological turn of phrase in the Party’s language could… hint at a genuine effort to re-energize its long-drawn-out regulatory clampdown,” Sunny Oh wrote for Marketwatch.

Similarly, ZeroHedge noted, “[I]n a surprising case of forward-looking prudence, the Chinese government is doing what numerous Fed members have also done in recent weeks, by setting a surprisingly wary tone about risk, demonstrated best by the front page commentary in the People’s Daily.”

Former Dallas Fed chief Richard Fisher referred to gray rhino risks on Squawk on the Street Monday.

Here’s some other notable coverage:

What’s a ‘gray rhino’ and Why Did It Cause Chinese Stocks to Drop? CNN Money, July 17, 2017
       ¿Por qué un ‘rinoceronte gris’ causó la caída de las acciones en China?
        ‘Tê giác xám’ ?ang ?e d?a th? tr??ng Trung Qu?c VNExpress (Vietnam)
        Piyasan?n yeni korkusu: Gri gergedan BusinessHT (Turkey)

China’s Economy Charges On as Officials Target the Risk ‘Rhino’ Bloomberg News, July 17, 2017
       China economy charges on as leaders target the risk `Rhino’ The Peninsula (Qatar), July 18, 2017

Why China Fears “Gray Rhino” Risk to Fragile Financial System Marketwatch, July 17, 2017

When a ‘Black Swan’ Will No Longer Do ZeroHedge, July 17, 2017

Xi’s Risk-off Push Ripples Through China as Transition Nears Bloomberg News, July 18, 2017

China Sentences to Ponder, Gray Rhino Edition Marginal Revolution, July 18, 2017

Beijing Watches Out for “Grey Rhino” and “Black Swan” in Jungle of Financial Risks South China Morning Post, July 19, 2017

People’s Daily Reference to the Gray Rhino -What Is It? jrj.com (Chinese Simplified Characters), July 19, 2017

China Ignores Gray Rhino Threats to its Economy at its Own Peril Andrew Sheng, South China Morning Post, July 21, 2017

Keeping Financial Risks at Bay, China Daily, July 20, 2017

Gray Rhinos, Game of Thrones, and TV’s Golden Age People & Profit, France24, July 21, 2017

 

THE GRAY RHINO Taiwan edition

THE GRAY RHINO is now available in Taiwan via Commonwealth Books.

Zhang Bo Song reviewed the book on Inside: “One of the hottest topics of the year is the Grey Rhino. If you don’t understand what the gray rhino is and what’s the difference with a black swan, be sure to take a look at this book. Because you don’t want to wait until the grey rhino is charging at you: you want to act.”

Economic Daily: Don’t Turn a Blind Eye to a Gray Rhinoceros Crisis April 17, 2017

Tai Zhong, DWNews Taiwan  “Gray Rhinoceros Phenomenon and Taiwan government” April 26, 2017 “In April 2017, the financial book “The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore” caused the attention of Taiwan’s people, Then “gray rhinoceros” following the “black swan,” became a common word on the media.”

Korea and China editions of THE GRAY RHINO

 

THE GRAY RHINO: How to Recognize and Act on the Obvious Dangers We Ignore is now available in China via Citic Publishing Group and Korea via Business Books and Co.

Read more at these links (you may need to use your browser’s translate option.)

Review in Korea Economic Daily
Maeil Business Newspaper -Cover Story
Rednet coverage of THE GRAY RHINO

THE GRAY RHINO was published in Hungary in Fall 2016 via Athenaeum, and Taiwan and Norway editions are in production.

Introducing www.thegrayrhino.com

The launch of my latest book, THE GRAY RHINO: How to Recognize and Act on the Obvious Dangers We Ignore (St Martin’s Press), kept me very busy in 2016, with appearances in New York, Washington DC, Chicago, Milwaukee, San Francisco, Phoenix, London, Luxembourg, and Oslo.

I’ve also been working on turning the concept and framework introduced in the book into keynote speeches, workshops, and practical tools for companies, policy makers, and individuals to use in making better decisions that will help them avoid preventable but too often overlooked “gray rhino” problems.

It’s very, very exciting to formally launch Gray Rhino & Company through its very own brand new website, thegrayrhino.com. The site includes blogs about geopolitical gray rhinos as well as behavioral tools to help with gray rhinos at work or home. Along with my own thoughts, the site hosts guest commentary. It also has multimedia resources, including video, audio, slides, and e-books.

Please visit the site, take a look around, and let me know what you love (or hate!). I’m open to suggestions, to guest posts, and collaboration opportunities.

You’re also invited to sign up for my newsletter, the Gray Rhino Tracker. Every month, I’ll share insights and tips designed to help you to make sure you’re not about to get run over by a gray rhino. Plus you’ll get special offers, links to articles, and recommendations of work by people I respect.

But wait, there’s more! (I always wanted to say that…) Gray Rhino Tracker subscribers also get a FREE e-book companion, What’s Your Gray Rhino? 5 Questions to Keep You from Getting Trampled, with a simple set of questions to help you keep track of your organization’s -or your own- gray rhinos. Sign up for the Gray Rhino Tracker to get a download link.

I’ll still post content here regularly, including things related to Why the Cocks Fight and Lockout, but you can take a much deeper dive into gray rhino thinking on the new site. Thanks for taking a look!

Profile in Der Standard (Austria)

Karin Bauer at the leading Austrian newspaper, Der Standard,
interviewed Michele Wucker about THE GRAY RHINO during Michele’s recent visit to Vienna. You can read the interview HERE (click the “more” button at the end of the article to translate into English; or use your browser’s translate function)

BusinessWorld Review: Stay Alert, Act In Time

Elton Sayward reviews THE GRAY RHINO in the December 26, 2016 issue of BusinessWorld, calling it “a must read for the C-Level suite, start-ups and anyone that has been trampled by a gray rhino.”

He applies the framework to his own memories in military situations: “As a US Naval Officer, I saw this first hand on the bridge of ships as officers would delay making a course correction in an obvious close crossing situation with another ship. Officers would have the data at hand from 2-3 different radar sources as well as visually from lookouts, but hesitated to make the call to the Captain to recommend a course change. The fear of looking foolish, making a wrong recommendation, not having the correct information would all play on the officer’s better judgement to take action. This invariably would end up with the officer looking reckless and the Captain coming to the bridge and making the needed course changes in a more complex and urgent situation.”

READ THE FULL REVIEW HERE.