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China’s Stock Market Plunges
Topic Started: 27 Jun 2015, 11:54 AM (19,950 Views)
peter fraser
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miw
8 Jul 2015, 11:12 AM
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.
In that case the central government can burn the investors if they want to, although that would have a flow on effect with margin lenders. Might this be the central government holding the door open long enough for those lenders to sort out their risk mitigation or provisioning?
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, 11:28 AM
In that case the central government can burn the investors if they want to, although that would have a flow on effect with margin lenders. Might this be the central government holding the door open long enough for those lenders to sort out their risk mitigation or provisioning?
I think the central government just doesn't want people to go away for another 7 years. Startups have been having horrible trouble getting funding and the stock market would be one piece of the puzzle to help that.

The margin lenders should be mostly OK - except that a lot of small caps are suspended which will give them some trouble.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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Terry
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Shanghai Top50 down 4% as we speak. You can go back to your smart phones now.
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Gossamer
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44th most prolific poster on APF

Where will it all end?
Common sense is a curse - those who have it need to suffer dealing with those who don't have it.

APF idiot list
Nelson
Black Panther
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Dr Watson
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Gossamer
8 Jul 2015, 01:54 PM
Where will it all end?
Maybe with more interest rate cuts and more expensive real estate in Sydney.
Edited by Dr Watson, 8 Jul 2015, 02:02 PM.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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Terry
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Gossamer
8 Jul 2015, 01:54 PM
Where will it all end?
Some strong carnage across Asia and many analysts watching Japanese banks closely. Nothing to fear. Suburbia in our part of the world is protected from this.
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Baron Von Rothschild
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How much coverage is it getting in the Chinese media?

Probably none obviously but it would be interesting to see how they are spinning it - I remember when I was there anything bad ended with "Chinese Wisdom will prevail"
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mayw
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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.
Yeah.

In China actually most share market investors are poor people because other investing channels require much more money. Richer people invest most of their fortune in real estate, and government trust fund(usually with 1 million yuan entry level requirement, about 210,000 AUD). Every time the share market crashes in China, the poor are hurt the most.

Edited by mayw, 8 Jul 2015, 02:54 PM.
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Terry
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miw
8 Jul 2015, 11:03 AM

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.
Where did this revelation come from? Hell, chances are you could not predict the direction of the stock market on a daily basis, but you can claim if it gets "too bad" (whatever that means), it will "normalize in 7 years".

So you can quantify an outcome based on a subjective feeling. Perhaps suburbia really is a place of mystical insight.
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Dr Watson
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The Chinese stockmarket may be crashing, but the Chinese are coming:

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Attachments: The_Chinese_are_coming.png (90.11 KB)
Edited by Dr Watson, 8 Jul 2015, 03:56 PM.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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