‘Rats leaving a sinking ship’ as China’s equity bubble implodes

JSCh said:

Yes, deception doesn't work in long term.

So far, all the negative talk about China didn't do squat.

没卵用!!

At the end, all they can really do is talk.

Click to expand...

There is no negative talk in China in the same vein there is no negative talk about Greece. There are truths, realities, if you choose to ignore them thats fine but there are certain parts of the Chinese government who obviously have no clue what they are doing, any emerging economy with a billion people and huge exports is going to make alot of money regardless but thats not the point, federal China has plenty of money.

The point isnt that China is some poor country drowning in debt which alot of Chinese on here seem to think is being said, its just the fact that theres alot of clueless people (like in Russia, who most likely have their jobs due to connections to party members etc and are generally morons in high positions raking in millions/billions) running important parts of the Chinese economy and they need to be replaced, stockmarket needs to balance out and the loan market.

Some municipalities reportedly have a debt to gdp ratio of like 250% due to all of the loans for construction and other projects over the past decade where a huge amount of them have either been abandoned/unfinished or just not used. Chinese Central government has a decent enough debt to gdp ratio that it wont cause serious damage but it will hurt, its like a mini version of what happened to Spain, far to much lending to property developers.

You gotta remember theres not alot of new sources for growth now that China has tapped into most markets. I see that yesterday the Chinese central bank or whatever its called cut lending rates in preperation for another 0.5-0.7% drop in the GDP, I have faith in China to balance it out but the problems started like 10 years ago when they switched to public investment which increases growth in the short term but then slows down and stagnates, im sure it will balance itself out to a normal level on par with the rest of the industrialised, civilized nations of the world instead of always being a few percentage points ahead of us

China Cuts Interest Rates to a Record Low After Stocks Slump

June 27, 2015 — 3:00 PM ISTUpdated on June 27, 2015 — 4:56 PM IST

China’s central bank cut its benchmark lending rate to a record low and lowered reserve-requirement ratios for some lenders after stocks plunged and local government bond sales drained liquidity.

In the fourth reduction since November, the one-year lending rate will be reduced by 25 basis points to 4.85 percent effective June 28, the People’s Bank of China said on itswebsite Saturday. The one-year deposit rate will fall by 25 basis points to 2 percent, while reserve ratios for some lenders including city commercial and rural commercial banks will be cut by 50 basis points, according to the statement.

The easing follows the biggest two-week plunge in the stock market since December 1996 and a four-week rise in money-market rates as lenders hoard cash. While industrial production and retail sales stabilized in May, investment slowed further -- a sign of weakness in infrastructure spending that policy makers are keen to reverse.

“The central bank doesn’t want a panic caused by the stock rout to spread,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. “That would lead to financial instability.”

Premier Li Keqiang has set a growth target of about 7 percent for 2015, which would be the slowest annual expansion since 1990. Policy makers are juggling the need to keep growth from slipping too far with plans to press ahead with reforms.

Global Easing
PBOC Governor Zhou Xiaochuan’s latest move adds to a global wave of monetary easing. South Korea and New Zealand are among the latest to lower their key rates as China’s weakness combined with domestic dynamics to argue for further stimulus.

The Shanghai Composite Index sank 7.4 percent on Friday, taking its decline from its June 12 high to 19 percent, on the cusp of a bear market.

“A plunge at that pace could have forced margin calls and another round of selling, leading to a stampede,” said Lu Ting, Chief Economist at Huatai Securities Co. “So avoiding panic in the financial market and protecting market confidence is part of the consideration.”

The government has escalated efforts to prevent a hard landing, adding fiscal loosening to monetary easing. It has doubled the size of a debt swap program, offering local governments cheaper financing to alleviate a funding crunch.

Local governments are set to issue about 2.8 trillion yuan ($451 billion) of debt this year, adding a strain on liquidity. The Ministry of Finance this week failed to meet its target at a bond auction for the first time since July 2014 amid the surge in municipal issuance.

PBOC Easing
The PBOC’s easing has been four pronged. Lower interest rates reduce repayment expenses for the nation’s indebted businesses; cuts to banks’ reserve ratios gives them more scope to lend; money market operations aim to add liquidity; while targeted injections to banks channel funds to preferred projects such as shanty town redevelopment.

Past moves, such as an interest-rate cut announced May 10, have also followed selloffs in the share market.

“With economic growth still weak, inflation far below the PBOC’s target and a slumping equity market, monetary policy had to be eased,” Zhao Yang, Chief China economist at Nomura Holdings Inc. in Hong Kong, wrote in an e-mail. “The magnitude is stronger than expected. I believe it’s closely related to the stock market plunge.”

China Cuts Interest Rates to a Record Low After Stocks Slump - Bloomberg Business

Little room to maneuver left for China.

BEIJING, June 30 (Xinhua) -- Chinese shares bounced back from early morning losses and closed sharply higher on Tuesday following a nightmarish fortnight.

The benchmark Shanghai Composite Index surged 5.53 percent to finish at 4,277.22 points. It fell more than five percent in the early morning to 3,847,88 points, extending losses from a peak of 5,178.19 points seen on June 12.

The Shenzhen Component Index gained 5.69 percent to close at 14,337.97 points.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, rallied 6.28 percent to end at 2,858.61 points.

A US statedept retired?LMAO

Isn't that what everyone, including Americans themselves say about the United States? Lol

Yes. It shot up. My family is a bit richer. My condolences to those who jumped to deaths.

The PE multiples don't add up. Consider further drops in recent future.

China will be fine, its only market readjustment

China brokerages pledge to buy at least $19.3 billion in shares to stabilise market - The Economic Times

China's top 21 securities brokerages said on Saturday that they would collectively invest at least 120 billion yuan ($19.3 billion) to help stabilise the country's stock markets after a slump of nearly 30 per cent since mid-June.

A flurry of official policy moves over the past week, including an interest rate cut and a relaxation of margin lending rules, has failed to arrest the sell-off.

The rout in China's highly leveraged stock market has become a major worry for global investors, who fear a meltdown could destabilise the world's second-largest economy at a time when growth is already slowing.

The brokerages met on Saturday in Beijing to discuss the market situation and expressed "full confidence" in the development of China's capital markets, a statement on the website of the Securities Association of China said.

"Twenty-one securities brokerages will jointly invest 15 per cent of net assets as of the end of June, or no less than 120 billion yuan, in blue chip exchange traded funds," it said.

The brokerages will not sell off holdings as long as the Shanghai Composite Index is below 4,500 points, the statement said.

The SSEC index fell 5.8 per cent on Friday to end at 3,684 points.

Listed securities companies among the 21 brokerages, along with their major shareholders, also would proactively buy back shares, the statement said.

The SSEC index fell 5.8 per cent on Friday to end at 3,684 points.

Listed securities companies among the 21 brokerages, along with their major shareholders, also would proactively buy back shares, the statement said.

Beijing has been struggling to find a policy formula to restore confidence in its stock markets.

After the market close on Friday, the China Securities Regulatory Commission (CSRC) said China would cut initial public offerings and capital raisings and support long-term investors entering the market to help stabilise prices.

The People's Bank of China (PBOC) also rolled over 250 billion yuan of medium-term loans to banks late on Friday to ensure adequate liquidity in the system.

Chinese stocks had more than doubled between November and mid-June, fuelled largely by retail investors using borrowed money.

Investors say constant tinkering with monetary policy and regulations to try to temper the stock market slide raises wider questions about whether China is ready to open up its capital markets and have more influence in the international financial system.

========================================================================

More fun in China coupled with a slow-down and a seemingly clueless government.
The implosion of the realty bubble aka ghost towns will complete the Chinese trifecta.

Nicky G said:

China brokerages pledge to buy at least $19.3 billion in shares to stabilise market - The Economic Times

China's top 21 securities brokerages said on Saturday that they would collectively invest at least 120 billion yuan ($19.3 billion) to help stabilise the country's stock markets after a slump of nearly 30 per cent since mid-June.

A flurry of official policy moves over the past week, including an interest rate cut and a relaxation of margin lending rules, has failed to arrest the sell-off.

The rout in China's highly leveraged stock market has become a major worry for global investors, who fear a meltdown could destabilise the world's second-largest economy at a time when growth is already slowing.

The brokerages met on Saturday in Beijing to discuss the market situation and expressed "full confidence" in the development of China's capital markets, a statement on the website of the Securities Association of China said.

"Twenty-one securities brokerages will jointly invest 15 per cent of net assets as of the end of June, or no less than 120 billion yuan, in blue chip exchange traded funds," it said.

The brokerages will not sell off holdings as long as the Shanghai Composite Index is below 4,500 points, the statement said.

The SSEC index fell 5.8 per cent on Friday to end at 3,684 points.

Listed securities companies among the 21 brokerages, along with their major shareholders, also would proactively buy back shares, the statement said.

The SSEC index fell 5.8 per cent on Friday to end at 3,684 points.

Listed securities companies among the 21 brokerages, along with their major shareholders, also would proactively buy back shares, the statement said.

Beijing has been struggling to find a policy formula to restore confidence in its stock markets.

After the market close on Friday, the China Securities Regulatory Commission (CSRC) said China would cut initial public offerings and capital raisings and support long-term investors entering the market to help stabilise prices.

The People's Bank of China (PBOC) also rolled over 250 billion yuan of medium-term loans to banks late on Friday to ensure adequate liquidity in the system.

Chinese stocks had more than doubled between November and mid-June, fuelled largely by retail investors using borrowed money.

Investors say constant tinkering with monetary policy and regulations to try to temper the stock market slide raises wider questions about whether China is ready to open up its capital markets and have more influence in the international financial system.

========================================================================

More fun in China coupled with a slow-down and a seemingly clueless government.
The implosion of the realty bubble aka ghost towns will complete the Chinese trifecta.

Click to expand...

I wonder whether you know what Nicky means in Arabic.

Götterdämmerung said:

I wonder whether you know what Nicky means in Arabic.

Click to expand...

Nope. Though now that you mention it, I hope its something dirty or evil. So what is it?

Nicky G said:

Nope. Though now that you mention it, I hope its something dirty or evil. So what is it?

Click to expand...

It's the best thing in life.