Chinese stock market crash; has the bubble finally burst?

[Tonitrus]

Nationalize corporations.  Problem solved.

Nationalize peanut butter cups

Nationalize Normandy. We did it once and their shore defenses are far weaker this time.

Nationalize Blu-Rays

Criterion collections are especially bourgeoisie.

[Duque de Bragança]

Nationalize corporations.  Problem solved.

Nationalize peanut butter cups

Nationalize Normandy. We did it once and their shore defenses are far weaker this time.

Nationalize Blu-Rays

Criterion collections are especially bourgeoisie.

Bi-annual sales at B&N are especially bourgeoisie? 

[Razgovory]

Well, I really hope the chinese bubble keeps going. We all know is a effing fake as can possibly be bubble, but the burst will hurt every body. (My family have a few shekels invested in Chinese assets).

Lolz, you've just validated every CdM "Siege is selling us out to the Chinese" joke ever made. 

Not to nitpick, but if Siege owns Chinese shares, it's more the case of the Chinese selling out to the International Jewry.

Unless they payed him shares.

[Ideologue]

Nationalize corporations.  Problem solved.

Nationalize peanut butter cups

Nationalize Normandy. We did it once and their shore defenses are far weaker this time.

Nationalize Blu-Rays

Don't tread on my blu-rays.

[jimmy olsen]

Down another 3-4 % today

http://www.theguardian.com/business/2015/jul/07/china-stocks-tumble-again-after-premier-li-keqiang-fails-to-mention-crisis

The sell-off on Chinese stocks continued on Tuesday despite government efforts to bolster the markets amid investor unease that premier Li Keqiang failed to mention the deepening crisis in a statement on the economy.

Before the market opened, Li said in comments on a government website that China had the confidence and ability to deal with challenges faced by its economy, but had nothing to say on the three-week plunge that has knocked around 30% off Chinese shares since mid-June.
 
After a brief pause to the slide on Monday, the CSI300 index of the largest listed companies in Shanghai and Shenzhen was down 4.4% in afternoon trading on Tuesday, while the Shanghai Composite Index had shed 3.1%.

The ChiNext growth board, home to some of China's giddiest small-cap valuations, fell 5.1%.

In an attempt to halt the slide, China has arranged a curb on new share issues and orchestrated brokerages and fund managers to buy massive amounts of stocks, helped by China's state-backed margin finance company, which in turn has a direct line of liquidity from the central bank.

Analysts said the government was taking a big risk. "China's leadership has doubled down on its efforts to prop up equity prices because it believes that its own credibility is now coupled to continued gains on the markets," said Mark Williams of Capital Economics in a report.

"It is following a risky path. Our view remains that a market rally cannot run ahead of economic fundamentals indefinitely," he said. "There is a good chance that the market rescue efforts are seen to be a failure in a few months' time."

"I don't see any change in the downward trend," said Qi Yifeng, analyst at consultancy CEBM. "It's only a matter of whether the market will fall more slowly, or continue to go south in a free fall."
The official Shanghai Securities News reported on Tuesday that China's major insurance firms ploughed tens of billions of yuan into blue-chip exchange-traded funds (ETF) and large caps on Monday.

China Life Insurance bought a net 10 billion yuan ($1.6bn) in index funds, while China Pacific Insurance Group and other insurers each invested more than 1 billion yuan, the newspaper said.

That helped the indexes rise just over 2% on Monday, but the relief was shortlived.

Lei Mao, assistant professor of finance at Warwick Business School, said government measures to support the market distorted the allocation of funds and trading behaviour and could create the conditions for further sharp falls.

"Even an optimistic investor should not participate in the market for now," he said.

Traders are increasingly unnerved by the unusually large number of Chinese companies asking for their shares to be suspended from trading, fearing that many of them are looking for excuses to sit out the market turmoil.

About a quarter of the roughly 2,800 companies listed in Shanghai and Shenzhen had filed for a trading halt by the close on Monday, and on Tuesday the Securities Times said another 200 had announced a suspension.

Investors were also reacting to news of tightened restrictions on futures trading on a major small-cap index.

The rapid decline of China's previously booming stock market, which had more than doubled in the year to mid-June, had become a major headache for President Xi Jinping and China's senior leaders, who are already struggling to avert a sharper economic slowdown.


Even China's bullish securities regulators admitted that markets had become too frothy before they turned down, but the slide quickly showed signs of getting out of hand.

A surprise interest-rate cut by the central bank at the end of June, relaxations in margin trading and other "stability measures" did little to calm investors, many of whom have borrowed heavily to play the stock market.

In a series of announcements on Saturday, China's top brokerages pledged to collectively buy at least 120 billion yuan of shares to help steady the market, and said they would not sell while the Shanghai Composite Index remained below 4,500, a level last seen on June 25.

Underlining scepticism beyond mainland China about the sustainability of the measures, Hong Kong listed shares of Chinese brokerages took a beating on Monday.

In addition, 28 companies that had been approved to launch IPOs announced they had suspended their plans. (Writing by Will Waterman; Editing by Alex Richardson)

[jimmy olsen]

Absolute lunacy, the Chinese government sounds even more delusional and incompetent than the Greek!

http://www.theguardian.com/business/nils-pratley-on-finance/2015/jul/07/beijings-desperate-attempts-to-control-the-stock-market-will-end-badly

Nervous about the Chinese stock market? You should be. First, it looks expensive, even after a dip. Second, the authorities in Beijing, by adopting increasingly desperate measures to prop up share prices, are sending an unmistakable message that they fear a crash is a possibility.

The latest official attempt to manipulate the stock market would be laughed out of court if it were attempted in the west. The central bank is shovelling cash towards a state-backed finance company that lends to individuals who would like to make bigger bets on the stock market than they can afford. That's right, in today's communist China, there are subsidies for stock market speculation.

By way of further encouragement, the state itself is piling in. A state-backed wealth fund is buying blue-chip stocks. Meanwhile, supposedly independent brokers and fund managers have decided this is the ideal moment to invest the equivalent of £12bn and pledge not to sell until the main Shanghai index has risen at least 20%. This extraordinary effort, apparently, is required to "uphold market stability".

So what catastrophe has befallen the Chinese stock market? Well, nothing to justify all-out panic. Having risen 150% in a year, the Shanghai Composite Index has surrendered 30% of its gains. That's how excitable developing markets often work: an enormous rise can be followed by a smaller fall. It's not unusual. And, at about 20 times earnings, the Shanghai market is not a bargain given the slow-down in growth in the Chinese economy.

The authorities in Beijing, one assumes, know all that. But they are inventing and deploying emergency measures anyway. Why? One assumes they think a serious slide in share prices would cause financial distress among 90 million individuals with share accounts. That might damage the real economy or, conceivably, create social unrest. Alternatively, the authorities think a crash could kill Chinese companies' long-term access to capital.


Whatever it is, Beijing has put its credibility on the line. Share prices must rise because the state, in effect, has issued an order.

The authorities may win the immediate battle with the market, though it's by no means certain. Monday's action was mixed. Blue-chip stocks, such as banks, rose because that is where the wall of money is being directed; small companies' shares mostly fell.

Whatever the outcome in the next few weeks, a policy of state-directed share prices is unsustainable in the long run. If investors believe there is an official safety net to protect them from losses, the next bubble will be bigger and even harder to deflate safely.

This is a fight Beijing should have avoided. It will end badly – if not this time, then next.

[Monoriu]

They are paranoid.  They see this as foreigners coming in to steal Chinese money, with a hidden agenda of destabilising communist rule.  It is a battle for the survival of the party.  At least, that's the way they see it. 

[jimmy olsen]

They are paranoid.  They see this as foreigners coming in to steal Chinese money, with a hidden agenda of destabilising communist rule.  It is a battle for the survival of the party.  At least, that's the way they see it.

What foriengers? I thought the market was genreally closed, with westernres banned from entire industries, and only a tiny percentage of overall stocks owned by westeners.

[Monoriu]

They are paranoid.  They see this as foreigners coming in to steal Chinese money, with a hidden agenda of destabilising communist rule.  It is a battle for the survival of the party.  At least, that's the way they see it.

What foriengers? I thought the market was genreally closed, with westernres banned from entire industries, and only a tiny percentage of overall stocks owned by westeners.

There are tons of ways for foreigners to participate in the Shanghai stock market.  It is no longer closed.  I can buy shares there with a few clicks.  Foreigners = Goldman Sachs and other western imperialist firms.

[Admiral Yi]

They are paranoid.  They see this as foreigners coming in to steal Chinese money, with a hidden agenda of destabilising communist rule.  It is a battle for the survival of the party.  At least, that's the way they see it.

Who is "they?"  Leadership, lumpenproletariat?

[Monoriu]

They are paranoid.  They see this as foreigners coming in to steal Chinese money, with a hidden agenda of destabilising communist rule.  It is a battle for the survival of the party.  At least, that's the way they see it.

Who is "they?"  Leadership, lumpenproletariat?

The top communist leadership.

[Admiral Yi]

The top communist leadership.

They seem a bit brighter than that to me.

[Monoriu]

The top communist leadership.

They seem a bit brighter than that to me.

Paranoia does strange things to minds, even bright ones. 

[Richard Hakluyt]

The top communist leadership.

They seem a bit brighter than that to me.

I imagine they are bright but don't get out much. It is easy for paranoia and incomprehension to develop in such circumstances.

[celedhring]

Blaming others is also a good way to avoid accepting that you've fucked up.