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China’s Stock Market Plunges
Topic Started: 27 Jun 2015, 11:54 AM (19,951 Views)
John Frum
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mayw
7 Jul 2015, 06:21 PM
Nothing strange. In 2008, the Shanghai Composite Index fell from 6100 to 1600 in only one year.

Only 10% people in China invested in stock market, which is extremely low compared with developed countries. The stock market is not that significant in China and the impact will be very limited this time.
What was the difference in trading volumes between 2008 and now? What % of the actively traded stock was on margin? What was the demographic profile of the average investor?
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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miw
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GloomBoomDoom
7 Jul 2015, 03:01 PM
I don't understand why they are scrambling to rescue a stock market that is still up 180% in the last 12 months.
Maybe someone can explain that to me.
My thoughts exactly. Not only that, but the stock market is hardly systemic in China at this stage.

Let the chips fall as they may I would have thought.

Rastus2
7 Jul 2015, 06:47 PM
China walked through the GFC so easily it towed Australia in it's wake...
Are you serious? The fallout from the GFC was disastrous in China. Businesses were falling over left, right and centre.
Edited by miw, 7 Jul 2015, 07:11 PM.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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createdby
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miw
7 Jul 2015, 07:03 PM
My thoughts exactly. Not only that, but the stock market is hardly systemic in China at this stage.

Let the chips fall as they may I would have thought.


Are you serious? The fallout from the GFC was disastrous in China. Businesses were falling over left, right and centre.
China should have opened up Shanghai exchange to foreign investors and let them be the last of the greatest fools. Big mistake.

The local mom and pop bubble already recapitalised the debt-laden private sector but the foreigners would have saved the Chinese mom and pop margin borrowers.

It's what the Liberal party's doing with the tail end of the Aussie housing boom. Let boomers sell to cashed-up Chinese investors and let the Chinese be the last holding the bag when it inevitably crashes.

Young Aussies should suck it up renting for a few more years and let the Chinese lose their money while increasing the housing supply. Instead of complaining like little Aussie cry babies, they should thank the policy of letting Chinese blow up the bubble.

It will help Aussies in the future as the pension pressure will be eased through cashed up boomers. Plus cheaper homes from the current over building.



Edited by createdby, 8 Jul 2015, 01:32 AM.
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Jimbo
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Rastus2
7 Jul 2015, 06:47 PM
Like the Greek situation... anyone who could see the deadlines as written in the time lines could (and should) have removed any substantial liquid assets into safe havens (bitcoins perhaps ?)...
When you invest in anything, you are looking for a return on your capital.

When you invest in anything that you do not physically hold, you are also looking for the return of your capital.

This is the problem that the world faces today. If bonds (debt) can be reneged upon, then is it really worth risking your capital for such tiny returns?

When a safe asset becomes a risk asset, is the premium (if there is a premium) worth the risk?



Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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Count du Monet
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I wonder what the P/E ratios were like with the stocks, before and after? The fact is over the last couple of years their central bank has reduced printing of cash to levels acceptable to the Basel community. This was going to catch up with the speculative market at some point or other.
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
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Drgonzo
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yet the little aussie battler market rises over 100 points, absolute madness.
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Massive
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miw
7 Jul 2015, 07:03 PM
Are you serious? The fallout from the GFC was disastrous in China. Businesses were falling over left, right and centre.
some real shit went down at that time .. stuff you only think happens in movies :bl: :bl: :bl:
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miw
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createdby
8 Jul 2015, 01:17 AM
China should have opened up Shanghai exchange to foreign investors and let them be the last of the greatest fools. Big mistake.

The local mom and pop bubble already recapitalised the debt-laden private sector but the foreigners would have saved the Chinese mom and pop margin borrowers.
Plenty of opportunity for foreigners to get their fingers burnt on the Hong Kong exchange.

The Shanghai exchange is widely recognised to be a casino. Almost nobody I know in China has Chinese shares, although lots got burned in the far more serious crash (so far at least) in the GFC. Maybe this is why the Shanghai Composite had done nothing for 7 years until the beginning of this year. Even after the sharp 25% correction so far it's only back to where it was at the end of March.

The recent 8 months of feverish activity have recapitalised nothing. They have shifted money around between gamblers, and they have given some startups a very good IPO.

If anything, the govt is trying to stabilise it because it wants the IPO route of startup financing to stay open. If the crash gets too bad it will be another 7 years before they get another chance at normalising the stock market in China.
The truth will set you free. But first, it will piss you off.
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peter fraser
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miw
8 Jul 2015, 11:03 AM
Plenty of opportunity for foreigners to get their fingers burnt on the Hong Kong exchange.

The Shanghai exchange is widely recognised to be a casino. Almost nobody I know in China has Chinese shares, although lots got burned in the far more serious crash (so far at least) in the GFC. Maybe this is why the Shanghai Composite had done nothing for 7 years until the beginning of this year. Even after the sharp 25% correction so far it's only back to where it was at the end of March.

The recent 8 months of feverish activity have recapitalised nothing. They have shifted money around between gamblers, and they have given some startups a very good IPO.

If anything, the govt is trying to stabilise it because it wants the IPO route of startup financing to stay open. If the crash gets too bad it will be another 7 years before they get another chance at normalising the stock market in China.
Won't some of the more professional investors be looking at shares that the government feels obliged to bailout as safe havens.

Bank shares for example.
Any expressed market opinion is my own and is not to be taken as financial advice
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miw
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peter fraser
8 Jul 2015, 11:06 AM
Won't some of the more professional investors be looking at shares that the government feels obliged to bailout as safe havens.

Bank shares for example.
Those shares have not moved around nearly as much as the small caps.

Not that there is any need to bail out a bank if its share price tanks, especially in China. A low share price just means the banks will have trouble raising equity via share issues. Meanwhile the big state-owned banks are very profitable at the moment, and if they needed an equity injection they could be bailed out directly.

As for the more professional investors, they can get 10% on trust loans to established companies that are protected by actual collateral, or they can get even more if they want to do more risky loans like the entrusted loans. Not bad when inflation is low, as it is at the moment. There is no need to chase yield by going into shares on a casino. This is why there is almost no money from institutional investors on the stock exchange in China.
Edited by miw, 8 Jul 2015, 11:20 AM.
The truth will set you free. But first, it will piss you off.
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