Doom???
http://www.theguardian.com/business/blog/2015/jul/03/china-stock-market-collapse-investors-margin-calls
QuoteWhat goes up, can also come down, as the old adage and the modern-day investor warning go. And that is precisely what the tens of millions of people who hold shares in China have been discovering.
Chinese stocks had doubled between last November and mid-June, to the delight of a fast-growing army of retail investors. In echoes of the dotcom bubble in the US, much of the speculation, fuelled by borrowing, has been on technology stocks. But now shares across all sectors are tumbling. After another punishing week, and despite a surprise move last week by the central bank to cut interest rates, shares are now down nearly 30% from their peak less than four weeks ago.
Analysts had doubted that cutting borrowing costs to stabilise a selloff in an overheated market would work even in the short term – there were fears it might well cause more alarm. In the longer term, making borrowing easier in response to a problem caused by debt-fuelled speculation made little sense. And so it proved. The panic selling continued this week and concern about investors' debt levels intensified.
At the centre of this dramatic stock market slide are individual investors borrowing from a broker to buy securities. Under that system the broker can make a demand for more cash or other collateral if the price of the securities has fallen – known as a margin call.
Such trading has been a key driver of the booming market, but regulators are cracking down. The resulting falling share prices have in turn triggered margin calls. Investors and policymakers are looking on with fear because if those margin calls continue, investors will have to offload other assets to come up with the cash they need.
For those who trade with China, the contagion fears add to worries that have been bubbling for some time. China's economy was already losing steam and the next GDP figures are expected to show the slowest growth since before the financial crisis. It might in time make the financial fallout from Greece look tame.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fi.imgur.com%2FCBBe44Y.png&hash=ef402f06d836a278da69481a99cc601fe800e526)
One way or another, Tim, yes. Doom.
Not doom for me.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fs19.postimg.org%2F4r3oxu5tf%2FTrading_places_finale.jpg&hash=f5f8e3792941c36f40db99fdd1c0a543ccd06af8)
How is it doom if it falls to the level from only two months ago? :unsure:
It's doom for the people who bought on margin, which I think is about 10% of the market.
I am ready to buy when it hits bottom. I can't wait :menace:
Incidentally, a lot of people have remarked that the daily swings in the market is a lot more than the entire GDP of Greece :lol:
If they are going bankrupt anyway, may as well gamble everything in the Chinese stock market to see if they can win back everything in one stroke :secret:
Maybe the EU should sell Greece to China.
Quote from: Tonitrus on July 04, 2015, 01:49:59 AM
Maybe the EU should sell Greece to China.
Too much trouble. Won't take it even if it is free. I for one won't spend a cent on Greek debt. At this point, giving me 100% yield is meaningless. They have zero credibility. The offer is not even valid.
As I said before, Greece should exit Eurozone, get humanitarian aid to get through the rough patch of 2-3 years, devalue drahma and bounce back with revenues from cheap tourism (especially as there is now a great climate for North African tourism to shift there) and factories and logistic centers moved there from the Rich North.
Quote from: Martinus on July 04, 2015, 02:04:11 AM
devalue drahma and bounce back with revenues from cheap tourism (especially as there is now a great climate for North African tourism to shift there) and
Greece currently has a considerable current account deficit (about 3% of GDP). If their tourism revenue goes down in nominal terms (otherwise it's not cheap for foreigners), they'll have an even harder time to pay for their huge foreign trade deficit. They import a lot of stuff they can't make themselves, such as pharmaceuticals. A low value drachma comes with a very high price. It's questionable if growth in tourism can compensate for that.
Quotefactories and logistic centers moved there from the Rich North.
Why would anybody invest in Greece? They rank dead last for competitiveness, ease of doing business, economic freedom etc. among the EU states. If you want cheap, go to Bulgaria.
That's why I said they will need humanitarian aid - the past you conveniently cut out from my post.
Quote from: Martinus on July 04, 2015, 02:57:46 AM
That's why I said they will need humanitarian aid - the past you conveniently cut out from my post.
Humanitarian aid? Greece is not a war or natural disaster zone. Even with their current economic malaise, they are still one of the richer countries in the world and much richer than some of the EU partners. Does Bulgaria next door get or need humanitarian aid?
Anyway, all the stuff I wrote - that you conveniently didn't answer to - will still be true after 2-3 years of "humanitarian aid".
Humanitarian aid to Greece? Yes please! #oldyeller
Quote from: Martinus on July 04, 2015, 02:04:11 AM
devalue drahma
That's your solution to everything. :(
Quote from: Martinus on July 04, 2015, 02:04:11 AM
and factories and logistic centers moved there from the Rich North.
that won't happen until they seriously reform their state-apparatus. And it's far from sure they'll be able/willing to do that. Greece defaults on average every 30 years or so (or about 5 times since independence)
$4 Trillion!? Holy crap!
http://www.abc.net.au/news/2015-07-05/china-freezes-share-offers-as-market-plunges/6596186
QuoteChina freezes share offers as market plunges in threatening blow to economy
Updated about 3 hours ago
China has frozen share offers and set up a market-stabilisation fund, as Beijing intensified efforts to pull stock markets out of a nose-dive that is threatening the world's second-largest economy, according to Wall Street Journal reports.
Beijing's reported suspension of initial public offers (IPOs) came a few hours after extraordinary announcements by major brokers and fund managers which collectively pledged to invest at least $25 billion of their own money into stocks.
China's government, regulators and financial institutions have waged a concerted campaign to prop up the nation's two main share markets, amid fears that a meltdown would rock the financial system and inflict heavy losses across an economy where annual growth is already running at a 24-year low.
Almost $4 trillion in market value — more than the entire economic output of Brazil — has been wiped out since markets went into reverse last month, posing a bigger headache for many global investors than even the Greek debt crisis.
The main Shanghai Composite Index has lost around 30 per cent of its value in three weeks — a dramatic end to an equally breathtaking rally that saw it more than double in just seven months, fuelled by official interest-rate cuts.
The sell-off is especially worrying because the bull market had been built on a mountain of speculative loans.
Some analysts have suggested total margin lending, both formal and informal, could add up to around $858 billion.
The stock markets are dominated by retail investors.
China's top brokerages said on Saturday they would collectively buy at least 120 billion yuan ($26.6 billion) of shares — a pledge that, according to the Wall Street Journal, would form part of Beijing's new stabilisation fund.
Separately on Saturday, 25 Chinese mutual funds announced they too would put their own capital into stocks.
The fund managers did not give a figure but said they would invest into their own funds, alongside their customers.
Reuters
And those millions of small-time investors who, to finance themselves buying stocks and profit from the bull market, used margin trading and speculative loans will face total ruin and bankrupcy. :Embarrass:
Quote from: Drakken on July 05, 2015, 02:13:01 PM
And those millions of small-time investors who, to finance themselves buying stocks and profit from the bull market, used margin trading and speculative loans will face total ruin and bankrupcy. :Embarrass:
I don't think there is personal bankruptcy in China. You owe people money, you repay them. No way out of it. It is ok for your children to help if you die though :menace:
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).
Quote from: Siege on July 05, 2015, 04:46:50 PM
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. :P
Quote from: Monoriu on July 04, 2015, 01:47:49 AM
I am ready to buy when it hits bottom. I can't wait :menace:
Maybe they'll try austerity and fire a bunch of civil service employees.
Quote from: Razgovory on July 05, 2015, 10:49:30 PM
Quote from: Monoriu on July 04, 2015, 01:47:49 AM
I am ready to buy when it hits bottom. I can't wait :menace:
Maybe they'll try austerity and fire a bunch of civil service employees.
Once again you fail to distinguish between Hong Kong and China. Our public finances are separate, our stock markets are separate, and our civil service systems are separate.
Plus the connection between a popping stock market bubble and austerity is tenuous to nonexistent.
Quote from: Tonitrus on July 05, 2015, 07:26:13 PM
Quote from: Siege on July 05, 2015, 04:46:50 PM
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. :P
Whoa, whoa, having some minute investment in china does not equal favoring a communist dictatorship.
Right is right, and China ain't right.
All my chips are clearly on the American side.
And if I ever had any ideas, my wife would smack me on the head with an American made frying pan.
Our two boys are Americans.
Shit. Did I tell you guys we have two boys?
I remember I told you about Yonatan, how I had to go through fertility treatment to get my sperm count up. Well, Yonatan is 3 years old. And my wife wanted another kid. A girl. So I went through the same shit again for her, but it was a boy. Hadriel will be a year old on August.
When im done with this stupid drill sergeant school I will post a few pics of the boys. They are amazing. Hyperactives like me.
Quote from: Admiral Yi on July 05, 2015, 11:11:04 PM
Plus the connection between a popping stock market bubble and austerity is tenuous to nonexistent.
Popping stock market will result in lower revenues, lower revenues result in defict spending, and we cure deficit spending by austerity. Or at least theoretically.
Quote from: Razgovory on July 05, 2015, 11:55:43 PM
Popping stock market will result in lower revenues, lower revenues result in defict spending, and we cure deficit spending by austerity. Or at least theoretically.
Are you sure China has a capital gains tax?
Corporate taxation is double taxation.
Nationalize corporations. Problem solved.
Quote from: Ideologue on July 06, 2015, 12:37:52 AM
Nationalize corporations. Problem solved.
They've decided to go down the corporatize nations route.
Quote from: Razgovory on July 05, 2015, 11:55:43 PM
Quote from: Admiral Yi on July 05, 2015, 11:11:04 PM
Plus the connection between a popping stock market bubble and austerity is tenuous to nonexistent.
Popping stock market will result in lower revenues, lower revenues result in defict spending, and we cure deficit spending by austerity. Or at least theoretically.
It wasn't that long ago that China did not have a stock market at all. The Chinese government does not depend on the stock market for revenue collection.
Quote from: Monoriu on July 06, 2015, 12:59:20 AM
Quote from: Razgovory on July 05, 2015, 11:55:43 PM
Quote from: Admiral Yi on July 05, 2015, 11:11:04 PM
Plus the connection between a popping stock market bubble and austerity is tenuous to nonexistent.
Popping stock market will result in lower revenues, lower revenues result in defict spending, and we cure deficit spending by austerity. Or at least theoretically.
It wasn't that long ago that China did not have a stock market at all. The Chinese government does not depend on the stock market for revenue collection.
No... but if business go under or people have less money to spend then revenues will go down.
Wow
http://money.cnn.com/2015/07/05/investing/china-stocks-crash/
QuoteAccording to Oxford Economics, shares may have to fall another 35% or so to bring them into line with long-term averages.
Quote from: Monoriu on July 05, 2015, 10:54:17 PM
Quote from: Razgovory on July 05, 2015, 10:49:30 PM
Quote from: Monoriu on July 04, 2015, 01:47:49 AM
I am ready to buy when it hits bottom. I can't wait :menace:
Maybe they'll try austerity and fire a bunch of civil service employees.
Once again you fail to distinguish between Hong Kong and China. Our public finances are separate, our stock markets are separate, and our civil service systems are separate.
But at least the tanks are not. :)
Quote from: Ideologue on July 06, 2015, 12:37:52 AM
Nationalize corporations. Problem solved.
Nationalize peanut butter cups
Quote from: Siege on July 05, 2015, 11:58:39 PM
Corporate taxation is double taxation.
I have to pay taxes why shouldn't corporate people pay them? :(
Quote from: Monoriu on July 05, 2015, 10:54:17 PM
Once again you fail to distinguish between Hong Kong and China. Our public finances are separate, our stock markets are separate, and our civil service systems are separate.
:hmm: Hypothetically speaking, if China were to borrow that nice big sovereign wealth fund HK is having, how long would it last it? You know, during a rainy day?
Quote from: Ed Anger on July 06, 2015, 07:05:56 AM
Quote from: Ideologue on July 06, 2015, 12:37:52 AM
Nationalize corporations. Problem solved.
Nationalize peanut butter cups
Nationalize Normandy. We did it once and their shore defenses are far weaker this time.
Quote from: DGuller on July 06, 2015, 08:04:48 AM
Quote from: Monoriu on July 05, 2015, 10:54:17 PM
Once again you fail to distinguish between Hong Kong and China. Our public finances are separate, our stock markets are separate, and our civil service systems are separate.
:hmm: Hypothetically speaking, if China were to borrow that nice big sovereign wealth fund HK is having, how long would it last it? You know, during a rainy day?
HK used to be 15% of China's GDP. Those days are long gone. Our fund is peanuts compared to theirs now. That should stop them from having funny ideas. :ph34r:
Quote from: Ideologue on July 06, 2015, 08:43:33 AM
Nationalize Normandy. We did it once and their shore defenses are far weaker this time.
That was the plan but fortunately the Allies never had to bother with an occupation. De Gaulle's people took control almost as soon as the Allies moved in.
Quote from: Tonitrus on July 05, 2015, 07:26:13 PM
Quote from: Siege on July 05, 2015, 04:46:50 PM
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. :P
Not to nitpick, but if Siege owns Chinese shares, it's more the case of the Chinese selling out to the International Jewry. :P
Quote from: jimmy olsen on July 06, 2015, 02:17:38 AM
Wow
http://money.cnn.com/2015/07/05/investing/china-stocks-crash/
QuoteAccording to Oxford Economics, shares may have to fall another 35% or so to bring them into line with long-term averages.
I don't understand this, most of these stocks haven't been around for very long. There is no long-term historical average.
Quote from: Ideologue on July 06, 2015, 08:43:33 AM
Quote from: Ed Anger on July 06, 2015, 07:05:56 AM
Quote from: Ideologue on July 06, 2015, 12:37:52 AM
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
Quote from: Ed Anger on July 06, 2015, 05:27:16 PM
Quote from: Ideologue on July 06, 2015, 08:43:33 AM
Quote from: Ed Anger on July 06, 2015, 07:05:56 AM
Quote from: Ideologue on July 06, 2015, 12:37:52 AM
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.
Quote from: Tonitrus on July 06, 2015, 05:47:23 PM
Quote from: Ed Anger on July 06, 2015, 05:27:16 PM
Quote from: Ideologue on July 06, 2015, 08:43:33 AM
Quote from: Ed Anger on July 06, 2015, 07:05:56 AM
Quote from: Ideologue on July 06, 2015, 12:37:52 AM
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? :hmm:
Quote from: Martinus on July 06, 2015, 09:49:09 AM
Quote from: Tonitrus on July 05, 2015, 07:26:13 PM
Quote from: Siege on July 05, 2015, 04:46:50 PM
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. :P
Not to nitpick, but if Siege owns Chinese shares, it's more the case of the Chinese selling out to the International Jewry. :P
Unless they payed him shares.
Quote from: Ed Anger on July 06, 2015, 05:27:16 PM
Quote from: Ideologue on July 06, 2015, 08:43:33 AM
Quote from: Ed Anger on July 06, 2015, 07:05:56 AM
Quote from: Ideologue on July 06, 2015, 12:37:52 AM
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.
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
QuoteThe 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)
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
QuoteNervous 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.
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.
Quote from: Monoriu on July 07, 2015, 01:39:59 AM
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.
Quote from: jimmy olsen on July 07, 2015, 01:44:14 AM
Quote from: Monoriu on July 07, 2015, 01:39:59 AM
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.
Quote from: Monoriu on July 07, 2015, 01:39:59 AM
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?
Quote from: Admiral Yi on July 07, 2015, 02:04:30 AM
Quote from: Monoriu on July 07, 2015, 01:39:59 AM
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.
Quote from: Monoriu on July 07, 2015, 02:05:52 AM
The top communist leadership.
They seem a bit brighter than that to me.
Quote from: Admiral Yi on July 07, 2015, 02:14:01 AM
Quote from: Monoriu on July 07, 2015, 02:05:52 AM
The top communist leadership.
They seem a bit brighter than that to me.
Paranoia does strange things to minds, even bright ones.
Quote from: Admiral Yi on July 07, 2015, 02:14:01 AM
Quote from: Monoriu on July 07, 2015, 02:05:52 AM
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.
Blaming others is also a good way to avoid accepting that you've fucked up.
Quote from: Ideologue on July 06, 2015, 08:31:26 PM
Quote from: Ed Anger on July 06, 2015, 05:27:16 PM
Quote from: Ideologue on July 06, 2015, 08:43:33 AM
Quote from: Ed Anger on July 06, 2015, 07:05:56 AM
Quote from: Ideologue on July 06, 2015, 12:37:52 AM
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.
Also, nationalize movie tickets.
Is this Chinese Stockmarket thing potentially destabilizing or is this mostly contained to the middle people's republican kingdom?
Quote from: Valmy on July 07, 2015, 07:55:37 AM
Is this Chinese Stockmarket thing potentially destabilizing or is this mostly contained to the middle people's republican kingdom?
This isn't the first time there is a correction in the stock market. It is still up when compared to, say, a year ago. Good luck if you bought at the peak though.
Whether it is destabilizing is hard to say. The thing with China is that anything and everything is potentially destabilizing. Because the fundamental structure is unstable, so any movement is dangerous. Tian An Men was triggered by the death of a senior official.
Trading halted today. Rumors that as many as 25% of the listed companies want to delist to protect themselves.
Quote from: MadImmortalMan on July 07, 2015, 10:27:46 AM
Trading halted today. Rumors that as many as 25% of the listed companies want to delist to protect themselves.
From what I have read, trading of 25% of companies listed on the Shanghai stock exchange have been suspended. No talk about delisting yet, but there is not much difference if the shares are suspended indefinitely.
Quote from: Monoriu on July 07, 2015, 10:46:40 AM
Quote from: MadImmortalMan on July 07, 2015, 10:27:46 AM
Trading halted today. Rumors that as many as 25% of the listed companies want to delist to protect themselves.
From what I have read, trading of 25% of companies listed on the Shanghai stock exchange have been suspended. No talk about delisting yet, but there is not much difference if the shares are suspended indefinitely.
Make that 40% as at this morning. The Chinese internet users are cheering this move and hailing the companies as "socially conscientious" :bleeding:
Hosting a stock market is in some ways similar to opening a casino. The casino wins some; the gamblers win some. If the casino doesn't let the gamblers leave with their winnings, who is going to come back?
What a disaster. This is completely the government's fault. They encouraged millions of everyday people who knew nothing about the stock market to invest, and when a market correction inevitibly occured the Chinese government paniced and put it's prestige on the line to stop it. This makes the situation look worse to the average person. Many will think the government is only interevening because they know something the rest of us don't, that things are even worse than most know and that they should sell. Furthermore, the fact that this won't stop the slide will make the government look weak, and the situation even worse. After all if the situtation is so bad the government can't do anything then there's no choice but to sell, sell, sell. It's a self fullfilling prophecy.
http://www.theguardian.com/business/2015/jul/08/china-stock-markets-continue-nosedive-as-regulator-warns-of-panic
Quote
Chinese stock markets continue nosedive as regulator warns of panic
Main markets open sharply down as nearly 700 companies request their shares be suspended in unprecedented move
Jennifer Duggan in Shanghai and agencies
Wednesday 8 July 2015 07.22 BST
Chinese stock markets tumbled again on Wednesday as investors shrugged off a series of support measures by Chinese regulators, including the central bank's first public statement in support of the market since it cut interest rates in late June.
Minutes after opening, the Shanghai Composite Index fell by just over 8%. while the Shenzhen Component was down almost 5%.
Within ten minutes of trading, more than 1,000 shares across China's two stock markets had dropped by the daily limited of 10% and had their shares automatically suspended. About 1,400 companies, or more than half of those listed – filed for a trading halt in an attempt to prevent further losses.
China's securities regulator said there was "panic" in the stock market with irrational selling off increasing and "leading the stock market to a situation of intense liquidity".
The People's Bank of China said it was assisting China's Securities Finance Corporation (CSFC), the national margin trading service provider, to acquire liquidity in an effort to steady the stock market.
It said it would do this through measures such as inter-bank lending, mortgage financing and floating financial bonds. It said it would keep a close watch on the market and continue to support the CSFC and guard against systematic and financial risks.
A spokesperson for China Securities Finance Corporation also said it would purchase more shares of small- and medium-size listed companies. It is these companies that have suffered the biggest losses.
Christopher Balding, a professor of economics at Peking University said that while it was not possible to know exactly why so many companies had suspended trading, a large number were doing so because they had used their own stock as collateral for loans and they want to "lock in the value for the collateral".
Ayako Sera, a senior market economist at Sumitomo Mitsui Trust Bank in Tokyo, said: "Today is all about China, with Greece in the background now that it's been given a new deadline."
"Shanghai's early losses were like a cliff-dive, which had a huge impact on investor sentiment."
Previous measures taken over the weekend by the Chinese government in an attempt to stabilise the markets appeared to have been unsuccessful. Analysts said the falls looked set to continue. Balding said: "I don't see it getting better. There is not going to be a turn around within the next week or two."
"It probably has a long way to go. Margin loans basically rose much faster and they are not falling nearly as fast, margin debt is not falling nearly as fast as the market is falling. What that is telling us is that there is a lot of stock that needs to be sold that hasn't been sold yet."
China's stock markets had previously been among the top-performing in the world, and had hit a seven-year peak in the middle of June. The Shanghai stock market had surged more than 150% in 12 months, but it has fallen 30% over the past three weeks – including a plunge of 12% last week.
Unlike most other stock markets, where investors are mostly institutional investors, in China, 80% of investors are small retail investors. This is a concern for the Chinese government because it causes a "political risk", according to Balding. The losses on the stock markets are going to cause a lot of people to lose money causing the government to "worry about people protesting on the streets", he said.
Chexit?
Important point- what does it mean for ROTW?
After a solid seven to eight years predicting DOOM here, I'm confident that that DOOM is finally here! :) Yay!? :unsure: :(
Seriously, there's some Arabian level delusion and conspiracy theory thinking here. Oh noes! The market fell on the leaders birthday! The economy's fucked!
http://www.wsj.com/articles/chinas-stock-plunge-is-scarier-than-greecechinas-stock-plunge-is-scarier-than-greece-1436309780?tesla=y
Quote
China's Stock Plunge Is Scarier Than Greece
There are four basic signs of a bubble, and the Chinese stock market is on the extreme end of all four.
By Ruchir Sharma
July 7, 2015 7:23 p.m. ET
71 COMMENTS
China's state-sponsored stock-market rally is unraveling, with potentially dangerous consequences. The first major sign that all wasn't going according to script came on June 15. Chinese had awakened expecting big gains because it was President Xi Jinping's birthday, but the Shanghai market fell more than 2%. One deeply indebted day trader committed suicide by jumping out a window, his net worth wiped out by the collapse of a single stock that he had borrowed heavily to purchase. The market has since fallen by another 25%—and some fear that prices could go much lower.
In most countries, no one thinks there is a link between a leader's birthday and the market. That such a theory prevails in China reflects the widespread belief that Beijing's authoritarian government can produce any economic outcome it wants. Now trust in China's ability to command and control the economy is faltering. If trust collapses, the global repercussions could be more severe than those from the Greek debt crisis.
When China's economy slowed following the 2008 global financial crisis, Beijing pumped massive amounts of liquidity into the system. First that money went into the property market, later into the various debt-related products sold through the shadow banking system. But when property slumped and the shadow banks started to pose systemic risks, China had only one major market left to flood—stocks.
Funneling some of China's $20 trillion in savings into stocks was a last-ditch effort to revive flagging economic growth by giving the country's debt-laden companies a new source of financing. The aim was to trigger a slow and steady bull run, but the somnolent stock market exploded into one of the biggest bubbles in history.
There are four basic signs of a bubble: prices disconnected from underlying economic fundamentals, high levels of debt for stock purchases, overtrading by retail investors, and exorbitant valuations. The Chinese stock market is at the extreme end on all four metrics, which is rare.
The sharp equity rally took place despite sputtering economic growth and shrinking profits. By official count, margin debt on the Chinese stock market has tripled since June 2014. As a share of tradable stocks, margin debt is now nearly 9%, the highest in any market in history. At the leading brokerages, 80% of margin finance has been going to retail investors, many of them new and inexperienced.
Today China's 90 million retail investors outnumber the 88 million members of its Communist Party. Two thirds of new investors lack a high school diploma. In rural villages, farmers have set up mini stock exchanges, and some say they spend more time trading than working in the fields.
The signs of overtrading are hard to exaggerate. The total value of China's stock market is still less than half that of the U.S. market, but the trading volume on many recent days has exceeded that of the rest of the world's markets combined. Turnover is 10 times the level seen at the peak of the previous China bubble in 2007, and virtually the entire market inventory is changing hands every month. Such frantic activity has pushed up valuations for companies large and small, with the broad CSI 500 index trading at 50 times last year's earnings and the Nasdaq -style board Chinext valued at 110 times last year's earnings.
Since the June 12 peak, nearly $3 trillion in value has been erased, as Beijing takes increasingly desperate measures to arrest the price collapse. The authorities have cut interest rates and transaction fees. They have directed mutual funds and state pension funds to buy stocks. Over the weekend they panicked and reversed course by suspending new initial public offerings, suddenly choking off a source of the new corporate funding they had been trying to create. This comes when the real cost of corporate borrowing is high. Any further reduction in interest rates could accelerate the outflow of capital, after a record $300 billion has already left China this year.
The continuing crisis is viewed, locally and globally, as a test of China's control over the economy. The "Beijing put"—a perception that Chinese economy and markets are backstopped by the government—is under threat. That perception has underpinned the widespread belief that Chinese growth won't fall much below 7%, because that is the government's desired target and Beijing is omnipotent.
Looming over all of this is China's massive run-up in debt, which has increased by over $20 trillion—to around 300% of GDP—since the global financial crisis in 2008. All along, the bulls argued that Beijing has successfully managed every challenge to its three-decade economic boom, and that it could overcome the threat this debt represents. At a minimum, the argument went, China's financial woes would be smaller than those of other countries with high levels of borrowing. This faith in Beijing encouraged many global hedge funds to pile into Chinese stocks.
But if Beijing can't stop the market's tumble, there could be a sudden shift in the perception of exactly how far economic growth might fall under the weight of too much debt. If that floor crumbles and the Chinese economy spirals downward, it will make the drama surrounding Greece feel like a sideshow. China has been the largest contributor to global growth this decade; Greece's economy is about the size as that of Bangladesh or Vietnam.
There is no global drama that bears closer watching than Beijing's battle for control.
Mr. Sharma is the head of emerging markets and global macro at Morgan Stanley Investment Management and the author of "Breakout Nations: In Pursuit of the Next Economic Miracles" ( Norton, 2012).
QuoteChina's Stock Plunge Is Scarier Than Greece
I don't find anything scary about Greece so that is not saying much.
QuoteThat perception has underpinned the widespread belief that Chinese growth won't fall much below 7%, because that is the government's desired target and Beijing is omnipotent.
Wait it is a widespread belief that China's government has super powers?
Has Xi lost his mandate of heaven?
Mono will be the Liu Bang of his age.
Quote from: Valmy on July 08, 2015, 08:19:43 AM
Mono will be the Liu Bang of his age.
I obey :bowler:
Quote from: Valmy on July 08, 2015, 08:19:43 AM
Mono will be the Liu Bang of his age.
Liu Kang of his age would be cooler.
Quote from: DGuller on July 08, 2015, 08:14:38 AM
Has Xi lost his mandate of heaven?
It takes a lot more than stock market crashes to lose mandates of heaven.
Quote from: Monoriu on July 08, 2015, 09:07:41 AM
Quote from: DGuller on July 08, 2015, 08:14:38 AM
Has Xi lost his mandate of heaven?
It takes a lot more than stock market crashes to lose mandates of heaven.
A lot of these retail investors have no doubt loaned money from the shadow banking system to trade on margin, what happens when millions of them can't pay back what they owe? The over-leveraged, under-regulated banking system collapses, that's what.
Quote from: jimmy olsen on July 08, 2015, 09:12:38 AM
A lot of these retail investors have no doubt loaned money from the shadow banking system
:bleeding:
Physician, heal thyself.
Quote from: jimmy olsen on July 08, 2015, 09:12:38 AM
Quote from: Monoriu on July 08, 2015, 09:07:41 AM
Quote from: DGuller on July 08, 2015, 08:14:38 AM
Has Xi lost his mandate of heaven?
It takes a lot more than stock market crashes to lose mandates of heaven.
A lot of these retail investors have no doubt loaned money from the shadow banking system to trade on margin, what happens when millions of them can't pay back what they owe? The over-leveraged, under-regulated banking system collapses, that's what.
Is this wishful thinking, or realistic assessment? This isn't the first time stock markets have crashed in China. The party has survived these. They can and will support the shadow banking system if necessary.
Quote from: Monoriu on July 08, 2015, 09:58:52 AM
Is this wishful thinking, or realistic assessment? This isn't the first time stock markets have crashed in China. The party has survived these. They can and will support the shadow banking system if necessary.
This is Tim, Mono, the 'DISASTER AND APPALLING' guy. He sees disaster everywhere. I wouldn't be so presumptuous to assume he wishes for disaster to occur though -_-
Quote from: Valmy on July 08, 2015, 10:00:37 AM
Quote from: Monoriu on July 08, 2015, 09:58:52 AM
Is this wishful thinking, or realistic assessment? This isn't the first time stock markets have crashed in China. The party has survived these. They can and will support the shadow banking system if necessary.
This is Tim, Mono, the 'DISASTER AND APPALLING' guy. He sees disaster everywhere. I wouldn't be so presumptuous to assume he wishes for disaster to occur though -_-
He, like countless others, wants to see the end of the Chinese communist party. I think that helps cloud his judgement.
I think the repercussions could be serious. A trillion people wiped out by doing what the Party told them to.
Quote from: Monoriu on July 08, 2015, 10:02:54 AM
He, like countless others, wants to see the end of the Chinese communist party. I think that helps cloud his judgement.
Party propaganda paranoia. He just loves train-wrecks. The CCP has certainly been good to the United States. Why would we want some insane populist group take over?
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.
Quote from: Monoriu on July 08, 2015, 10:47:06 AM
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.
And I thought it was a stock market.
Quote from: frunk on July 08, 2015, 10:49:44 AM
Quote from: Monoriu on July 08, 2015, 10:47:06 AM
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.
And I thought it was a stock market.
This has become a battle to prove to the world that the party has control over everything. At least everything that goes on in China.
According to you everything is that in the eyes of the party :P
Mono, do you know if one can trade options on Chinaman markets?
Quote from: Monoriu on July 08, 2015, 10:53:53 AM
This has become a battle to prove to the world that the party has control over everything. At least everything that goes on in China.
Which is fine, it just isn't a stock market.
In other news, the HK stock index has also fallen sharply. None of the Chinese state's policies apply to us, and our valuations are a lot lower (yes, shares of the same companies that are listed on both the HK and Shanghai stock exchanges have lower valuations in HK). So, for a lot of Chinese companies, one of the few ways to sell shares for cash is Hong Kong.
I am stockpiling ammunition to buy later.
Quote from: Admiral Yi on July 08, 2015, 10:55:51 AM
Mono, do you know if one can trade options on Chinaman markets?
No idea about Shanghai but tons of options are traded in HK. We call them warrents here. There are like thousands of them.
Quote from: Monoriu on July 08, 2015, 10:58:05 AM
No idea about Shanghai but tons of options are traded in HK. We call them warrents here. There are like thousands of them.
So could you have been shorting the mainland stocks through the HK market? Or anyone, for that matter.
Quote from: Admiral Yi on July 08, 2015, 10:59:27 AM
Quote from: Monoriu on July 08, 2015, 10:58:05 AM
No idea about Shanghai but tons of options are traded in HK. We call them warrents here. There are like thousands of them.
So could you have been shorting the mainland stocks through the HK market? Or anyone, for that matter.
Not sure. That will require a human broker and an account with a securities firm (as opposed to a bank), and I don't have that. There are quite a number of exchange traded stock index funds listed in HK, and a few of them track the Shanghai index. I imagine that you can short those in HK, although there are also limitations on short-selling. Anyway, I have never short-sold anything, so I really don't know.
Anyway, forget Greece. The stock market crashes in China and Hong Kong have wiped out market capitalisation that is probably a hundred times Greece's annual GDP already. If this goes further, Greece will become a sideshow.
Quote from: Monoriu on July 08, 2015, 11:02:45 AM
Not sure. That will require a human broker and an account with a securities firm (as opposed to a bank), and I don't have that. There are quite a number of exchange traded stock index funds listed in HK, and a few of them track the Shanghai index. I imagine that you can short those in HK, although there are also limitations on short-selling. Anyway, I have never short-sold anything, so I really don't know.
FYI, short-selling is borrowing the stock (at a fee) and selling it. That's different than buying puts.
Since the debt owed by Greece is to other governments and not private lenders, it is a sideshow. But a sideshow given a lot more prominence because the inadequacies of the EU are being exposed. The story is not so much about Greece but the political future of the EU.
Quote from: crazy canuck on July 08, 2015, 11:08:53 AM
Since the debt owed by Greece is to other governments and not private lenders, it is a sideshow. But a sideshow given a lot more prominence because the inadequacies of the EU are being exposed. The story is not so much about Greece but the political future of the EU.
Right the economic impact of Greece is insignificant. It is a political show not an economic one.
Quote from: Monoriu on July 08, 2015, 10:47:06 AM
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.
:hmm: So, selling is forbidden, but buying is "encouraged"? How does that work?
Quote from: DGuller on July 08, 2015, 11:15:36 AM
Quote from: Monoriu on July 08, 2015, 10:47:06 AM
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.
:hmm: So, selling is forbidden, but buying is "encouraged"? How does that work?
You use cash to buy, knowing it is stupid. Then you tell the party boss that you have fulfilled your patriotic duty, and hope he remembers your sacrifice at an unspecified future date.
Quote from: Monoriu on July 08, 2015, 11:30:07 AM
You use cash to buy, knowing it is stupid. Then you tell the party boss that you have fulfilled your patriotic duty, and hope he remembers your sacrifice at an unspecified future date.
Yes, but who is selling?
Quote from: frunk on July 08, 2015, 11:41:41 AM
Quote from: Monoriu on July 08, 2015, 11:30:07 AM
You use cash to buy, knowing it is stupid. Then you tell the party boss that you have fulfilled your patriotic duty, and hope he remembers your sacrifice at an unspecified future date.
Yes, but who is selling?
Unpatriotic retail investors.
Quote from: frunk on July 08, 2015, 11:41:41 AM
Quote from: Monoriu on July 08, 2015, 11:30:07 AM
You use cash to buy, knowing it is stupid. Then you tell the party boss that you have fulfilled your patriotic duty, and hope he remembers your sacrifice at an unspecified future date.
Yes, but who is selling?
Not all selling is prohibited. Just the insiders (those with 5% or more stake in the company)
Overall I think this is great news for Hong Kong. We still have a reason to exist. Foreign investors who want to buy shares in Chinese companies but are worried about liquidity in the Shanghai Stock Exchange can do business in Hong Kong. I guess we won't starve to death in the next few years after all.
Quote from: jimmy olsen on July 08, 2015, 09:12:38 AM
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.
The Chinese stock markets and the underlying fundamentals are so opaque that IMO its a fool's errand to talk about what price movements mean or what's under or over-valued or where prices are going. Clearly some people did nicely early this year as prices went way up, and some people are doing not so nicely as they go down, and some of each of those categories of people are the same people, and some are not. This basically comes down to a political problem for the Party and they will handle however they handle it, for better or for worse.
The interesting economic question is what the state of China's macro-economy truly is. We know growth is slowing. Is it slowing according to plan: i.e. gradually and steadily with consumption replacing investment? Or is it falling much faster? The uncertainty about that question is helping to drive the market gyrations but if there really is an enduring slowdown well beyond plan, that raises potential problems much broader than instability in the stock market.
Quote from: Monoriu on July 08, 2015, 11:50:52 AM
I guess we won't starve to death in the next few years after all.
:(
Quote from: The Minsky Moment on July 08, 2015, 04:37:42 PM
Quote from: jimmy olsen on July 08, 2015, 09:12:38 AM
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?
Quote from: jimmy olsen on July 08, 2015, 05:41:10 PM
Quote from: The Minsky Moment on July 08, 2015, 04:37:42 PM
Quote from: jimmy olsen on July 08, 2015, 09:12:38 AM
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.
They are mobilising ordinary people to join the war to protect the A-shares market :lol: 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".
Quote from: Monoriu on July 08, 2015, 10:47:06 AM
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.
Insurance companies have been ordered to pour the money in the life insurance policies into the stock market.
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.
The thing is they must have millions of western-educated eggheads who are screaming their heads off about the futility of propping up bubbles.
Quote from: Admiral Yi on July 08, 2015, 08:57:16 PM
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?
Quote from: DontSayBanana on July 08, 2015, 09:00:23 PM
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.
Quote from: Monoriu on July 08, 2015, 08:16:16 PM
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.
You know, suspending trading is not totally different than freezing bank accounts.
The government is managing to keep the SSE above water so far
http://english.sse.com.cn/
Hong Kong and Shanghai stock markets rebounded today.
Meanwhile, Chinese police have launched high-profile investigations into "hostile short-selling" activities :ph34r:
Oh crap. Are they coming for me? :ph34r:
The rules on buying shares on margin have been relaxed to facilitate patriotic retail investors who want to join the battle :secret:
Quote from: Monoriu on July 09, 2015, 03:09:26 AM
Hong Kong and Shanghai stock markets rebounded today.
Meanwhile, Chinese police have launched high-profile investigations into "hostile short-selling" activities :ph34r:
It's just delaying the pain and making it worse.
I hope Mono loses all his savings. :D
That's a terrible thing to say. I certainly don't; I hope he has the acumen to work this to his advantage.
Quote from: Monoriu on July 09, 2015, 03:23:13 AM
The rules on buying shares on margin have been relaxed to facilitate patriotic retail investors who want to join the battle :secret:
Is this correction not big enough for them? They want to make a bigger, more explosive crash later?
Quote from: Lettow77 on July 09, 2015, 04:59:49 AM
That's a terrible thing to say.
Yeah, well Marty is a pretty terrible person.
At least his Languish persona is. Allegedly he's more agreeable in real life.
Mono will emerge from this as owner of half of shangdong.
I suspect he is already
Quote from: frunk on July 09, 2015, 09:01:48 AM
Quote from: Monoriu on July 09, 2015, 03:23:13 AM
The rules on buying shares on margin have been relaxed to facilitate patriotic retail investors who want to join the battle :secret:
Is this correction not big enough for them? They want to make a bigger, more explosive crash later?
China wants to be number 1 in everything! America has big crash in 1929. China must have bigger one before 2029!
Quote from: Crazy_Ivan80 on July 09, 2015, 01:21:18 PM
Quote from: frunk on July 09, 2015, 09:01:48 AM
Quote from: Monoriu on July 09, 2015, 03:23:13 AM
The rules on buying shares on margin have been relaxed to facilitate patriotic retail investors who want to join the battle :secret:
Is this correction not big enough for them? They want to make a bigger, more explosive crash later?
China wants to be number 1 in everything! America has big crash in 1929. China must have bigger one before 2029!
Damn Chinese steal and copy everything from the US! :mad:
Another strong rebound today. Looks like the communists can really dictate where the stock market should go. At least for now :ph34r:
Who knows, maybe they'll declare victory and then forget about it.
Quote from: Tyr on July 09, 2015, 12:31:49 PM
Mono will emerge from this as owner of half of shangdong.
I only pretend that I am an investor, and in reality I only own some penny stocks :secret:
Quote from: Monoriu on July 09, 2015, 09:54:11 PM
Another strong rebound today. Looks like the communists can really dictate where the stock market should go. At least for now :ph34r:
Who knows, maybe they'll declare victory and then forget about it.
This is totally going to ruin your grand strategy :(
Quote from: Monoriu on July 09, 2015, 09:54:11 PM
Another strong rebound today. Looks like the communists can really dictate where the stock market should go. At least for now :ph34r:
Who knows, maybe they'll declare victory and then forget about it.
Emphasis on for now.
Quote from: Valmy on July 09, 2015, 10:09:42 PM
This is totally going to ruin your grand strategy :(
What grant strategy? :lol:
I thought you were stockpiling funds to get bargain basement prices?
Quote from: Valmy on July 09, 2015, 11:02:22 PM
I thought you were stockpiling funds to get bargain basement prices?
When you said grand strategy, I thought you meant my retirement plans. Despite my stock holdings, I do want the market to crash to that I can buy more. The next pay day is coming up and I need to do something instead of sitting in savings earning 0.01%.
The Chinese have announced 7% growth, right in line with government projections.
How... convenient.
http://www.theguardian.com/business/2015/jul/15/china-surprises-economists-with-gdp-rise-of-7
The Chinese leadership seems to have realised that there is a lack of consumers to buy goods made in China. There is only so much that the Americans are willing to buy. The quest is to find new customers. They believe that people in central Asia and the middle east can buy more Chinese goods, but the lack of infrastructure is undermining business opportunities. The solution is to set up the Asian Infrastructure Investment Bank to fund infrastructure developments in these countries, so that they can buy more Chinese goods. When this is done, China can set up more factories and hire more workers, and growth will pick up again.
Eventually, they're gonna have to market to the Alpha Centaurans. :P
There is a huge middle-income trap there, there are simply not enough consumers in the world to boost China and its 1.35bn people to high-income status. China needs to make domestic consumption a priority imo.
Quote from: jimmy olsen on July 08, 2015, 04:14:22 AM
After a solid seven to eight years predicting DOOM here, I'm confident that that DOOM is finally here! :) Yay!? :unsure: :(
Canadian real estate prices will quickly follow.
Quote from: Richard Hakluyt on July 15, 2015, 02:01:43 AM
There is a huge middle-income trap there, there are simply not enough consumers in the world to boost China and its 1.35bn people to high-income status. China needs to make domestic consumption a priority imo.
The communist leadership recognise the need for increased domestic consumption, and they have said so publicly. It is difficult though as nobody seems to have great ideas on how to achieve that. Part of the problem is the lack of social safety nets that necessitates private savings to guard against rainy days. Part of it is the severe penalties of not being able to repay loans. More fundamental is how to increase the wages of the general population without giving them political rights.
This all sounds familiar to the problems crushing Tsarist Russia 100 years ago.
So long as China avoids disastrous wars about damn fool things in the Balkans they might succeed where the Russians failed.
Quote from: Monoriu on July 15, 2015, 06:35:15 AM
The communist leadership recognise the need for increased domestic consumption, and they have said so publicly. It is difficult though as nobody seems to have great ideas on how to achieve that.
Very simple-- EAT MORE
Worked for us :D
Quote from: Monoriu on July 15, 2015, 06:35:15 AM
Quote from: Richard Hakluyt on July 15, 2015, 02:01:43 AM
There is a huge middle-income trap there, there are simply not enough consumers in the world to boost China and its 1.35bn people to high-income status. China needs to make domestic consumption a priority imo.
The communist leadership recognise the need for increased domestic consumption, and they have said so publicly. It is difficult though as nobody seems to have great ideas on how to achieve that. Part of the problem is the lack of social safety nets that necessitates private savings to guard against rainy days. Part of it is the severe penalties of not being able to repay loans. More fundamental is how to increase the wages of the general population without giving them political rights.
Seems easy enough. Pay them more without giving them political rights. In fact, enforcing labor laws, as our own right is fond of saying, limits the scope of one's rights.
Quote from: Monoriu on July 15, 2015, 06:35:15 AM
Quote from: Richard Hakluyt on July 15, 2015, 02:01:43 AM
There is a huge middle-income trap there, there are simply not enough consumers in the world to boost China and its 1.35bn people to high-income status. China needs to make domestic consumption a priority imo.
The communist leadership recognise the need for increased domestic consumption, and they have said so publicly. It is difficult though as nobody seems to have great ideas on how to achieve that. Part of the problem is the lack of social safety nets that necessitates private savings to guard against rainy days. Part of it is the severe penalties of not being able to repay loans. More fundamental is how to increase the wages of the general population without giving them political rights.
The elephant in the room is the inconvenient fact that no country has transitioned to an affluent mass consumer society while retaining monopolized political power.
If only Gorbachev had deployed the tanks.
Quote from: The Minsky Moment on July 15, 2015, 03:39:42 PM
The elephant in the room is the inconvenient fact that no country has transitioned to an affluent mass consumer society while retaining monopolized political power.
Singapore is the model that they are after. But Singapore actually has democracy and largely independent courts.
Quote from: Monoriu on July 15, 2015, 06:03:35 PM
Quote from: The Minsky Moment on July 15, 2015, 03:39:42 PM
The elephant in the room is the inconvenient fact that no country has transitioned to an affluent mass consumer society while retaining monopolized political power.
Singapore is the model that they are after. But Singapore actually has democracy and largely independent courts.
And Singapore is a tiny island, while China is an enormous landmass encompassing tons of diverse territory, historical cultures and logistical challenges.
Quote from: MadImmortalMan on July 16, 2015, 04:50:31 PM
And Singapore is a tiny island, while China is an enormous landmass encompassing tons of diverse territory, historical cultures and logistical challenges.
Given that the Chinese leadership don't want a western style liberal democracy, there aren't that many successful models to draw reference from. The rich places on earth that aren't liberal democracies or oil-rich sparsely populated Muslim countries are Hong Kong and Singapore. Hong Kong is high on civil liberties, low on voting rights, and government participation in the economy is minimal, whereas Singapore is the opposite. In the eyes of the leadership, HK doesn't work. The people are restless, the HK government sits on mountains of cash but won't spend it and lacks the political capital to do anything. Singapore is Chinese, is ideologically close to the mainland Chinese way of interfering in the market, and the ruling party has successfully maintained power for over half a century while able to claim that it is a democracy.
There is a delicate ethnic situation in Singapore that decreases the incentives of the population to rock the boat; and there is a very large foreign component strongly biased to the status quo.
Also Singapore has been very successful in reducing corruption. Xi is supposedly following that playbook but so far it looks like his corruption drive is politically biased - and thus will ultimately fail.
Quote from: The Minsky Moment on July 17, 2015, 09:41:48 AM
There is a delicate ethnic situation in Singapore that decreases the incentives of the population to rock the boat; and there is a very large foreign component strongly biased to the status quo.
Also Singapore has been very successful in reducing corruption. Xi is supposedly following that playbook but so far it looks like his corruption drive is politically biased - and thus will ultimately fail.
All true. But there is no acceptable model out there other than Singapore. It is far from perfect, but it is the best.
Far from being the best I am not even sure it is relevant to China's circumstances. The only thing that really recommends it to China is that it is also Chinese.
More signs of the coming storm.
http://www.thestar.com.my/Business/Business-News/2015/07/20/Manage-meddle-or-magnify-Chinas-corporate-debt-threat/?style=biz
QuoteManage, meddle or magnify? China's US$16.1tril corporate debt threat
Monday, 20 July 2015
HONG KONG
Beijing may have averted a crisis in its stock markets with heavy-handed intervention, but the world's biggest corporate debt pile - US$16.1 trillion and rising - is a much greater threat to its slowing economy and will not be so easily managed.
Corporate China's debts, at 160 percent of GDP, are twice that of the United States, having sharply deteriorated in the past five years, a Thomson Reuters study of over 1,400 companies shows.
And the debt mountain is set to climb 77 percent to $28.8 trillion over the next five years, credit rating agency Standard & Poor's estimates. [ID:nL4N0ZV68I]
Beijing's policy interventions affecting corporate credit have so far been mostly designed to address a different goal - supporting economic growth, which is set to fall to a 25-year low this year.
It has cut interest rates four times since November, reduced the level of reserves banks must hold and removed limits on how much of their deposits they can lend.
Though it wants more of that credit going to smaller companies and innovative areas of the economy, such measures are blunt instruments.
"When the credit taps are opened, risks rise that the money is going to 'problematic' companies or entities," said Louis Kuijs, RBS chief economist for Greater China.
China's banks made 1.28 trillion yuan ($206 billion) in new loans in June, well up on May's 900.8 billion yuan.
The effect of policy easing has been to reduce short-term interest costs, so lending for stock speculation has boomed, but there is little evidence loans are being used for profitable investment in the real economy, where long-term borrowing costs remain high, and banks are reluctant to take risks.
Manufacturers' debts are increasingly dwarfing their profits. The Thomson Reuters study found that in 2010, materials companies' debts were 2.8 times their core profit. At end-2014 they were 5.3 times. For energy companies, indebtedness has risen from 1.1 to 4.4 times core profit. For industrials, from 2.5 to 4.2.
LOW RETURNS
Gao Hong, investor relationship principal at railway equipment maker Jinxi Axle Co <600495.SH>, which has seen its debt-to-core profit multiple triple to 10.25 between 2010 and 2014, said the company struggled to find profitable capital projects to invest in, so put money into short-term bank products that guaranteed returns.
"The risk for these (capital) programmes is so high and the rate of return so low that we have to make the best decision for our investors (by) purchasing bank products. Last year, we made profits thanks to the sale of CNR shares," said Gao.
Much of the new lending is going to China's notoriously inefficient state-owned enterprises (SOEs) as part of the government's fiscal stimulus.
"They are lending more to fund infrastructure projects, and some may be done by SOEs where leverage is increasing as a result," said Tao Wang, UBS head of China research.
"Prices are declining and revenue is slowing, and in this environment you cannot force too quick a deleverage – that would lead to a hard landing," said Wang.
S&P expects China's companies to account for 40 percent of the world's new corporate lending in the period through 2019.
But quantity is not the only problem.
Getting credit to the most efficient companies, where it has the most impact on the economy, would be easier if inefficient companies were allowed to fail, so markets can price debt effectively.
Policymakers have said they want market mechanisms to play a bigger role in credit pricing, but in practice have baulked at the consequences, effectively bailing out companies in trouble, as it did last year when state-backed Shanghai Chaori Solar Energy Science and Technology Co Ltd <002506.SZ> defaulted on a bond coupon payment.
Rapid debt growth, opacity of risk and pricing and very high debt to GDP are a hazardous combination, Standard & Poor's says.
It took an unprecedented series of measures to arrest the plunge in China's stock markets, which are worth just over $8 trillion and are a minority pursuit for the relatively wealthy.
Tackling corporate debt might make that seem like child's play.
"Managing the debt market is probably more dangerous than the stock market because the scale of the debt market is bigger, and without any high-profile default, the moral hazard is a significant issue," said David Cui, BofA Merrill Lynch analyst.
($1 = 6.2084 Chinese yuan renminbi)- Reuters
As expected, the government couldn't hold back gravity forever. The Shanghai exchange dropped 8.5% yesterday and is down another 1% today.
http://money.cnn.com/2015/07/27/investing/china-stock-market/
The Shanghai stock index is still considerably higher than before the market intervention. I think it is still too early to say if the intervention is successful.
One of those questions that will only really be answered in history books.
Also the objective may not be to sustain stock prices indefinitely but to provide some breathing space for investors and brokers to close out positions and retrench back on margin.
Quote from: The Minsky Moment on July 28, 2015, 11:16:25 AM
Also the objective may not be to sustain stock prices indefinitely but to provide some breathing space for investors and brokers to close out positions and retrench back on margin.
Which may not be such a contemptible position, in the short term anyway. Such contagion is a type of destructive over-correction. Of course, by saving market participants from contagions you're just predisposing yourself to more Misky moments in the future, but that's the risk of every market regulation for the sake of stability.
Quote from: The Minsky Moment on July 28, 2015, 11:16:25 AM
Also the objective may not be to sustain stock prices indefinitely but to provide some breathing space for investors and brokers to close out positions and retrench back on margin.
Regardless of the objective, the actors that were coerced into propping up the market are going to have a load of overvalued stock on their hands that they can only unload if the bubble continues.
Quote from: DGuller on July 28, 2015, 11:19:59 AM
Quote from: The Minsky Moment on July 28, 2015, 11:16:25 AM
Also the objective may not be to sustain stock prices indefinitely but to provide some breathing space for investors and brokers to close out positions and retrench back on margin.
Of course, by saving market participants from contagions you're just predisposing yourself to more Misky moments in the future, but that's the risk of every market regulation for the sake of stability.
Yeah where have I heard that argument before? :D
Shanghai market plunged 8.45%, even the PRC can't repeal the laws of economics.
http://www.bloomberg.com/news/articles/2015-08-24/chinese-stock-index-futures-tumble-after-last-week-s-retreat (http://www.bloomberg.com/news/articles/2015-08-24/chinese-stock-index-futures-tumble-after-last-week-s-retreat)
Quote
China's stocks plunged, with the benchmark index erasing its gains for the year, as government support measures failed to allay investor concerns that a slowdown in the world's second-largest economy is deepening.
The Shanghai Composite Index sank 8 percent to 3,226.14 at 10:50 a.m. local time, dropping below the key 3,500 level that previously spurred state buying. The Hang Seng China Enterprises Index lost 5.3 percent. Taiwan's Taiex index slid as much as 7.5 percent in its biggest decline since 1990.
Worsening economic data and signs of capital outflows are undermining unprecedented government attempts to shore up the country's $6 trillion stock market. While China said over the weekend it will allow pension funds to buy shares for the first time, a speculated cut in bank reserve ratios failed to materialize.
"This is a real disaster and it seems nothing can stop it," Chen Gang, Shanghai-based chief investment officer at Heqitongyi Asset Management Co. "If we don't cut holdings ourselves, the fund faces risk of forced closure. Many newly started private funds suffered that recently. I hope we can survive."
More than 650 stocks fell by the daily 10 percent limit on the Shanghai Composite, including China Shenhua Energy Co. and China Shipbuilding Industry Co . The gauge has tumbled 37 percent from its June 12 peak to wipe out more than $4 trillion of value.
Economic growth slowed to 6.6 percent in July, according to Bloomberg's monthly GDP tracker. China's first major economic indicator for August signaled a further deterioration as a private manufacturing index fell to the lowest level in six years.
Stock Valuations
"China's economy is pretty ugly and some sectors have bubbles," said Wu Kan, a Shanghai-based fund manager at JK Life Insurance Co., who's keeping his holdings unchanged. "Selling pressure around global markets is also weighing on local sentiment. The Shanghai Composite may fall to around the 3,000-point level."
Stocks on mainland bourses traded at a median 61 times reported earnings on Friday, according to data compiled by Bloomberg. That's the most among the 10 largest markets and more than three times the 19 multiple for the Standard & Poor's 500 Index.
Yuan positions at the central bank and financial institutions fell by the most on record last month, a sign capital outflows have picked up. Chinese equity funds were the biggest contributors to more than $4 billion of outflows in Asia excluding Japan in the week to Aug. 19, EPFR Global said. Margin traders reduced holdings of shares purchased with borrowed money for a fourth day on Aug. 21.
Pension Funds
PetroChina Co., the nation's biggest company by market value, plummeted 8.4 percent. Industrial and Commercial Bank of China Ltd., the second largest, headed for its biggest loss since Jan. 19 with a 7.7 percent slump.
The State Council, or cabinet, on Sunday announced it will allow pension funds to invest as much as 30 percent of their total net assets in stocks. Pension funds had net assets of 3.5 trillion yuan ($547 billion) by the end of 2014, Xinhua News Agency reported.
The move is the latest attempt by the government to support the equity market, after arming a state agency with more than $400 billion, banning selling by major shareholders and telling state-owned companies to buy stocks.
"The news on pension funds over the weekend was positive, but not having the expected required-reserve ratio cut or any other larger measure seems to have disappointed investors," said Gerry Alfonso, a Shanghai-based trader at Shenwan Hongyuan Group Co. "But it is questionable whether even with one the market would have rebounded."
Trying to keep the bubble inflated by letting pension funds prop it up? :hmm: I think American hegemony is safe for the near future.
Isn't that the Japanese approach?
Quote from: Tyr on August 24, 2015, 01:34:59 AM
Isn't that the Japanese approach?
AFAIK Japan didn't do anything to prop up their bubble.
:bleeding:
Doesn't Shanghai have a trade-curbing mechanism? NYSE would curb trading for 15 minutes at 7%...
http://www.finviz.com/futures.ashx
End of times! (again)
Down another 3.97% so far today.
In recent months, the Shanghai index hovered between 3,500 and 4,000. 3,500 points was considered the floor that the central government would tolerate. They'd buy if the index approaches it. What triggered the latest panic is that the index fell decisively below 3,500. It is now trading at around 3,100. That means either Beijing has abandoned the 3,500 floor, or it has run out of ammunition.
Maybe they're giving it a few days/weeks to see if it will bounce back first?
Quote from: Monoriu on August 24, 2015, 10:37:29 PM
In recent months, the Shanghai index hovered between 3,500 and 4,000. 3,500 points was considered the floor that the central government would tolerate. They'd buy if the index approaches it. What triggered the latest panic is that the index fell deciseively below 3,500. It is now trading at around 3,100. That means either Beijing has abandoned the 3,500 floor, or it has run out of ammunition.
Which is the classic danger of government pegs. You either succeed or fail catastrophically.
Quote from: Tonitrus on August 24, 2015, 10:42:37 PM
Maybe they're giving it a few days/weeks to see if it will bounce back first?
The problem is that nobody knows what the Politburo is thinking about. So everybody is speculating based on limited information available. The market used to believe that the Shanghai index would not fall below 3,500, because every time it looked like it would happen, the state-owned companies went in to buy everything they could. That changed last week. There is no official communication on what happened, so the market has to reach its own conclusions. So far, the conclusion seems to be that Beijing can no longer prop up the market, for whatever reason.
Quote from: Monoriu on August 24, 2015, 10:50:21 PM
Quote from: Tonitrus on August 24, 2015, 10:42:37 PM
Maybe they're giving it a few days/weeks to see if it will bounce back first?
The problem is that nobody knows what the Politburo is thinking about. So everybody is speculating based on limited information available. The market used to believe that the Shanghai index would not fall below 3,500, because every time it looked like it would happen, the state-owned companies went in to buy everything they could. That changed last week. There is no official communication on what happened, so the market has to reach its own conclusions. So far, the conclusion seems to be that Beijing can no longer prop up the market, for whatever reason.
This reminds me of Railroad Tycoon 3, when I'm badly over-leveraged just before recession hits, and am desperately trying to stay one month ahead of margin calls. My company needs the cash as the operating profits plummet, but I need to keep the share price propped up with share buybacks or it won't be my company anymore. More often than not the end result is having $-2,000,000 in cash and 0 stocks. :(
It is likely that Beijing will continue to support the market at least for a while. 3 September 2015 is the 70th anniversary of China's WWII victory against Japan, and there will be a huge military parade in Beijing. It is billed as an important political event for the current generation of Chinese leadership, so it is unlikely that we will hear any bad news in the coming week. Or so they say :ph34r:
Quote from: Monoriu on August 24, 2015, 11:06:54 PM
It is likely that Beijing will continue to support the market at least for a while. 3 September 2015 is the 70th anniversary of China's WWII victory against Japan, and there will be a huge military parade in Beijing. It is billed as an important political event for the current generation of Chinese leadership, so it is unlikely that we will hear any bad news in the coming week. Or so they say :ph34r:
Shouldn't the KMT be celebrating that, not the CPC? :P
Quote from: Tonitrus on August 24, 2015, 11:10:29 PM
Quote from: Monoriu on August 24, 2015, 11:06:54 PM
It is likely that Beijing will continue to support the market at least for a while. 3 September 2015 is the 70th anniversary of China's WWII victory against Japan, and there will be a huge military parade in Beijing. It is billed as an important political event for the current generation of Chinese leadership, so it is unlikely that we will hear any bad news in the coming week. Or so they say :ph34r:
Shouldn't the KMT be celebrating that, not the CPC? :P
History, as they say, is written by the victors :ph34r:
The Chinese slowdown is leading to a further fall in oil prices, one that will be exacerbated if the Iran sanctions are lifted as expected. Excellent! :menace:
http://www.nytimes.com/2015/08/25/world/from-venezuela-to-iraq-to-russia-oil-price-drops-raise-fears-of-unrest.html
Still probably going to stay over $3/gallon here in AK. :glare:
Quote from: DontSayBanana on August 24, 2015, 08:49:52 AM
Doesn't Shanghai have a trade-curbing mechanism? NYSE would curb trading for 15 minutes at 7%...
Yes, and IIRC they also have a certain percentage down stocks can go in a day or something like that. I read that something like 70% of their listed entities closed yesterday down the max.
Quote from: Tonitrus on August 24, 2015, 11:26:30 PM
Still probably going to stay over $3/gallon here in AK. :glare:
I saw 4.50 in Malibu.
Quote from: DGuller on August 24, 2015, 10:48:13 PM
Quote from: Monoriu on August 24, 2015, 10:37:29 PM
In recent months, the Shanghai index hovered between 3,500 and 4,000. 3,500 points was considered the floor that the central government would tolerate. They'd buy if the index approaches it. What triggered the latest panic is that the index fell deciseively below 3,500. It is now trading at around 3,100. That means either Beijing has abandoned the 3,500 floor, or it has run out of ammunition.
Which is the classic danger of government pegs. You either succeed or fail catastrophically.
You spelled "pigs" wrong.
Quote from: Martinus on August 25, 2015, 12:10:19 AM
Quote from: DGuller on August 24, 2015, 10:48:13 PM
Quote from: Monoriu on August 24, 2015, 10:37:29 PM
In recent months, the Shanghai index hovered between 3,500 and 4,000. 3,500 points was considered the floor that the central government would tolerate. They'd buy if the index approaches it. What triggered the latest panic is that the index fell deciseively below 3,500. It is now trading at around 3,100. That means either Beijing has abandoned the 3,500 floor, or it has run out of ammunition.
Which is the classic danger of government pegs. You either succeed or fail catastrophically.
You spelled "pigs" wrong.
Pigs can succeed? :huh:
Yes, if their goal is to be delicious. :mmm:
Quote from: Peter Wiggin on August 25, 2015, 12:36:53 AM
Yes, if their goal is to be delicious. :mmm:
:hmm: You make a good point. :mmm:
Quote from: Tonitrus on August 24, 2015, 11:26:30 PM
Still probably going to stay over $3/gallon here in AK. :glare:
cheap
Quote from: DGuller on August 25, 2015, 12:29:28 AM
Quote from: Martinus on August 25, 2015, 12:10:19 AM
Quote from: DGuller on August 24, 2015, 10:48:13 PM
Quote from: Monoriu on August 24, 2015, 10:37:29 PM
In recent months, the Shanghai index hovered between 3,500 and 4,000. 3,500 points was considered the floor that the central government would tolerate. They'd buy if the index approaches it. What triggered the latest panic is that the index fell deciseively below 3,500. It is now trading at around 3,100. That means either Beijing has abandoned the 3,500 floor, or it has run out of ammunition.
Which is the classic danger of government pegs. You either succeed or fail catastrophically.
You spelled "pigs" wrong.
Pigs can succeed? :huh:
And how.
Interesting :hmm:
QuoteTo understand China's predicament, Mr. Dollar compared its experience with some of the best known stories of successful economic development of the last half-century: Japan, which reached China's income level per capita in the early 1970s; Taiwan, which passed this threshold in the early 1980s; and South Korea, which hit it around 1990.
What is most striking is not how all three countries followed quite similar paths, but how China's trajectory has diverged from the others'.
Household spending was always the main source of demand in all three, declining gradually to about 50 percent of gross domestic product when they were about as rich as China is today. Investment rates, which rose sharply in the early stages of their development, peaked at that time at around 35 percent of G.D.P.
By these metrics, China's economy is upside down: Consumer spending by households is only 35 percent of the nation's G.D.P. — one of the lowest levels in the world. Its investment rate — nearly 50 percent of G.D.P. — is extraordinarily high. And the productivity of this investment is dismal.
China needs to produce better stuff. Looking at the well-known brands and companies in the world, almost none of them are from China. Japan has Sony, Toyota; S. Korea has Samsung, KIA; France has Louis Vuitton and a whole bunch of other names that my wife knows but I don't etc. China has a ton of state-owned banks and oil giants that are unknown outside China. China produces lots of things, but most of them are other people's stuff. It merely assembles Apple's iphones, under Taiwanese management to boot; it does not design them. This economic model can only take it so far. China needs to create, design and develop its own products and brands.
China does seem to be grabbing the low end of the (dying) PC market with the Acer brand it overpaid IBM for. Or was that Visio?
Every time I read about the Chinese car industry the verdict is still the same: they're all shit.
Quote from: Admiral Yi on August 25, 2015, 09:26:59 PM
China does seem to be grabbing the low end of the (dying) PC market with the Acer brand it overpaid IBM for. Or was that Visio?
Every time I read about the Chinese car industry the verdict is still the same: they're all shit.
Lenovo (992.hsi) bought IBM's PC business. Acer is a separate Taiwanese brand.
I won't buy a Chinese brand car. No way I'm entrusting my life with that. I don't think they meet international safety standards at all. When we talk about if Toyota is better than BMW or Volkswagan, the assumption is that they all meet basic safety standards; the only question being if they go beyond them. When it comes to Chinese cars, the problem is they don't even meet the minimum standards.
If you go by crash test videos, Chinese cars in some ways are far more advanced in safety compared to European cars. While in European cars there is maybe three feet worth of crumple zone, in Chinese cars the crumple zone runs the entire length of the car.
I work in IT and there is a couple of well-known Chinese brands. Alibaba, Baidu, TenCent as service providers, Huawei for communication hardware. Not quite Google but it is getting there.
Quote from: Admiral Yi on August 25, 2015, 09:26:59 PM
China does seem to be grabbing the low end of the (dying) PC market with the Acer brand it overpaid IBM for. Or was that Visio?
Every time I read about the Chinese car industry the verdict is still the same: they're all shit.
Are PCs dying?
Pity all the alternatives look like you pay a crap load more for a lot less computing power and flexibility.
Quote from: Zanza on August 25, 2015, 09:54:59 PM
I work in IT and there is a couple of well-known Chinese brands. Alibaba, Baidu, TenCent as service providers, Huawei for communication hardware. Not quite Google but it is getting there.
I own a Huawei modem, and they are a large smartphone vendor too. They are certainly a popular choice in Spain.
Quote from: Valmy on August 26, 2015, 08:12:28 AM
Quote from: Admiral Yi on August 25, 2015, 09:26:59 PM
China does seem to be grabbing the low end of the (dying) PC market with the Acer brand it overpaid IBM for. Or was that Visio?
Every time I read about the Chinese car industry the verdict is still the same: they're all shit.
Are PCs dying?
Pity all the alternatives look like you pay a crap load more for a lot less computing power and flexibility.
That's the story - PC sales have been flat to declining for years.
Quote from: Barrister on August 26, 2015, 09:30:15 AM
That's the story - PC sales have been flat to declining for years.
Soon everything will be over-priced and under-powered touch screen crap. :weep:
I blame Apple for this. They have always convinced consumers that paying more for less is trendy. DAMN YOU AND YOUR CULT BB.
Quote from: Valmy on August 26, 2015, 09:32:06 AM
DAMN YOU AND YOUR CULT BB.
I think there are legitimate doubts if BB is still in the Apple camp :shifty:
A lot of low-computing stuff that you were forced to do in a PC now can be done in other, lighter, low-powered devices. Watching films, internet browsing, messaging, etc... The market has reshuffled to reflect that, but the PC isn't going away.
Also, unless you're into gaming or some professional applications, there's little incentive to upgrade your PC anymore. Office runs as well in my mid-2000s laptop as in this one I bought in 2013.
Quote from: Barrister on August 26, 2015, 09:30:15 AM
That's the story - PC sales have been flat to declining for years.
Are flat sales really a sign of a dying market? Pretty much everyone who wants to own a PC owns a PC these days, so there isn't much organic growth. And PCs do have a somewhat longer lifespan these days, so they'll be replaced less often. That doesn't mean that the industry is dying, only that it's stabilizing.
It's dying like the stove and refrigerator markets died.
Quote from: Tonitrus on August 24, 2015, 11:26:30 PM
Still probably going to stay over $3/gallon here in AK. :glare:
There was some talk of gas being under $2 a gallon in some areas, not many, and a continuing downward trend. I've been paying about $2.55 for gas the last time I filled up.
Quote from: KRonn on August 26, 2015, 10:16:49 AM
Quote from: Tonitrus on August 24, 2015, 11:26:30 PM
Still probably going to stay over $3/gallon here in AK. :glare:
There was some talk of gas being under $2 a gallon in some areas, not many, and a continuing downward trend. I've been paying about $2.55 for gas the last time I filled up.
Gas prices won't be affected much by oil prices because refineries are running at capacity.
I buy crude oil and home-refine my own gasoline.
Quote from: derspiess on August 26, 2015, 10:22:17 AM
I buy crude oil and home-refine my own gasoline.
In contrast, I'm too refined to get my hands dirty. :bowler:
Quote from: Baron von Schtinkenbutt on August 26, 2015, 10:18:58 AM
Quote from: KRonn on August 26, 2015, 10:16:49 AM
Quote from: Tonitrus on August 24, 2015, 11:26:30 PM
Still probably going to stay over $3/gallon here in AK. :glare:
There was some talk of gas being under $2 a gallon in some areas, not many, and a continuing downward trend. I've been paying about $2.55 for gas the last time I filled up.
Gas prices won't be affected much by oil prices because refineries are running at capacity.
Good point but the US was, and maybe still is, exporting gasoline so we must have room for prices to come down with an over supply. There is a problem with refinery capacity but I'm pretty sure I've read that some refineries have been able to increase production.
Most refineries in the US are 40 years old or so. I haven't heard of a new one opening in my lifetime.
http://www.bbc.com/news/world-asia-china-34104114
QuoteChina punishes 197 over stock market and Tianjin 'rumours'
Chinese authorities have punished 197 people for spreading rumours online about the recent stock market crash and fatal explosions in Tianjin, according to state news agency Xinhua.
A journalist and stock market officials are among those arrested, Xinhua said. It gave no other details.
Chinese shares fell by nearly 8% after a week of volatile trading that spread fear to global markets.
The Tianjin explosions killed 150 people - with 23 still missing.
A total of 367 people remain in hospital after the 12 August blast at a warehouse where large amounts of toxic chemicals were stored. Twenty are in critical condition, according to Xinhua.
Separately, the UK's Financial Times says Chinese leaders feel they mishandled their stock market rescue efforts.
The paper, quoting an account of a meeting of senior regulatory officials on Thursday, said the government had decided to abandon attempts to boost the stock market and instead step up efforts to punish people suspected of "destabilising the market".
Chinese authorities tightly control information online and have previously prosecuted internet users for spreading rumours.
The rumours described by the latest statement include reports that a man had jumped to his death in Beijing due to the stock market slump and that as many as 1,300 people were killed in Tianjin blasts, Xinhua said.
The news agency said "seditious rumours about China's upcoming commemorations of the 70th anniversary of the end of World War II" were also among the offences.
A journalist was also arrested along with several stock market officials, according to a Xinhua report. The journalist, Wang Xiaolu, is accused of "spreading fake information" about the market slump, the report said.
'Picking quarrels'
The state news agency said Mr Wang confessed that he "wrote fake report on Chinese stock market based on hearsay and his own subjective guesses without conducting due verifications".
In 2013 Chinese authorities introduced a possible three-year sentence for spreading rumours - the sentence was supposed to apply to anyone who posted a rumour that was reposted 500 times or viewed 5,000 times.
Last year, Qin Zhihui, a blogger, was sentenced to three years in a government crackdown on internet rumours. Mr Qin was found guilty of "slander" and "picking quarrels and provoking troubles", state broadcaster CCTV said at the time.
Such law would completely decimate Polish stock market journalists who routinely seem to talk entirely out of their ass.
Quote from: Admiral Yi on August 25, 2015, 09:26:59 PM
China does seem to be grabbing the low end of the (dying) PC market with the Acer brand it overpaid IBM for. Or was that Visio?
Lenovo.
And it's not dying. It has had negative growth in the past, and it should oscillate toward stagnation. Most gamers prefer to pay a premium for antiquated hardware and casual users prefer a tablet.
Quote from: viper37 on August 31, 2015, 12:22:43 PM
Quote from: Admiral Yi on August 25, 2015, 09:26:59 PM
China does seem to be grabbing the low end of the (dying) PC market with the Acer brand it overpaid IBM for. Or was that Visio?
Lenovo.
And it's not dying. It has had negative growth in the past, and it should oscillate toward stagnation. Most gamers prefer to pay a premium for antiquated hardware and casual users prefer a tablet.
Antiquated hardware? What are you referring to?
Quote from: Barrister on August 31, 2015, 02:02:42 PM
Quote from: viper37 on August 31, 2015, 12:22:43 PM
Quote from: Admiral Yi on August 25, 2015, 09:26:59 PM
China does seem to be grabbing the low end of the (dying) PC market with the Acer brand it overpaid IBM for. Or was that Visio?
Lenovo.
And it's not dying. It has had negative growth in the past, and it should oscillate toward stagnation. Most gamers prefer to pay a premium for antiquated hardware and casual users prefer a tablet.
Antiquated hardware? What are you referring to?
Yeah! Where? :w00t:
I paid extra on my last PC for a windows downgrade. :P
But anyway. All hail the China crash. It made my highest earning year ever. I wouldn't have put so much in, but my wife happened to be snooping around when I was doing my research and convinced me to take a full short position. She was all about putting everything we had into that but it's just too damn risky.
If I had done so, we'd be retiring right now.
Quote from: MadImmortalMan on August 31, 2015, 03:59:55 PM
I paid extra on my last PC for a windows downgrade. :P
But anyway. All hail the China crash. It made my highest earning year ever. I wouldn't have put so much in, but my wife happened to be snooping around when I was doing my research and convinced me to take a full short position. She was all about putting everything we had into that but it's just too damn risky.
If I had done so, we'd be retiring right now.
Where do I find someone like your wife.
Quote from: Barrister on August 31, 2015, 02:02:42 PM
Quote from: viper37 on August 31, 2015, 12:22:43 PM
Quote from: Admiral Yi on August 25, 2015, 09:26:59 PM
China does seem to be grabbing the low end of the (dying) PC market with the Acer brand it overpaid IBM for. Or was that Visio?
Lenovo.
And it's not dying. It has had negative growth in the past, and it should oscillate toward stagnation. Most gamers prefer to pay a premium for antiquated hardware and casual users prefer a tablet.
Antiquated hardware? What are you referring to?
consoles like the Xbox and the Playstation. The gaming potential of PCs are limited because many developpers want to cater to these markets by offering a unique experience across the board. Dragon Age Inquisition comes to mind. Many portions of the game had to be disabled because the older consoles could not cope with it. And we will see the same thing with DA4 when it comes out as the current gen console will be antiquated compared to a modern PC.
Quote from: MadImmortalMan on August 31, 2015, 03:59:55 PM
I paid extra on my last PC for a windows downgrade. :P
But anyway. All hail the China crash. It made my highest earning year ever. I wouldn't have put so much in, but my wife happened to be snooping around when I was doing my research and convinced me to take a full short position. She was all about putting everything we had into that but it's just too damn risky.
If I had done so, we'd be retiring right now.
How about we don't pester you to run our accounts....but you share more of your thoughts and ideas on stocks? :pope:
The collapse accelerates
http://www.wsj.com/articles/china-august-manufacturing-pmi-slips-1441070881
QuoteBEIJING—China got another poor picture of its economic health on Tuesday, as an official gauge of manufacturing activity in August slumped to a three-year low while the usually strong services sector showed new weakness.
Meanwhile, private gauges of both manufacturing and services activity also showed a similar pattern of less-than-stellar activity despite government efforts to bolster the economy.
Analysts said, however, that some of the weakness could be temporary, as the latest slip in manufacturing may have been aggravated by temporary factory closures aimed at controlling pollution around the nation's capital ahead of celebrations marking the 70th anniversary of the end of World War Two.
Still, there was no question that the nation's main economic engines weren't running at full speed.
"There is insufficient growth momentum in the country's manufacturing sector," said Zhao Qinghe, an economist with the National Bureau of Statistics, in a statement accompanying the release of the official economic data.
The data spurred selling in Asia, with Shanghai's major stock index down about 5% after the data were released before clawing back and trading at about 2% lower. Share indexes in Tokyo and Hong Kong also were down.
China's official manufacturing purchasing managers index fell to 49.7 in August from 50 a month ago, falling short of market forecasts of 49.8. A reading above 50 indicates an expansion in manufacturing activity compared with the previous month, while a reading below points to a contraction.
The government's nonmanufacturing PMI, also released on Tuesday, fell to 53.4 from 53.9 in July, showing expansion but at a slower pace.
China has set an economic growth target of about 7% for this year, and policy makers have vowed to ensure the expansion reaches that level. The economy has so far maintained that pace, but a full-year expansion at 7% would still be the worst performance in more than two decades.
Chinese Premier Li Keqiang said on Saturday that the economy was showing signs of improvement after a series of measures to boost growth, though he said the government still needed to do more to ensure that growth didn't come up short.
So far China has slashed interest rates five times since November and made repeated moves to let banks lend more of their deposits. It has also offered tax breaks for businesses and accelerated approvals for infrastructure projects.
But weak demand at home and abroad have confounded Beijing's efforts. Exports slumped 8.3% in July and were down nearly 1% for the first seven months of the year compared with last year. Imports slid 8.1% in July and have dropped for nine consecutive months, partly due to a fall in demand at home.
Last month, China's central bank devalued the yuan by 2%, and it has let the currency slip further since. It hopes the weaker currency will give the nation's exports a bit of a boost by making Chinese goods a little bit cheaper in foreign markets.
The government said that weather as well as factory shutdowns in and around Beijing were to blame for some of the manufacturing weakness during the month. It said that efforts to limit air pollution in the cities of Beijing and Tianjin and neighboring Hebei province in north China had slowed production, and that the PMI in this region was lower than the national level. The government plans a huge military parade on Thursday, which has been interpreted as an effort to demonstrate its military and political prowess.
Analysts said that the weakness in the nonmanufacturing measure probably reflected disruptions to the financial sector that followed a steep slide in stock prices in June and July.
Meanwhile, the final Caixin Manufacturing Purchasing Managers' index came in at a more than a six-year low of 47.3 in August from 47.8 in July, according to publisher Caixin Media Co. and research firm Markit, which compile that index. The reading was better than the preliminary level of 47.1 issued late last month but remained at a 77-month low.
The Caixin China services purchasing managers' index showing sluggishness outside the factory sector with the slowest increase in 13 months. It fell to 51.5 in August, from 53.8 in July.
Quote from: viper37 on August 31, 2015, 04:13:12 PM
consoles like the Xbox and the Playstation. The gaming potential of PCs are limited because many developpers want to cater to these markets by offering a unique experience across the board. Dragon Age Inquisition comes to mind. Many portions of the game had to be disabled because the older consoles could not cope with it. And we will see the same thing with DA4 when it comes out as the current gen console will be antiquated compared to a modern PC.
Agreed. When I bought my XBox 360 a year or so after its launch it had notably better hardware than my PC which was a big incentive for me to buy it at the time (and a few games that at the time weren't scheduled to come out on PC). I was happy with my 360 for several years (including the Guitar Hero phase, obviously).
I already regret buying the PS4. Games like GTA5 or Alien Isolation look better on my 3 year old computer (though to be fair I replaced the graphics card last year, going from 660 to 770), and most games I'm interested in come out for PC, anyways, with the exception of a handful sports games and Sony exclusives.
I see why developers still like to publish for consoles - they're pretty easy to use and maintain for the average couch gamer, and piracy is less of a concern.
There are clear signs that China's economy is slowing down, but I won't call it a collapse. The business cycle is hardly unique in China. Everybody's economies go through ups and downs. China's economy has grown in the past twenty years. So what if it slows down for a while.
Quote from: Monoriu on September 01, 2015, 02:58:20 AM
There are clear signs that China's economy is slowing down, but I won't call it a collapse. The business cycle is hardly unique in China. Everybody's economies go through ups and downs. China's economy has grown in the past twenty years. So what if it slows down for a while.
The conventional wisdom is that the Communist Party has to deliver a certain level of growth or the social contract breaks down and they lose the mandate of heaven. My personal hunch is that's around 3-4% a growth a year.
Quote from: Monoriu on September 01, 2015, 02:58:20 AM
There are clear signs that China's economy is slowing down, but I won't call it a collapse. The business cycle is hardly unique in China. Everybody's economies go through ups and downs. China's economy has grown in the past twenty years. So what if it slows down for a while.
I think that the growth just gets more difficult as China moves up the GDP per capita table. Building additional steelworks, coal mines, roads etc is a fairly straightforward process, moving on to a rich services economy less so. Growth rates slowed in places like Japan and Korea as they developed too.
Quote from: Admiral Yi on September 01, 2015, 03:02:00 AM
Quote from: Monoriu on September 01, 2015, 02:58:20 AM
There are clear signs that China's economy is slowing down, but I won't call it a collapse. The business cycle is hardly unique in China. Everybody's economies go through ups and downs. China's economy has grown in the past twenty years. So what if it slows down for a while.
The conventional wisdom is that the Communist Party has to deliver a certain level of growth or the social contract breaks down and they lose the mandate of heaven. My personal hunch is that's around 3-4% a growth a year.
The problem is that these kinds of statistics aren't very reliable. If they say they'll deliver 7% growth, I am sure the department of statistics or whatever it is called will certainly report at least 6.9% growth no matter what.
People get paid in money, not statistics.
Quote from: Syt on September 01, 2015, 01:09:08 AM
Quote from: viper37 on August 31, 2015, 04:13:12 PM
consoles like the Xbox and the Playstation. The gaming potential of PCs are limited because many developpers want to cater to these markets by offering a unique experience across the board. Dragon Age Inquisition comes to mind. Many portions of the game had to be disabled because the older consoles could not cope with it. And we will see the same thing with DA4 when it comes out as the current gen console will be antiquated compared to a modern PC.
Agreed. When I bought my XBox 360 a year or so after its launch it had notably better hardware than my PC which was a big incentive for me to buy it at the time (and a few games that at the time weren't scheduled to come out on PC). I was happy with my 360 for several years (including the Guitar Hero phase, obviously).
I already regret buying the PS4. Games like GTA5 or Alien Isolation look better on my 3 year old computer (though to be fair I replaced the graphics card last year, going from 660 to 770), and most games I'm interested in come out for PC, anyways, with the exception of a handful sports games and Sony exclusives.
I see why developers still like to publish for consoles - they're pretty easy to use and maintain for the average couch gamer, and piracy is less of a concern.
This came up with the Arkham Knight PC port debacle- one of the problems with the consoles is that for more consistent playback purposes, most content (games or video) for consoles is still frame-locked to 30 frames per second, which is okay for a movie with slowed-down special effects, but terrible for video games requiring near-single-frame reaction times.
Some people complain about the 4K versus 1080p limitations, but I kind of treat them the same way I treat the people complaining about lossless versus 320kbps MP3 quality- biologically, it's extremely unlikely that one can actually make the differentiation, but people investing in perceived high-end hardware will convince themselves that they're losing out by not having the highest spec possible. So far, all the controlled experiments have come down on the side of technology having outpaced the granularity of human perception.
According to the Economist, from the year 2000 to the present, the ratio of house prices to income in China has fallen by more than half.
Quote from: The Minsky Moment on September 01, 2015, 01:02:24 PM
According to the Economist, from the year 2000 to the present, the ratio of house prices to income in China has fallen by more than half.
You are an evil, evil man.
I was very surprised to see that. Either the Economist has goofed badly, or -- more likely - the facts are not entirely in accord with the conventional narrative of a massive Chinese RE bubble.
They would be in accord with a narrative of a frenzied RE bubble who's growth ratet peaked long ago and diversion of investment funds into the equity market.
Quote from: The Minsky Moment on September 01, 2015, 01:09:26 PM
I was very surprised to see that. Either the Economist has goofed badly, or -- more likely - the facts are not entirely in accord with the conventional narrative of a massive Chinese RE bubble.
Or, most likely, option 3- pricing in China can't be accurately gauged because the Chinese government interferes too heavily in pricing for it to be an accurate indicator of market forces.
Quote from: Admiral Yi on September 01, 2015, 01:15:09 PM
They would be in accord with a narrative of a frenzied RE bubble who's growth ratet peaked long ago and diversion of investment funds into the equity market.
I.e. an RE bubble that subsided.
Quote from: DontSayBanana on September 01, 2015, 02:47:35 PM
Quote from: The Minsky Moment on September 01, 2015, 01:09:26 PM
I was very surprised to see that. Either the Economist has goofed badly, or -- more likely - the facts are not entirely in accord with the conventional narrative of a massive Chinese RE bubble.
Or, most likely, option 3- pricing in China can't be accurately gauged because the Chinese government interferes too heavily in pricing for it to be an accurate indicator of market forces.
How does the PRC government interfere in sales of residential RE in a manner that distorts prices?
As compared to say RE markets in the US and Europe which are also not 100% free of policy distortion.
Quote from: The Minsky Moment on September 01, 2015, 03:21:06 PM
Quote from: DontSayBanana on September 01, 2015, 02:47:35 PM
Quote from: The Minsky Moment on September 01, 2015, 01:09:26 PM
I was very surprised to see that. Either the Economist has goofed badly, or -- more likely - the facts are not entirely in accord with the conventional narrative of a massive Chinese RE bubble.
Or, most likely, option 3- pricing in China can't be accurately gauged because the Chinese government interferes too heavily in pricing for it to be an accurate indicator of market forces.
How does the PRC government interfere in sales of residential RE in a manner that distorts prices?
As compared to say RE markets in the US and Europe which are also not 100% free of policy distortion.
Magic. Haven't you heard of Feng Shui? It's the ancient Chinese art of real estate market distortion.
Quote from: Razgovory on September 01, 2015, 07:34:05 PM
Magic. Haven't you heard of Feng Shui? It's the ancient Chinese art of real estate market distortion.
There's not a real estate bubble, just a lot of houses built on dragons that haven't been discovered yet.
Read it a weep, tons of embeded links within.
All of this was completely predictable.
http://www.slate.com/blogs/moneybox/2016/01/04/markets_are_panicking_about_china_again.html
QuoteWelcome Back to the Office. China's Stock Market Crashed Again.
By Jordan Weissmann
Meet the new year, same as the old year. Financial markets are off to a rocky start in 2016 thanks to turbulence—where else?—in China, where stocks had to halt trading for the day after a 7 percent drop, sparking a worldwide sell-off. In the U.S., the trusty Dow Jones is down more than 400 points.
The selling in China seems to have started thanks to a combination of disappointing manufacturing data and a falling currency. Some investors may also be trying to unload their holdings before a ban on selling by large shareholders expires on Friday. China's government slammed those restrictions in place to try to halt the country's massive stock market declines that spooked the world over the summer. Once it's lifted, we should expect a lot of pent-up selling.
And that may speak to Monday's big theme (insofar as there is one): unintended consequences. By attempting to calm its markets a few months ago, China seems to have created new kinds of chaos. On Monday, for instance, the country debuted its new "circuit breaker" system, which pauses trading for 15 minutes once the benchmark CSI300 index drops 5 percent and cuts it off for the day after a 7 percent decline. The idea is to give panicking investors time to think and stop herd-driven selling; the U.S. has somewhat similar safeguards in place although here trading halts when the S&P 500 drops more than 20 percent in a day. But a lot of people seem to think China's new system exacerbated Monday's declines, as anxious traders tried to sell their positions before the circuit breakers kicked in.
As CNBC notes, it may just be that China's 5 percent and 7 percent thresholds are too small given how erratic stock prices are there. But either way, it's another example of the Chinese government's ineptitude at market tinkering. I'm guessing the blooper reel will continue well into the new year.
I've been considering shorting Shenzhen again.
Down another 7% yesterday
https://www.washingtonpost.com/news/wonk/wp/2016/01/07/whats-really-important-about-chinas-stock-market-disaster-and-whats-not/
Quote
What's really important about China's stock market disaster, and what's not
By Matt O'Brien January 7 at 11:25 AM
(Reuters)
You can only defy financial gravity for so long. At some point, what went up for no reason must come down for a very good one, no matter what the government does to try to keep it aloft.
Which is to say that it was another disastrous day for Chinese stocks. On the plus side, though, it was a short one. Indeed, China's market was only open for 14 minutes on Thursday before it fell the maximum 7 percent it's allowed to in a single session. It's the second time that's happened this week, enough to erase almost all its gains since the summer.
Now, on the one hand, it's kind of silly to ask why China's stock market bubble is bursting. That's what a bubble, which is by definition unsustainable, does. They stop. But, on the other, it's still worth thinking about what it is that's set off this latest sell-off. And the answer, it turns out, is simple. It's everything. It's an economy that seems to be slowing down more than Beijing wants, and rules that perversely seem to have made the panic worse. What does that mean exactly?
Well, here are the three biggest problems.
1. Is China slowing down or is it slowing down? China was never going to keep growing at double-digit rates — there just aren't as many people to move from the farms to the factories as before — but the question is whether it can do so at, say, 7 percent instead. That's the government's official target, and it's looking like it might miss it.
Now, this isn't just a matter of China's economic stats being unreliable enough that economists think "7 percent" growth might be the new 5 percent growth. It's that the rest of its numbers, particularly manufacturing, show that it's not in great shape. Well, that and the fact that the government seems to believe this too. It devalued its currency back in August and has continued to do so — its latest move to devalue Wednesday night was its biggest one since that first one — which looks suspiciously like it's trying to prop up growth by boosting exports.
That's not the kind of country that people want to invest in. Think about it like this: If Beijing knows more about its economy than anybody else, what does it tell you that it thinks its economy needs more stimulus? It says that China is not only slowing down due to its graying workforce, but also because its slowly deflating credit bubble has it as close as it will get to a recession. That's admittedly still pretty far away, but there's a real risk it could have a "hard landing" where it doesn't grow fast enough to keep unemployment down.
2. Beijing's plan to calm the market down has backfired. China's markets are dominated by mom-and-pop traders who are prone to fits of fear, greed and even more fear, sometimes all within the space of an hour. So it's not unusual for stocks to be up 3 percent one minute, down 2 percent the next, and then finish the day up 4 percent. That'd actually be a pretty tame day by Shanghai's standard.
The authorities, though, have had enough of this kind of extreme volatility — at least on the way down — and have circuit breakers in place this past week. The way it works is that the market takes a 15-minute break if it's ever down 5 percent on the day, at which point trading resumes — unless stocks fall an additional 2 percent. Then the market closes for the day. What's the problem? Well, anytime stocks start getting close to that first level, say down 4 percent, people race to sell anything they might want to out of fear that they won't be able to if they wait a little longer. That, of course, sends stocks down to the 5 percent threshold, which then gives them 15 minutes to figure out how to sell everything else before the next circuit breaker.
In other words, the rush to beat the circuit breakers made the market more likely to hit them. It's no surprise, then, that just four days after putting them in place, the government announced this morning it is getting rid of them now.
3. The government won't let big shareholders sell their stock, after all. Beijing tried to stop the last sell-off by saying corporate bigwigs couldn't unload their shares for six months. That was, well, six months ago. You can probably see where this is going. People were afraid that, once the lockup ended, everybody else would try to sell big blocks of stock all at once, so they tried to sell their own blocks of stock first. The result was what they feared — a crash. So the government did what it always does. It told big shareholders that they still had to hold on to their stock, at least most of it. All they're allowed to do is sell 1 percent of their shares over the next three months — and that's provided that they give 15 days advance notice.
Voilà, today's problem has become tomorrow's.
***
A little perspective is important, though. China's stock market is still small enough that what happens in it doesn't really matter for its economy. Sure, it might turn into a few bad days for our markets, but just that. The far, far bigger story is whether China's actual economy keeps growing fast or keeps slowing down. So it's only insofar as Beijing's bungled stock market rescue tells us something about their managerial competence, or lack thereof, that it tells us something important.
China's stock market crash doesn't really matter for its economy, but its government's response to it might. That's because policymakers who have made this many mistakes with their markets might make ones with their economy too — and that's what matters. Not just for their own standard of living, but for everyone else who has come to depend on China's economy — and its demand for raw materials of every kind.
It turns out that socialism with Chinese characteristics is just capitalism where markets get punished for giving the "wrong" answer. There's been a lot of punishment in China and will be for awhile.
The Chinese have announced the 'circuit breakers' won't be enabled tomorrow.
Truly we live in 'interesting times'.
Up 3% on the open 1/2 hour ago, then down, now back up.
edit:
could well be down again by the time I finish this edit.
This kind of news is not going to help market stability
$7.6 billion ponzi scheme
http://mobile.nytimes.com/2016/02/02/business/dealbook/ezubao-china-fraud.html?_r=0&referer=https://news.google.com/
7.6 billion? Amateurs.
Madoff's scheme amounted to almost 10 times that IIRC.
Pfft right? Call me when you have a real ponzi scheme China.
Quote from: celedhring on February 01, 2016, 02:15:48 PM
7.6 billion? Amateurs.
Madoff's scheme amounted to almost 10 times that IIRC.
And that was just one guy... and the guy clumsy enough to get caught, at that.
The contagin is spreading
http://www.bloomberg.com/news/articles/2016-04-18/it-s-all-suddenly-going-wrong-in-china-s-3-trillion-bond-market
Quote
It's All Suddenly Going Wrong in China's $3 Trillion Bond Market
by Bloomberg News
April 19, 2016 — 1:00 AM JST
Updated on April 19, 2016 — 11:17 AM JST
The unprecedented boom in China's $3 trillion corporate bond market is starting to unravel.
Spooked by a fresh wave of defaults at state-owned enterprises, investors in China's yuan-denominated company notes have driven up yields for nine of the past 10 days and triggered the biggest selloff in onshore junk debt since 2014. Local issuers have canceled 60.6 billion yuan ($9.4 billion) of bond sales in April alone, and Standard & Poor's is cutting its assessment of Chinese firms at a pace unseen since 2003.
While bond yields in China are still well below historical averages, a sustained increase in borrowing costs could threaten an economy that's more reliant on cheap credit than ever before. The numbers suggest more pain ahead: Listed firms' ability to service their debt has dropped to the lowest since at least 1992, while analysts are cutting profit forecasts for Shanghai Composite Index companies by the most since the global financial crisis.
"The spreading of credit risks is only at its early stage in China," said Qiu Xinhong, a Shenzhen-based money manager at First State Cinda Fund Management Co. "Many people have turned bearish."
China's leaders face a difficult balancing act. On one hand, allowing troubled companies to default forces money managers to pay more attention to credit risk and accelerates government efforts to curb overcapacity. The danger, though, is that investor panic leads to tighter credit conditions, dealing a blow to President Xi Jinping's plan to keep the economy growing by at least 6.5 percent over the next five years.
Economic figures for March reveal a growing dependence on debt. China's aggregate financing -- a broad measure of credit that includes corporate bonds -- almost doubled from a year earlier to 2.34 trillion yuan, exceeding all 24 forecasts in a Bloomberg survey as policy makers turned on the taps to support economic growth.
Yet even that wasn't enough to save the seven Chinese companies that reneged on bond obligations this year. Three of those were part-owned by China's government, seen not long ago as a provider of implicit guarantees for bondholders. Dongbei Special Steel Group Co. on April 13 missed a third payment since its chairman was found dead by hanging last month, while Chinacoal Group Shanxi Huayu Energy Co. failed to make a distribution on April 6.
Baoding Tianwei Group Co., a government-owned maker of electrical transformers that first defaulted a year ago, said on April 14 it may not be able to repay principal and interest on five-year bonds due this month. State-owned China Railway Materials Co. halted its bond trading on April 11, saying it's studying debt "repayment issues."
The reaction has been swift in China's 18.8 trillion yuan corporate bond market (a figure that excludes certificates of deposit). The extra yield investors demand to hold seven-year onshore corporate bonds with top ratings over similar-maturity government notes has jumped by 28 basis points from an almost nine-year low in January, to 91 basis points as of Monday. At least 62 Chinese firms have postponed or scrapped planned note sales this month, six times more than the same period a year earlier.
"To Chinese investors at the moment, default risks are high almost everywhere," said Shi Lei, the head of fixed-income research at Ping An Securities Co. The yield premium on corporate bonds will probably rise by 30 to 50 basis points over the next several months, Shi said.
Earnings Risk
There's little sign that China Inc. is on the road to recovery. Non-financial companies traded in Shanghai and Shenzhen are generating just enough operating profit to cover the interest expenses on their debt twice, down from almost six times in 2010, data compiled by Bloomberg show.
Analysts are getting more downbeat. Twelve-month earnings forecasts for Shanghai Composite companies have dropped by 7.8 percent this year, the most since 2009, according to data compiled by Bloomberg. S&P has cut its credit ratings or reduced its outlook on 63 Chinese companies this year while upgrading just two, on course for the highest annual ratio of downgrades to upgrades in 13 years.
"As more and more issuers default, lenders and investors will reassess their portfolio and lending, and that will cause yields to rise," said Christopher Lee, chief ratings officer for Greater China at Standard & Poor's in Hong Kong. "If the onshore market has any dislocation, that will have a spillover effect in the offshore market."
'Swimming Naked'
The overseas bonds of Chinese issuers have so far proven resilient. The yield premium on corporate dollar notes has dropped 57 basis points from this year's high in February to 250 basis points, near the lowest since 2007, according to Bank of America Merrill Lynch indexes.
Rising defaults are actually healthy for China's bond market, said Xia Le, the chief economist for Asia at Banco Bilbao Vizcaya Argentaria SA in Hong Kong.
"It shows the government is taking away the implicit guarantee," Xia said. "Now risk awareness is rising, so we will see which issuers are swimming naked."
People's Bank of China Governor Zhou Xiaochuan appears fully aware of the risks. The PBOC, which has cut official lending rates six times since November 2014, still has "ample monetary ammunition" to counter a deeper selloff in the bond market, said Tommy Xie, a Singapore-based economist at Oversea-Chinese Banking Corp.
Boom-Bust
Still, China's recent history shows that a turn for the worse in markets can be hard to control once it starts. The nation's equities lost more than $5 trillion of value last summer as authorities struggled to contain an unwinding of margin trades. Leverage is a big factor for corporate bond investors, too, with outstanding repurchase agreements in the interbank market reaching a record 9.7 trillion yuan in December.
A reversal in China's bond markets would likely have a greater impact on the economy than the rout in stocks, given the country's reliance on debt. Corporate obligations climbed to a record 165 percent of GDP at the end of last year, the latest figures from Bloomberg Intelligence show.
"The market is worried about the building up of debt," said Iris Pang, senior economist for Greater China at Natixis SA in Hong Kong. "The cost has built up in the form of corporate credit risks and bank risks for the whole economy."
What? Red China possesses neither the elastic and independent financial controls necessary nor the institutional experience to deal with Big Boy Bond Markets?
Holy Mao's Mango Water, Batman. Enjoy going back to the fields for manual pest control with chopsticks, you mutts.
Quote from: CountDeMoney on April 19, 2016, 12:45:43 AM
What? Red China possesses neither the elastic and independent financial controls necessary nor the institutional experience to deal with Big Boy Bond Markets?
Holy Mao's Mango Water, Batman. Enjoy going back to the fields for manual pest control with chopsticks, you mutts.
Come on CdM, tell us how you really feel.