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

[Luca1]

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.

I believe the yuan is still kept artificially low by theChinese gov. It will continue to appreciate against USD. Because of economic fundamentals.

 

[Spectre]

I believe the yuan is still kept artificially low by theChinese gov. It will continue to appreciate against USD. Because of economic fundamentals.

If that happens it would further compound the problem as exports would become noncompetitive and exports are one of the major things propping up Chinese economy. To be fair to Chinese they are stressing on increasing share to be provided by domestic consumption but as things stands now if Yuan appreciates its gonna be a problem for Chinese.

So Yuan won't appreciate

 

[F-22Raptor]

China curbs IPOs, enlists brokers in all-out bid to end market rout| Reuters

Time to panic?

 

[DarkElf]

Over $200k (USD)

Well, to be honest im glad i didn't go into real estate as what some of my friends did. I've got some friends who bought condo properties in Ningbo , i don't know how the property value will be affected, but yea, for some of them, they put in over ¥ 60 million (that's roughly over 500k USD). So you can imagine...the worry.

Its tempting not to panic, lol. From my portolio's end --- looks like the pharmaceuticals sector isn't affected. But yea....worried? Yes, i am.

Read more about China in business week, they are getting better about China now. At least this time their timing is impeccable. Thank to their articles warning, I pull out 1-2 week before the current crash.

 

[Aepsilons]

Read more about China in business week, they are getting better about China now. At least this time their timing is impeccable. Thank to their articles warning, I pull out 1-2 week before the current crash.

You pulled out?!?!

I am hesitant to leave. Why?

I can't get out yet!!!!

 

[F-22Raptor]

China's market collapse could play havoc with Premier Li Keqiang's economic reform model

The mainland stock market crash has been a bitter pill for the real economy, and will be a huge comedown for policymakers if they are forced to revisit Premier Li Keqiang's "new normal" growth plan for slower, healthier economic development.

Li, the first mainland leader to hold a doctorate (in economics), raised the profile of the capital markets after he took the helm of the world's second-largest economy in March 2013, encouraging technological startups to net much-needed growth funds on the stock exchanges and the over-the-counter markets.

"The market crash could dash the government's hopes for the stock market being an effective fundraising channel," said Wang Feng, chairman of Shanghai-based private equity group Yinshu Capital. "The worst is yet to come and it's nearly certain the collapse will hijack the originally planned policymaking."

Since June 15, the benchmark Shanghai Composite Index has plunged 29 per cent, sparking a crisis of confidence among investors who now believe the downward spiral will last some time .

Beijing stepped in to stem bloodletting on the A-share market, urging state-owned institutions to buy more stocks and cut transactions costs for shares trading, only to see skittish investors rush for the exit.

Yesterday the country's largest brokerages and mutual funds to work together to prop up the market, while 28 companies reportedly agreed to withdraw their IPOs. This came a day after the China Securities Regulatory Commission (CSRC) said it would slow down IPO approvals.

Zhang Xiaojun, a CSRC spokesman, said the commission would reduce the number of IPOs and the size of ths offerings to shore up investor confidence.

The regulator, which put IPO reform on the top of its agenda this year, was expected to embark on a registration system based on full disclosure of information. The new listings procedures, touted as the boldest move by the regulator in the history of the mainland's equity markets, were designed to unleash a flood of new share offerings to echo the premier's calls to bolster entrepreneurship and expand domestic demand. The CSRC has not published a clear-cut timeframe for the implementation of the new procedures, but they were expected to take effect next year.

"Apparently, the market collapse will deter the regulator from conducting major IPO reform," said Zhou Ling, a hedge fund manager at Shanghai Shiva Investment. "Severe losses by millions of investors in equities is a serious political issue, one that's much more urgent than the market reform."

Normally, the CSRC would suspend new offerings or slow down IPO approvals because they could siphon off liquidity from the existing holdings.

Indeed, a stock market crash would not only undermine a fundraising platform that could help conclude financing of hundreds of billions of yuan, it might turn out to be a rare setback for the incumbent cabinet, whose all-out efforts to drive the mainland economy through wide applications of internet technologies and promotion of customer-focused business models appears to hit a stumbling block.

"It will prompt the leadership to reassess the effectiveness of the policymaking," said Orient Securities chief economist Shao Yu. "The government needs to re-work the policy to find out which element they should focus on now, whether it's opening-up the financial markets, the innovations, or the risk-control."

Before the crash, the Cabinet regarded the A-share market as a catalyst for the real economy, where companies could raise capital for innovation.

In March, Zhou Xiaochuan , governor of the People's Bank of China, acknowledged the positive role of the stock market when he said that eased monetary policy that directed massive flows of funds to equity exchanges could eventually support the real economy as capital infusions found their way to oil companies and food processors.

"A buoyant market on a solid footing could be a reliable funding source," Howhow Zhang, head of research at Z-Ben Advisors, said. "But a roller-coast market doesn't work."

The stock market crisis exacerbated the overall bleak economic outlook as Beijing strives to sustain stable growth to avoid massive layoffs.

The HSBC/Markit Purchasing Managers' Index, a gauge of China's business activity in service sector, fell to 51.8 last month, from 53.5 in May, hitting its lowest since January. A figure above 50 represents positive sentiment; below 50 reflects pessimism.

Global consultancy McKinsey, however, allayed fundraising concerns, underscoring the importance of cultivating talent and turning research into commercially viable products.

China's market collapse could play havoc with Premier Li Keqiang's economic reform model | South China Morning Post

 

[大汉奸柳传志]

Wow didn‘t know theres so much global attention.

Well some call it collapsing，I call it hard de-leveraging.Bottom line is the market cannot afford to go beyond 6000 with so many running at 1：4 or 1：3 leverage. I am with the govt this time.

 

[Aepsilons]

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

Great analysis, buddy.

 

[cnleio]

Foreign hot money will die in China stock market, the CCP get ur money via China stock crash... the money into the market after 4000 point, all no chance to escape ... but most Chinese stock players started from 2000 point, still have benefits left ... as far as i said, this hot game finished, China stock will return 3000 point...foreign hot money leave in China now.

 

[Aepsilons]

Foreign hot money will die in China stock market, the CCP get ur money via China stock crash.

lol, what?

 

[cnleio]

lol, what?

nothing new here, bro. In 2008 China stock market drop from 6100 to 1800，and 2015 drop from 5100 to 3000+ ... not a big deal in China, CCP won't save the market, the only purpose is to leave foreign hot money in China. In CCP's stock market, those foreign money become CCP's money and u got some crashed stocks, a truth.

 

[Aepsilons]

nothing new here, bro. In 2008 China stock market drop from 6100 to 1800，and 2015 drop from 5100 to 3000+ ... not a big deal in China, CCP won't save the market, the only purpose is to leave foreign hot money in China. In CCP's stock market, those foreign money become CCP's money, a truth.

Well, in 2009, one of the large effects was job shedding, bro. Hundreds of thousands of jobs were shed. Let's hope the same doesn't happen. Either way, if China goes down, we're (Japan) going to get hit.

 

[cnleio]

Well, in 2009, one of the large effects was job shedding, bro. Hundreds of thousands of jobs were shed. Let's hope the same doesn't happen. Either way, if China goes down, we're (Japan) going to get hit.

2015-2016 we might repeat 2008 economic crisis, the only difference this time China economy will get hurt too ... World Economy will worse than 2008. If BeiJing can't deal with it carefully, whole Asia economy will get hit badly...

Just Watch -!

 

[TaiShang]

Well, in 2009, one of the large effects was job shedding, bro. Hundreds of thousands of jobs were shed. Let's hope the same doesn't happen. Either way, if China goes down, we're (Japan) going to get hit.

 

[hans]

In China the problem of economy is how fast it grows..
If there is an economy crisis outside, the economy will only slow down.
It never goes downwards...

Well, in 2009, one of the large effects was job shedding, bro. Hundreds of thousands of jobs were shed. Let's hope the same doesn't happen. Either way, if China goes down, we're (Japan) going to get hit.