Chinese Stock Markets Are in the Middle of an ‘Unprecedented’ Slide

[Aepsilons]

Greek vote in less than 13 hours, If Greek votes oxi (no) to EU Bailout then lets just it would be very interesting. I expect a major setback to world economy and EU in particular and Greek exit from EU is certain.

Monday is gonna see a huge flight to quality (US bonds) when you combine this with investors pulling out of China

Its going to be an INTERESTING day in the stock market this Monday, buddy.

PS. There goes the effort in trying to raise the RMB as a global currency. This recent collapse of up to $3.7 Trillion shows just how volatile the Chinese market really is. Investor confidence has been, unfortunately, diminished. Expect a more conservative , concerted response in China stocks in long term.

Let's hope policy can help.

 

[cnleio]

Clash is a good news to me...When 2008 China stock market drop from 6000 to 1800, i watched it ... when 2015 drop from 5100 to 3800 i watching it ... China still there, the only changed is the bubble. The clash is another opportunity for us ... next something will become cheaper, i get my money ready for it.

 

[Spectre]

Its going to be an INTERESTING day in the stock market this Monday, buddy.

PS. There goes the effort in trying to raise the RMB as a global currency. This recent collapse of up to $3.7 Trillion shows just how volatile the Chinese market really is. Investor confidence has been, unfortunately, diminished. Expect a more conservative , concerted response in China stocks in long term.

Let's hope policy can help.

I predict the opposite, but i often take the contrarian view. It's almost certain that you would see an appreciation of 40-50% by August end in stock market. I won't comment on how artificial and state driven it would be because that would rile up our Chinese friends over here.

 

[NiceGuy]

Great Flood? What an interesting association, buddy.

Bro., I still remember what happened during 1997 Asian financial crisis in Indones-Thailand-SK and even JP, thats was a horrible period . CN economy luckily did have big trouble in 1997, but now, it will face wt this Great floor that will flush away everything they've earned since 1979

 

[Aepsilons]

I predict the opposite, but i often take the contrarian view. It's almost certain that you would see an appreciation of 40-50% by August end in stock market. I won't comment on how artificial and state driven it would be because that would rile up our Chinese friends over here.

My professional conjecture is that the CCP will inject $1 Trillion of FOREX to stabilize the market. Again this is a quick fix, unless they solve the core problem, this will only be a short term solution for a long term gargantuan problem.

 

[cirr]

What crash？

Any market that went from 2000 to 5200 in 10 months needs a healthy correction。

 

[Aepsilons]

Bro., I still remember what happened during 1997 Asian financial crisis in Indones-Thailand-SK and even JP, thats was a horrible period . CN economy luckily did have big trouble in 1997, but now, it will face wt this Great floor that will flush away everything they've earned since 1979

Yes, you're right, my friend. The 1997 Asian Financial Crisis was indeed a lesson for all of us on the valuation of currency at current state. Tho i think Japan was not that much affected as say South Korea, Taiwan and the rest of ASEAN. It was affected as a creditor nation had to loan substantial amount of capital to Thailand, Vietnam, Malaysia, Thailand during that fiscal year through the ADB.

What do we learn from this? It is important to build one's currency reserves as well as introduced the culture of foreign currency swaps. I think we are seeing this now, however, those alone will not protect economies in the region of an economic meltdown that may be precipitated with China's current economic....situation.

 

[cirr]

Article is very well written, I just hope China economy crash should have minimum effect on other Asian Economies, it should not trigger another Asian Financial Crisis

Don't worry。

The Chinese stock market index went from 6150 to less than 2000 in a year（Oct。2007-2008） and the real economy barely blinked。

Not to forget that the global economy went into a tailspin thanks to the financial crisis in the US at the same time。

 

[NiceGuy]

What crash？

Any market that went from 2000 to 5200 in 10 months needs a healthy correction。

I bet that it will go below 2000 no matter how hard Cn govt. try to raise it up. All investors wanna get the hell out of CN bcz CN is not a TPP member , so they have to leave CN to avoid the high tax they must pay when exporting goods to TPP member like USA-Australia

 

[tranquilium]

Its going to be an INTERESTING day in the stock market this Monday, buddy.

PS. There goes the effort in trying to raise the RMB as a global currency. This recent collapse of up to $3.7 Trillion shows just how volatile the Chinese market really is. Investor confidence has been, unfortunately, diminished. Expect a more conservative , concerted response in China stocks in long term.

Let's hope policy can help.

Nah, RMB as a global currency and the stock market are two separate things. They are remotely related like all subjects in today's interconnected world, but only remotely.

The push for RMB as global currency is backed by the industrial production capacity of China and its ability to provide goods. After the reason you hold a currency is that you expect this currency can be traded for something of value. Secondary to production capacity is military might which ensure the country remains stable and capable of maintaining its influence.

Stock market is a place where a company can raise capital, but after the initial deployment, the subsequent trade doesn't actually generate value, nor does it boost the company's product capacity. (Okay, it does somewhat, but only through secondary effects such as attracting investor to buy new shares, but the original share doesn't actually generate direct value in the subsequent trades)

Consequently, a stock market plunge has no immediate impact on a nation's influence. US stock market has great crushes on generational basis and it haven't affect its status as reserve currency.

 

[Aepsilons]

Nah, RMB as a global currency and the stock market are two separate things. They are remotely related like all subjects in today's interconnected world, but only remotely.

The push for RMB as global currency is backed by the industrial production capacity of China and its ability to provide goods. After the reason you hold a currency is that you expect this currency can be traded for something of value. Secondary to production capacity is military might which ensure the country remains stable and capable of maintaining its influence.

Stock market is a place where a company can raise capital, but after the initial deployment, the subsequent trade doesn't actually generate value, nor does it boost the company's product capacity. (Okay, it does somewhat, but only through secondary effects such as attracting investor to buy new shares, but the original share doesn't actually generate direct value in the subsequent trades)

Consequently, a stock market plunge has no immediate impact on a nation's influence. US stock market has great crushes on generational basis and it haven't affect its status as reserve currency.

Great points, but the point I'm stressing is the confidence in relation to the US Dollar. I think that is ever so clear , especially now. Just my view. I could be wrong.

 

[NiceGuy]

Yes, you're right, my friend. The 1997 Asian Financial Crisis was indeed a lesson for all of us on the valuation of currency at current state. Tho i think Japan was not that much affected as say South Korea, Taiwan and the rest of ASEAN. It was affected as a creditor nation had to loan substantial amount of capital to Thailand, Vietnam, Malaysia, Thailand during that fiscal year through the ADB.

What do we learn from this? It is important to build one's currency reserves as well as introduced the culture of foreign currency swaps. I think we are seeing this now, however, those alone will not protect economies in the region of an economic meltdown that may be precipitated with China's current economic....situation.

What we also can learn from this is that Big-Strong nation (like US) always make the rules and he's always WIN.

So, if u dont wanna be a loser , u should try to become a big-strong nation (or big-strong association ) to win the game

 

[ito]

Guy, you make it complex, I am well in finance, but know a little, below is my opinion, if wrong, correct me:
1.what's stock market: Stock is a market, that let company collecting money for company developing through stock exchanging, first, stock itself is not unvalued, but because it can exchange, it has price, like currency.

2.The company which IPO get the first benifit from the stock market: When a company start IPO, the instituation(A) and public(B) can buy the share through Primary and secondary market that you said( Normal public can't buy it through Primary market), if the company have 1 million shares, assume that, each share's price is $20(In fact, in primary, you can get it cheaper, for simple, let's set it $20), and in fact, in the 1 million shares, many are owned by company owner(No exchange frequentarily generally) , assume about 0.5 million, so the company get about 10 million$, instituation and public lost 10 million$, but they have shares.

then instituation and public exchange the share in the secondary market, if the share price up to 30$, C buy them, so till now: Company get 10 million, the A and B earn 5 million, the C spend 15 million on these, the C's wealth is distributed to Company, A, B, the whole wealth is 15 million( If you want caculate the 0.5 million shares owned by company owner, the whole value is from 20 million to 30 million).

Then if the share price to 10$, C sell it to D, C lost 5 million$,the price of 0.5 million shares is down from 15 million to 5 million right. is 10 million disappear, no one get it? I don't thing so, from IP, Company earn 10 million, A and B earn 5 million, D lost 10 million, and value of 0.5 million is 5 million: 10(Company earned) +5( A and B earned) = 10( D lost) + 5 (Value of 0.5 million). it is wealth transfer, not disappear.

The $3.7 trillion has been took by others before falling.

You are right on stock market to an extent. Stock markets are where stocks are bought and sold for a price. The price is set by the demand for the particular stock from the buyers.

IPO are issued in primary markets by the company. General public and financial institutions can buy them. IPO are not brought in secondary market.

Just because you are buying an IPO doesn’t mean they are cheaper, but generally IPO are cheaper than when they are traded as share in secondary market.

If 1 million shares are issued and if the ‘owner’ owns .5 million and public own .5 million at $ 20. The company as a whole gets $ 20 million. There is no more ‘owner’ in a public company. Anybody who owns a share is the ‘owner’ of the company and they are called shareholders.

Once the IPO is complete, and the shares are traded in secondary markets, then company doesn’t get any money from the price increase. If C buys a share for $ 30 from B, the $10 is the profit that B gets from selling the stock.

If price of the share fells to $10, and C sells the share to D then C lost $20.

LOL

Not only a wannabe expert that you are, but also lacking comprehension of English. Where did I say that I'm an expert?

How about I exposed you what you really are: a braggadocio.

Let me help you out. You paid 100 $ and gets a commodity that you thought was worth 100 $ but it turns out to be only worth 70 $, you lost 30 $, who gained 30 $ (actually it's more than that)? Got it, Mr. Wannabe-Expert?

First learn 101 on stocks and come and discuss with me. Your knowledge on finance and investment is zero. And please don't ask idiotic questions.

 

[Aepsilons]

What we also can learn from this is that Big-Strong nation (like US) always make the rules and he's always WIN.

So, if u dont wanna be a loser , u should try to become a big-strong nation (or big-strong association ) to win the game

There is substance to this. Afterall, look what is happening to Russia, her being strangled slowly by Sanctions.

 

[Spectre]

Nah, RMB as a global currency and the stock market are two separate things. They are remotely related like all subjects in today's interconnected world, but only remotely.

The push for RMB as global currency is backed by the industrial production capacity of China and its ability to provide goods. After the reason you hold a currency is that you expect this currency can be traded for something of value. Secondary to production capacity is military might which ensure the country remains stable and capable of maintaining its influence.

Stock market is a place where a company can raise capital, but after the initial deployment, the subsequent trade doesn't actually generate value, nor does it boost the company's product capacity. (Okay, it does somewhat, but only through secondary effects such as attracting investor to buy new shares, but the original share doesn't actually generate direct value in the subsequent trades)

Consequently, a stock market plunge has no immediate impact on a nation's influence. US stock market has great crushes on generational basis and it haven't affect its status as reserve currency.

Correct analysis. Though i must say that stock markets are not completely divorced from industry and currency.

The stock prices put pressure on the companies and fall in values of the stock is often perceived as lack of performance by company. Please note I am talking about perception and not the reality but as they say economy is 50% perception.

A free falling stock market further puts pressure on currency as there would be flight to quality to EU and US bonds. This naturally would mean institutions would sell RMB in billions.

Your point towards the US stock market crashes are completely irrelevant. US is the unofficial Global currency and other currencies are pegged to dollar , in case of any crashes and yes even the US stock market crashes there is a movement towards US Govt. Bonds not Chinese or EU bonds which further strengthens the currency. Same thing happened in 2007-2008 at the peak of financial crisis while in case of China the capital will move out of the country.

RMB to achieve the status of USD would take decades and that too after complete convertibility. Till RMB stays controlled its unlikely to happen