• Wednesday, December 19, 2018

Shanghai's crashing market has lost $2 trillion -more than the value of all German stocks in 17 days

Discussion in 'World Affairs' started by Hamartia Antidote, Jul 14, 2018.

  1. Hamartia Antidote

    Hamartia Antidote ELITE MEMBER

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    http://www.businessinsider.com/shan...-value-of-all-german-stocks-in-17-days-2015-7

    China's stock collapse in the last couple of weeks has been as dramatic as its previous surge was. Despite logging its biggest one-day rise since 2009 on Thursday, the previous 17 days saw the index collapse by 32.1%.

    Given the overall size of the Chinese stock market, that means tremendous amounts of market value was lost. In fact, according to a note from Bank of America Merrill Lynch analysts on Thursday morning, $2 trillion (£1.30 trillion) was wiped off the Shanghai Composite, the country's benchmark stock index.

    Here's how that looks:


    Screen Shot 2018-07-13 at 11.05.43 PM.jpg

    There have been steeper crashes in countries around the world throughout history, but the notable thing about the Shanghai Composite's collapse is the speed at which it went through the floor. In 2008, Shanghai stocks fell by 49.2%, but it took 125 trading days to do so from the top.

    You can see from the graph above that the crash is far sharper than the bursting of the 2008 stock bubble, even though the index had further to fall back then.

    Here's how it looks in historical context:
    Screen Shot 2018-07-13 at 11.06.35 PM.jpg

    The plunge has been stalled, with nearly half of the stocks on the exchange not trading on Wednesday.

    The individual collapses of companies could also have been more severe if it wasn't for the 10% maximum movement that Chinese stocks are allowed to make each day — once they fall by a tenth in value, trading is suspended.

    To put the slump in context, According to the World Federation of Exchanges the companies listed by Germany's Deutsche Borse ran to $1.823 trillion (£1.18 trillion) in May.
     
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  2. nang2

    nang2 SENIOR MEMBER

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    it means one thing for sure. German stocks are just small potatoes.
     
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  3. Akasa

    Akasa SENIOR MEMBER

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    Or it could mean that dysregulation has turned China's stock market into a bubble waiting to burst, threatening China's decades of growth. Laissez-faire lending followed by sudden tightening of bank loans is what essentially gutted Japan's GDP growth in the 1990s.
     
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  4. nang2

    nang2 SENIOR MEMBER

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    wrong. dysregulation never creates bubble. On the contrary, it fosters competition that keeps bubbles in check.
     
  5. haidian

    haidian SENIOR MEMBER

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    They have been predicting that bubble bursting for 4 decades, stock markets in China flluctuate much more than this one every single year, big risk but also big gain, it's very different from western stock market, just in case you don't know.
     
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  6. jhungary

    jhungary MILITARY PROFESSIONAL

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    Still losing 2 Trillions in 17 days is not something small. You can joke about it of course, but most stock listed in China have halved their price in less than a month, there is something in the air and if it was not caught before it manifested into something bigger, this can easily be turned into a little financial crisis in Chinese cup.


    You are using free market as an example, and China is not exactly a free market.

    Problem is, when a market is largely void of government intervention, yes, deregulation bring competition and weed out the non-performance.

    On the other hand, China is still heavily controlling the stock market directly over investment law and indirectly with Semi-SOE, that mean deregulation could actually do more harm than good to Chinese market.

    On the other hand, depending on how deregulation worked in a market, it may actually do more harm than good anyway, see how dereg stem the subprime mortgage crisis in 2008 as an example.
     
  7. Śakra

    Śakra SENIOR MEMBER

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    Arent most of chinas traders retail traders? Wild swings are expected cuz theyre very prone to irrational moves like panic selling
     
  8. antonius123

    antonius123 FULL MEMBER

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    But how the heavily controlling government will have her deregulation to do more harm in term of creating bubble?

    The history showed that bubble happen more frequently in the free market like US.
     
    Last edited: Jul 15, 2018
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  9. Skull and Bones

    Skull and Bones ELITE MEMBER

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    One thing is for sure, investors are more confident about US market than Chinese market. I might invest some in Chinese market once the valuation is attractive.
     
  10. 52051

    52051 FULL MEMBER

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    You dont understand the Chinese stock market at all, the market has zero relevance with underline economy. Actually China stock market has always been very dynamic for the past 20 years, thats why many of us make alot of money.

    To put it this way: China has basically two big cash pool: financial market and property market, you put a lid on one the cash will go to the other.

    The stock market after 2015's crash, now return to a very high capital level, whilst the propery market, after 2015-16's booming, now get stalled thanks to many government heavy-hand policy that specifically targetting property price (an example: Second-house rule: anyone want to buy a second house in Beijing need to pay 80% of the money in cash and thus can only apply 20% of loan, more importantly, in case this is your first house, but as long as you have a track record of get loan from bank before, it is still considered as your second house, and the 80-20 rule applies to you).

    Such situation suggesting that property market in big cities will likely to go up soon, which is a bad news for the stock investor since many investors will withdraw their money from the market and go to invest real estate.

    China's property market (which is at least 1 order of magitude higher than China's stock market) is about to take off soon (the government put a huge lid on it to prevent it from take off like high tax rate/very strict loan policy), for instance the Beijing's real estate volume has jump 50%+ over the recent two months, when volume goes up price will follow.

    Thats why I just use my parents's quotian (To control property price, China has policy to restrict a single family to only own no more than 2 properties in Beijing) to buy a big new house that worth roughly $X million USD in Beijing's country side just a month ago, and I am pretty sure that my investment in this house will have amazing returns.:partay:

    Simply put in China, majority of ppl treat stock investment as gambling and never put serious money there, thats why its irrelevant to China's underline market, and thats why its highly dynamic and government seldom do anything about it (which give guys like us a lot of space hehehe).

    On the contrary, most Chinese think property investment is the right way to save or even make more out of your money, and so property/real estate is far far more revelant to China's economy and people's wealth, and thats why China's one of the highest property ownership rate in the world and much higher than that in the US.:lol:
     
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  11. Globenim

    Globenim FULL MEMBER

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    To keep it simple. Those who professionally produce and perpetuate this garbage usually do understand while not the matter at least the absurdity of their claims. They are just disingenious and lying in attempt to cause and fuel real damage. Much like some selftitled "experts" on this board they are just trying to support negative sentiment, undermine justified positive seniment and spin or fabricate a whole new "truth". Their target are ultimately the ones that dont understand it at all.
     
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  12. Hamartia Antidote

    Hamartia Antidote ELITE MEMBER

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    https://defence.pk/pdf/threads/chin...t-as-grim-mood-persists.564663/#post-10611976

    You think he is the only one? (300K) Just because it doesn’t directly affect you doesn’t mean others aren’t feeling pain.
     
    Last edited: Jul 15, 2018
  13. faithfulguy

    faithfulguy ELITE MEMBER

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  14. Hamartia Antidote

    Hamartia Antidote ELITE MEMBER

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    Lol! Outsiders can yap all they want but the reality is when it starts hitting your wallet. $2Trillion is nothing to laugh at. I’m sure the guy above with the 300 can tell you that. We can shrug it off but remember that’s a lot for someone in China.
     
    Last edited: Jul 15, 2018
  15. faithfulguy

    faithfulguy ELITE MEMBER

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    Well, would you recommend that it’s time to buy?

    When will the world realize that there are two economies that are too big to crash. And there are lots of reports and books on these two crashing. But the reality is that it’s everyone besides these two that are more likely to crash.

    Do you see anyone care to predict the collapsed of Indian economy?