Ten days ago, the China Agricultural Bank was nicely placed on its own with an Asian shares issue offering a discount to rivals of over 10%. It needed more funds to meet exploding consumer loan demand, said the spin-merchants.

But then doubts started about the Chinese economy – output falling, crackdown on credit, possible personal debt crisis etc etc….until even Goldman Sachs Permabull Jim O’Neill wrote in the Sunday Telegraph over the weekend that things were looking unpleasant in the CPR.

So Agricultural’s rights issue discount disappeared as shares in rival institutions fell. Now the discount is only 5% – and doubts are being expressed about the Bank’s ability to raise the US$20 billion it seeks.

More money-literate readers will remember this sequence of events from 2008 – as Britain’s overlent-in-subprime banks started trying to raise money at the same time as sector valuations fell: it is a vicious circle that closes on its victims, and eventually makes public offerings impossible. This was the point at which Freddie Goodwin and his mates turned to Downing Street….and disaster followed.

Keep your eye on this one. It may be nothing, but The Slog’s water says it’s an early symptom of malaise in China’s eccentric half command, half free economy.

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