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China’s Stock Market Plunges
Topic Started: 27 Jun 2015, 11:54 AM (19,947 Views)
newjez
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Mike
10 Jul 2015, 11:48 AM
I think the real answer is China just nationalised the Stock Market if you can call it that anymore.

Who is going to invest in Chinese shares if you are not allowed to sell them to get your money back in a falling market.

70% need to have trading halted as the value of the shares no longer supported the debt each company holds, hence why the Chinese Communists pumped up the stock market over the last 18 months. Increase valuations to offset mountains of debt.

I like this game, create 13 trillion in debt in 7 years then to help pay the debt off force a stock market bubble over 2 years with prices up 180% at its peak. I cant see this ending badly.

The stock market was also the last plank to help keep Chinas economy growing at 7% or higher. They will be lucky to grow at 3-4% if they published real data.
Has it occurred to you that maybe you should think about selling houses if you are right? The joy of predicting the market is making money out of it. Self righteousness only goes so far.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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miw
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mayw
8 Jul 2015, 02:54 PM
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.
Most of the people I know who are dabbling in small amounts of money are speculating on silver. It's really popular and there are apps for it. They like silver because they don't think the government can manipulate it to benefit the leaders.

Terry
8 Jul 2015, 03:11 PM
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.
Tell us what you think, then dogbreath. What''s your prediction? If you can predict the direction of the market on a daily basis why are you here? If I could even predict the direction reliably one day before I would be a very rich man indeed.

So far you have just shown you can't even get your facts right on China in areas a simple as consumer goods, let alone provide us with insight.

The simple truth is that the Shanghai exchange tanked from over 6000 to under 2000 in the GFC, recovered a tiny bit in 2009 and then did nothing until November last year when it started showing some signs of life, mainly talked up by the leaders in Beijing. In the few months of life quite a few Chinese startups had decent IPOS and raised money from the stock market, which is the main purpose of stock markets. Given that from 2008 to late 2014, it was unfavorable for private companies to raise money on the stock market, the SSE was as useful as a fly wire door in a submarine.

If this correction actually becomes a crash - which it actually has not done yet - let's say it crashes by 60% to be back where it was in July last year, then I would expect the SSE would become an expensive chocolate teapot for another 7 years or so in that it will not be useful for companies to raise capital - the prime purpose of stock exchanges.

I'd argue that the recent frantic moves by the government have severely damaged the stock market in China. The people I know who have steadfastly refused to touch stocks do it because they see too much scope for government interference and don't believe the average punter will get the news of interference until a day or more after the leaders who are also in the markets - in other words they see the stock market as a vehicle too transfer money from their hands to the hands of the leadership. The last 2 weeks of panic measures by Xi Jinping and his crew will only have convinced them more strongly that this is true and they will be more determined than ever not to buy shares on any Chinese stock exchange - without having any real effect on the plunge, since people are being forced to sell by margin calls regardless and the pain will just have to run its course.



Rastus2
8 Jul 2015, 10:23 PM
A poor choice of words perhaps.

Sure, Chinese economy was slowed, but it kept growing... every other country would have loved to have their growth. That does not mean the deceleration was not difficult and harmful to business.

China still had enough momentum to keep australia out of recession.
The overall figures really did hide the pain in the southeast where there was definitely a severe recession. There were absolutely massive layoffs and a big spike in unemployment in the southeast, followed by a mass migration back to the western provinces by migrant laborers. In Beijing all the laid-off laborers who didn't scarper back home fast enough were rounded up and sent to camps so they wouldn't be visible for the Olympics, but Beijing wasn't all that affected anyhow.

That's why the stimulus at the time was so massive. Social unrest was really rearing its head in a big way in some areas.

So far I am not hearing anything like that in the current relatively slow and controlled slowdown in growth.
Edited by miw, 10 Jul 2015, 02:47 PM.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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Mike
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newjez
10 Jul 2015, 12:12 PM
Has it occurred to you that maybe you should think about selling houses if you are right? The joy of predicting the market is making money out of it. Self righteousness only goes so far.
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As policy makers continued to work to stop the recent rout, the official Securities Times reported on Friday that local securities regulators had ordered listed companies in their areas to submit plans to stabilise their stock prices, via measures such as purchases by major shareholders and company executives, share buybacks, and employee shareholding plans.

In the wealthy eastern province of Jiangsu, near Shanghai, regulators instructed all major shareholders who sold stock over the past six months to reverse course, adding that they should increase their holdings by at least 10 per cent of the amount of the original reduction. Those whose share sales exceeded Rmb500m ($81m) were told to increase holdings by at least 20 per cent.



Share Market Communist Style

I have already sold a number of properties to increase my cash position, decrease leverage so I am in a position to buy up properties from distressed sellers. I did tell you this months ago.

The only real problem is if China really does fall over our Govt will unleash massive stimulus. With debt at around 30% of GDP or expected to peak at this level in a few years, Australia has plenty of room for massive stimulus. The RBA would cut to ZIRP.

I am already watching a number of properties I am interested in buying, just watching as each few weeks the price reduces. The properties I am interested in though are very expensive as I can build 16-30 units/apartments on them in the future. So I am watching as more and more large lots of land appear on the market, probing to find the desperate sellers.
http://mike-globaleconomy.blogspot.com.au/
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Mike
10 Jul 2015, 03:42 PM



Share Market Communist Style

I have already sold a number of properties to increase my cash position, decrease leverage so I am in a position to buy up properties from distressed sellers. I did tell you this months ago.

The only real problem is if China really does fall over our Govt will unleash massive stimulus. With debt at around 30% of GDP or expected to peak at this level in a few years, Australia has plenty of room for massive stimulus. The RBA would cut to ZIRP.

I am already watching a number of properties I am interested in buying, just watching as each few weeks the price reduces. The properties I am interested in though are very expensive as I can build 16-30 units/apartments on them in the future. So I am watching as more and more large lots of land appear on the market, probing to find the desperate sellers.
The Australian government only has as much room as the bond agencies are willing to cut it. And ZIRP is not possible in Australia. You'd have a run on the currency. I say that we have 2 rate cuts left (with considerable downside for AUD and increased housing risk), but nobody knows for sure. It's easy to see things getting worse in a hurry.
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skamy
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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.
Agree with you here - the only thing I can think of is that they may be out to punish any market shorters especially if they they think it is external manipulation.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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miw
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skamy
10 Jul 2015, 04:47 PM
Agree with you here - the only thing I can think of is that they may be out to punish any market shorters especially if they they think it is external manipulation.
...except that the short interest is miniscule and blaming the shorters is just an obvious deflection from the real problems.

Actually, if it was easier to short shares on the SSE, the run-up might not have happened and hence the correction might not have happened either.

The Chinese central govt has handled this whole thing atrociously in my view. Xi does not seem to be one for listening to his expert advisors, which Hu and Jiang, for all their faults, were.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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skamy
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KaiserSauzee
9 Jul 2015, 01:20 AM
Lol

I know, some people get excited by the chinese flocking over to australia, as if its a good thing.
Thought you were a 457 mate.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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miw
10 Jul 2015, 04:55 PM
...except that the short interest is miniscule and blaming the shorters is just an obvious deflection from the real problems.

Actually, if it was easier to short shares on the SSE, the run-up might not have happened and hence the correction might not have happened either.

The Chinese central govt has handled this whole thing atrociously in my view. Xi does not seem to be one for listening to his expert advisors, which Hu and Jiang, for all their faults, were.
Hello miw, whats the lastest on ground level ?
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miw
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Guest
10 Jul 2015, 06:45 PM
Hello miw, whats the lastest on ground level ?
Haven't been in China for 6 weeks, so don't know. I live in Queensland now.

It would be interesting to see the reactions on the street to what's happening on the stock market. All I see is the chatter on Wechat.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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GloomBoomDoom
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http://www.news.com.au/finance/economy/experts-split-on-beijings-next-move/story-e6frflo9-1227439841933
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