Chinese stock market crash; has the bubble finally burst?

[lustindarkness]

I guess we won't starve to death in the next few years after all.

[jimmy olsen]

The over-leveraged, under-regulated banking system collapses, that's what.

What does "under-regulated" mean in this context?  The government owns majority stakes and controls the majority of the big banks.   And the government has vast financial reserves at its disposal.

Even after all the trading declines, the Big 4 Chinese banks are still sporting market caps in excess of a trillion Yuan.  So despite the panics the market isn't pricing in a generalized financial collapse.

I thought they had a massive parallel banking system, the shadowing banking system, which is basically unregulated?

[Monoriu]

The over-leveraged, under-regulated banking system collapses, that's what.

What does "under-regulated" mean in this context?  The government owns majority stakes and controls the majority of the big banks.   And the government has vast financial reserves at its disposal.

Even after all the trading declines, the Big 4 Chinese banks are still sporting market caps in excess of a trillion Yuan.  So despite the panics the market isn't pricing in a generalized financial collapse.

I thought they had a massive parallel banking system, the shadowing banking system, which is basically unregulated?

In China, the party owns the banks, the shadow banks, the central bank, the investment banks, and the bank regulators.  So I don't understand what you mean by unregulated.

[Monoriu]

They are mobilising ordinary people to join the war to protect the A-shares market  Lots of slogans and advertisements have popped up all over the country.  "If you can join the war, join.  If you lack ammunition, at least cheer the market". 

[DontSayBanana]

Trading of half the stocks on the Shanghai Stock Exchange has been suspended.  Major shareholders (those with 5% stakes or higher) have been forbidden to sell.  All state owned companies have been asked to buy shares, and any selling is strictly forbidden.  Important shareholders who have sold shares in the previous few months have been...invited to talks with party officials.  The People's Bank of China has promised unlimited ammunition for securities companies in their patriotic duty in supporting the stock market. 

This is really, really bad news.  Forbidding selling is just the market equivalent of printing money to fix rates.  Foreign investors will see it that way, too, decide their valuations are unreliable, get jittery about the likelihood of being able to cash out on their valuations, and pull out of the market.  And without foreign investors to act as interested third parties to fairly valuate their shares, the detachment from reality would just get worse.

[Monoriu]

Insurance companies have been ordered to pour the money in the life insurance policies into the stock market. 

[DGuller]

That might work.  One of the most effective ways of preventing catastrophic wildfires is to smother all minor fires with a huge pile of dry wood chips.

[Admiral Yi]

The thing is they must have millions of western-educated eggheads who are screaming their heads off about the futility of propping up bubbles.

[DontSayBanana]

The thing is they must have millions of western-educated eggheads who are screaming their heads off about the futility of propping up bubbles.

Sure, and they're probably in the market and forbidden to sell.  I mean, the CCP being an echo chamber that refuses to listen to external advice isn't exactly news, is it?

[Admiral Yi]

Sure, and they're probably in the market and forbidden to sell.  I mean, the CCP being an echo chamber that refuses to listen to external advice isn't exactly news, is it?

I'm not talking about external advice.  I'm talking about well educated technocrats working in the bureaucracy.

[Valmy]

Insurance companies have been ordered to pour the money in the life insurance policies into the stock market. 

You know compared to this kind of scary shit I am glad we just printed a big bailout instead.

[Admiral Yi]

You know, suspending trading is not totally different than freezing bank accounts.

[jimmy olsen]

The government is managing to keep the SSE above water so far

http://english.sse.com.cn/

[Monoriu]

Hong Kong and Shanghai stock markets rebounded today. 

Meanwhile, Chinese police have launched high-profile investigations into "hostile short-selling" activities 

[MadImmortalMan]

Oh crap. Are they coming for me?