End of the China bull?

[waterbottle]

Most markets have some sort of limit down amount on stocks and futs. But this is being handled about as bad as it could be. If you did have holdings in stocks that still are trading you would be thinking of pulling out now while you can.....

Cheers TH. Why do you say it's being handled badly? Is it because they've left it too late to really do anything?

Also, is anything stopping them from implementing further stimulus?

 

[rimtas]

Today on the news is all about China and it's crashing stock market. One commentator even said that chinese authorities are rising a question maybe there is some sort of manipulation and this needs to be investigated.
No one bothered about "manipulation" when stocks rose more than 100% in a year, but when they started to decline, suddenly this appeared as "not normal".

Today more than 1000 companies suspended their share trading, thinking that they will avoid further falls. The desperation for up trend to continue is so strong, that measures taken are anecdotal. They even think that throwing 100billions to buy shares will work and stop or even reverse a decline. When in fact no one is bigger than a market, and all those shares in a suspended state will open with massive gaps to adjust to the market when trading is enabled again.

Recent news that are floating in mass media usually appear only in two places-either at the bottom of the correction, or close to the Point of Recognition, which marks that the crash is only in the early stages. And from the technical perspective this makes sense-almost entire extended Wave (5) has been retraced, which is a norm. Prices are just a fraction from the area where the Bottom of the correction usually occurs, and if they find support here and rally, the crash should be postponed. Of course Chinese later say that "measures to protect the crash from happening worked", which in fact not, as market crashed already.

So from this point conditions and sentiment for a bottom are good, but if Market tanks below Wave (4) extreme of ~3100, consider that Chinese stock market is poised to go all the way to 1000.

 

[Tyler Durden]

No one bothered about "manipulation" when stocks rose more than 100% in a year, but when they started to decline, suddenly this appeared as "not normal".

This is a very good point. I guess when money is coming in, whether it be by way of cheap loans or 'increased valuations', everyone is happy and not too many questions are asked. But when people start losing money, then everyone starts pointing fingers at everyone else.

On another point, it is interesting to see China be so involved in their stock market. I mean, aren't stock markets supposed to be 'free'? A market isn't left to its own devices if there are constraints such as limiting the value of a share decrease to 10% a day, or implementing trading halts for the sole purpose of stopping a slide.

 

[waterbottle]

A post from the Chinese section of reddit (social media) about how this is being handled in China:

In China's 股市:贴吧, a China's version of reddit(with Chinese characteristics), there exists a subreddit that is themed on and about China's stock market. The way the Chinese think about stock market is totally different from us, and I think their point of views on a few topics are quite interesting:

Why are the stock market dropping?

c110972 says: Today, we reap what we sow yesterday. Let's start with the investigation on margin trading. In the past, when in bull market, margin trade investigation will at best create a single 10% mid-term drop. No matter what you do, even with stamp duty and super short sell, still we won't be able to create the drop like today. China stock market is a super mutant. Stock market value very high, dividend very low. Most stock do not have investment value, everyone are speculating on rise and drops, no different from casinos. The only function of the stock market, is to allow companies to create gambling chips for people sell into the stock market for real cash, it doesn't matter what the chips are made out of.

For those who can read Chinese, you can see people's replies in here, most agree with him, however, pes2068 says other wise:

The country is busy with AIIB, China's stock market tanks, is this a coincidence? Of course not, it's the American and Japanese's fault! Every country are watching us, we must win this war on finance! The index is the key, we win, AIIB can open successfully! Today the big companies are showing signs of weakness, oil, bank, insurance and broker firms are starting to protect their share prices, all the data shows that our country is very efficient at handling matters when the stock market crises happen, showing responsibility worthy of this great country! To be a children of Chinese we can deeply feel the love and bountifulness of this land. When small time investors are under fire from the stock market crises, the regularities, broker firms, stock funds have joint hands to launch a unionized assault, protecting the share prices together. Central bank is giving stock broker liquidity support. Do not fall before sun rise! Believe in the capability of the government in saving the stock market! It is the Chinese government, with guts and capabilities, who will protect the small investors of our motherland time and time again. Believe!

Sorry, I need to take a break to laugh, more translations coming

What are we gonna do when the stock market tanks?

winnie200 said:

Citizens of China need to unite together! To protect the chinese stocks is to protect yourself! Buy!

Instead of insulting you should unite, support china! The stock market crisis is going to affact everyone!

The next step of a financial crisis, not only investors and financial institutes will be the ones negatively affected. A lot of physical will also be affected. Domestic demand will decrease, finance shrivel, exchange rate stability goes away, currency depreciate, first we will have deflation, then we will have bad inflation, every industry goes bankrupt, like what happened to Thailand and Korea in 1997. If this happen, will civil unrest happen? We can't imagine that. Under this condition, our currency will no longer be any safe asset, we will have to accept a totally different lifestyle.

For the country, for yourself, everyone buy 100 shares!

The others do not quite agree. For example, fly飞翔的番茄 told winnie200:

OP should sell every he has, including his house, to buy in the stock market. If he doesn't, he is unpatriotic, nation traitor!

Full credit to notting for having picked this outcome :::

 

[CanOz]

On another point, it is interesting to see China be so involved in their stock market. I mean, aren't stock markets supposed to be 'free'? A market isn't left to its own devices if there are constraints such as limiting the value of a share decrease to 10% a day, or implementing trading halts for the sole purpose of stopping a slide.

Well Tyler, lots of 'free' markets have limits too, agricultural futures for example have daily trading limits. The US are no strangers to jumping into plunging markets, Google "plunge protection team"

CanOz

 

[notting]

Awesome they have commanded a 6 month bottom!!!

China on Wednesday said it was banning major shareholders, executives and directors of listed companies from selling any of their stakes for six months - the latest in long line of measures the country has introduced in recent days to stop a brutal market sell-off that has wiped more than $3 trillion of value off its main exchanges.

In a statement, the China Securities Regulatory Commission said investors who own stakes exceeding 5 per cent must maintain their positions.

The ban is aimed at safeguarding the market from what the regulator had earlier described as panic and irrational selling.

Now it's all in the hands of newbie small time retail investors.
I can stop taking acid my entertainment is well and truly back on!

 

[CanOz]

Awesome they have commanded a 6 month bottom!!!



Now it's all in the hands of newbie small time retail investors.
I can stop taking acid my entertainment is well and truly back on!

We've got to remember the date!

 

[Uncle Festivus]

On another point, it is interesting to see China be so involved in their stock market. I mean, aren't stock markets supposed to be 'free'? A market isn't left to its own devices if there are constraints such as limiting the value of a share decrease to 10% a day, or implementing trading halts for the sole purpose of stopping a slide.

No, they are not 'free'. Nor transparent. Nor fair. There are agendas at play by those who have the means and connections. Pick who they are and what they are trying to achieve and you can 'win' too.....until it all collapses. Start again with other peoples money.

All the players in a Ponzi are 'winning' on the way up. All markets are Ponzi's of one sort or another.

The US finally cracks under the weight of margin calls as well?

http://www.businessinsider.com/nyse-margin-debt-may-2015-2015-6?IR=T

 

[waterbottle]

Own 5% of a company or more? Well you can't sell!

China’s securities regulator banned major shareholders, corporate executives and directors from selling stakes in listed companies for six months, its latest effort to stop the nation’s $3.5 trillion stock-market rout.

Investors with stakes exceeding 5 percent must maintain their positions, the China Securities Regulatory Commission said in a statement. The rule is intended to guard capital-market stability amid an “unreasonable plunge” in share prices, the CSRC said.

While China has already ordered government-owned institutions to maintain or boost their stock holdings, the CSRC’s directive expands the ban on sales to non-state companies and potentially foreign investors who own major stakes in mainland businesses. Regulators have unveiled market-boosting measures almost every night over the past 10 days, steps that have so far failed to revive investor confidence. Foreign traders sold Chinese shares at a record pace this week in part due concerns over the government’s meddling in markets.

“It suggests desperation,” Mark Mobius, chairman of Templeton Emerging Markets Group, said by phone Wednesday. “It actually creates more fear because it shows that they’ve lost the control.”

Meanwhile, NYSE halts trading due to "technical issues"

 

[notting]

http://www.investmentnews.com/article/20150708/FREE/150709919/chinas-stock-market-meltdown-is-looking-like-a-buying-opportunity

 

[ROE]

Just dont buy more than 5% or you cant sell

 

[satanoperca]

Come on China, just rip that band-aid off quick and release all stocks suspended and get it over and done with.

Torture is less painful if it is down quick and fast, rather than slow and prolonged.

Tomorrow will be another day of taking a big breath of air before the next dive down.

On cue so far.

 

[notting]

On cue so far.

You bet -

Chinese Police Vow To Arrest "Malicious Short Sellers"

 

[notting]

China's total trade slumped in the first half of this year, official data showed Monday, far off the government's targets and dealing a blow to the global economy from the world's biggest trader in goods.

Two-way trade for the first six months of the year fell 6.9 percent to 11.53 trillion yuan ($1.85 trillion), the General Administration of Customs said.

Lucky you can't sell your shares!

 

[Tyler Durden]

http://www.smh.com.au/business/shar...-as-chinas-economy-slows-20150504-1myq9r.html

View attachment 62471

This was indeed a very true sign, as accurate as the shoe shine boy.

 

[waterbottle]

This was indeed a very true sign, as accurate as the shoe shine boy.

I'm pretty sure I've seen that photo before... Probably pre-2012 I think

CCP promised to control the markets and it looks like they have

 

[sydboy007]

http://www.bloombergview.com/articles/2015-07-13/two-scary-charts-about-china

As of December, the combined debts of households and non-financial corporations -- with the latter accounting for the majority of the total -- stood at 192 percent of gross domestic product, up from 118 percent before the 2008 financial crisis (and that doesn’t include as much as $4 trillion in local-government debt).

To a large extent, China can absorb losses by recapitalizing state-owned banks that run into trouble. Nonetheless, banks outside China are increasingly exposed: As of December, total foreign bank exposure to the country's government, banks and companies stood at $1.3 trillion, according to the Bank for International Settlements. That's down a bit from September, but still more than five times the pre-crisis level.

A Chinese bust could play out in several ways. It could be a long period of stagnation with a banking system paralyzed by bad loans, like Japan in the 1990s. Or if losses crystallized at a global systemically important bank, it could be more sudden and financially destabilizing. Or both.

 

[waterbottle]

http://www.bloombergview.com/articles/2015-07-13/two-scary-charts-about-china

1. If those foreign companies who were exposed to China go under, why would that affect China's bull run or ability to get back onto one?
2. $1.3 trillion doesn't seem like a large amount of money, given that it is spread over so many institutions and countries

Really, it's amazing the lengths to which the CCP have kept their markets afloat: Rate cut + drop in reserves over weekend; force brokers to start buying; ban selling of ~30-40% of market by major shareholders for 6 months; ban any negative talk about the sharemarket. All this earning them ~10% increase in the space of a week!

 

[notting]

Dictators doing all the buying today and 'the people' are doing all the selling!
It's been more mixed than that since they dictated the floor.
Looks like they will allow an orderly exit.

 

[notting]

"The People" not convinced by the GDP proclaimed by the dictators.



http://www.abc.net.au/news/2015-07-15/chinese-growth-based-on-money-from-thin-air/6622146?section=business