Did China's Stock Market Crash Just End Economic Reform?

  • Posted by a hidden member.
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    Jul 06, 2015 5:12 PM GMT
    The beauty of markets is that they have a mind of their own. For the Chinese government, this has been a tough pill to swallow.

    Try as it might, the Chinese government was unable to arrest the decline in the domestic stock market last week. The central bank cut benchmark interest rates and the amount of money banks must keep with it on reserve. A government investment vehicle made it known that it was buying ETFs. The securities regulator eased regulations on margin trading and the Stock Exchange cut transaction fees. Despite this, the benchmark Shanghai Composite Index declined 12% over the course of the week, bringing the total decline since June 12th to more than 28%.

    http://www.forbes.com/sites/oliverbarron/2015/07/05/did-chinas-stock-market-crash-just-end-economic-reform/

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  • WrestlerBoy

    Posts: 1903

    Jul 07, 2015 2:55 AM GMT
    If there ever was an elephant in the room, China is it. While most of the world's newspapers were concentrating on Greece, this all sort of got by in much smaller "headlines".

    China is the biggest smoke and mirrors act around: they've got no money; businesses are "owned" by state banks - meaning they're not "owned", at all, in our sense, as they're not actually "businesses" - and if ANY OTHER market in the world had "performed" in the unfathomably disastrous way the Chinese market has in the last month, there'd be a global crisis of enormous proportions.

    Lesson: It doesn't matter how the Chinese market performs, because everyone knows it isn't a "market" to begin with.

    As one article in the FT put it, "Not to worry, valuations are still...FROTHY." LOL, you BET they are!!!!
  • Svnw688

    Posts: 3350

    Jul 07, 2015 5:39 AM GMT
    WrestlerBoy saidIf there ever was an elephant in the room, China is it. While most of the world's newspapers were concentrating on Greece, this all sort of got by in much smaller "headlines".

    China is the biggest smoke and mirrors act around: they've got no money; businesses are "owned" by state banks - meaning they're not "owned", at all, in our sense, as they're not actually "businesses" - and if ANY OTHER market in the world had "performed" in the unfathomably disastrous way the Chinese market has in the last month, there'd be a global crisis of enormous proportions.

    Lesson: It doesn't matter how the Chinese market performs, because everyone knows it isn't a "market" to begin with.

    As one article in the FT put it, "Not to worry, valuations are still...FROTHY." LOL, you BET they are!!!!


    Harsh but TRUE. The Chinese economy, despite how well "embraced" (begrudingly, and with good reason) it is by Western leaders, has always been a paper tiger (pun intended, since we humans consider paper to have value arbitrarily upon agreement). The 'red sea' is a player, but no more than Brazil or lately Russia (save it's nukes and an amazingly tone-deaf and bullish leader in Putin, it has no bargaining chip on the table). I am unaware of ANY law firm in the entire world that has an office in China. Please educate me if I'm wrong, because I'd be very interested to see how that happens. And "Veirins" firsm don't count.

    China is a player, but never was a major player. China consistently violates internationally respected IP law with abandon. China has no semblance of privacy or rights, despite it's "republic" and "Democratic" ostensible nomenclature.

    I simply can't with China anymore. "Smoke and mirrors" is an understatement. They ARE a major player, but The Economist, and other opiners have sorely exaggerated their presence and influence. It's akin to saying North Dakota is the new juggernaut in America because it's unemployment rate is so low. God bless China because we don't want to see them turn MORE towards the (increasingly desperate, poor and radical Russia). Sigh.
  • WrestlerBoy

    Posts: 1903

    Jul 07, 2015 6:30 AM GMT
    Oh there are LOADS of U.S. law firms with offices in Beijing and Shanghai, not to mention, of course, Hong Kong.

    I know half a dozen lawyers just in NYC who are on the plane every five minutes... to China.

    And you cannot get a seat on a plane from LA to Shanghai these days as every movie producer I know is ALSO on the plane to there every other week.

    (The Iranian, "non-Hollywood" LA biz community is also big on China).

    Do you think it's the Chinese, themselves, who know how all these "frothy valuations" work? We're the ones teaching them! icon_biggrin.gif

  • Posted by a hidden member.
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    Jul 07, 2015 4:11 PM GMT
    Svnw688 said... China consistently violates internationally respected IP law with abandon. China has no semblance of privacy...



    There is no IP law:
    -All it takes is an ugly PC burred anywhere on the planet to hack into anything. I think its France not China.

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    Jul 07, 2015 4:23 PM GMT
    WrestlerBoy said... China is the biggest smoke and mirrors act around: they've got no money; businesses are "owned" by state banks...


    This is an interesting thought.
    May be all totalitarian governments are paper thin. Almost better than nothing.
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    Jul 07, 2015 4:37 PM GMT
    WrestlerBoy said
    China is the biggest smoke and mirrors act around: they've got no money; businesses are "owned" by state banks - meaning they're not "owned", at all, in our sense, as they're not actually "businesses"

    What I don't understand, then, is how China can have billionaires, outside of Hong Kong. Or even millionaires. And how they've become a big market for Western luxury cars and other goods. The Chinese seem to have become personally affluent, as evidenced by being a big presence on the international tourist scene. How do "smoke and mirrors" and collective state ownership without real businesses fund that?
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    Jul 07, 2015 4:49 PM GMT
    China has a big population 1.3 billion (the America has 300 million).

    so if ~1% of their population can achieve some sort of wealth (say a million $USD) they have more active millionaires than the us has total population. Something like that.
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    Jul 07, 2015 9:04 PM GMT
    China stocks fall again despite support measures
    Chinese stocks fell on Tuesday, taking little comfort from a slew of support measures unleashed by Beijing in recent days, and unnerved by Chinese Premier Li Keqiang's failure to mention the market chaos in a statement on the economy.

    Qi Yifeng, analyst at consultancy CEBM, said government measures were not strong enough to reverse the downtrend, especially as it was a liquidity issue for many who had borrowed to buy shares and were now forced to sell to meet margin calls.

    "It's just a matter of whether it will fall more slowly, or continue to slump in freefall," he said.
    http://www.reuters.com/article/2015/07/07/us-china-markets-idUSKCN0PH08Q20150707

    Ordinary people borrowing to buy shares? This has a whiff of Wall Street Crash about it. While I think the Chinese government could do with its wings clipping, I hope for the sake of ordinary Chinese folk it doesn't come to that.
  • metta

    Posts: 39166

    Jul 07, 2015 9:47 PM GMT
    Wealthy Chinese Are Fleeing the Country Like Mad


    http://www.chinafile.com/multimedia/infographics/wealthy-chinese-are-fleeing-country-mad


    I have heard that China makes it really difficult to take assets out of China. I know someone that sold a home their for about $1 million and he had a heck of a time trying to bring that money back over here.

    I also read that is one of the reasons why art has been selling at such high prices.
  • WrestlerBoy

    Posts: 1903

    Jul 07, 2015 11:34 PM GMT
    Art_Deco said
    WrestlerBoy said
    China is the biggest smoke and mirrors act around: they've got no money; businesses are "owned" by state banks - meaning they're not "owned", at all, in our sense, as they're not actually "businesses"

    What I don't understand, then, is how China can have billionaires, outside of Hong Kong. Or even millionaires. And how they've become a big market for Western luxury cars and other goods. The Chinese seem to have become personally affluent, as evidenced by being a big presence on the international tourist scene. How do "smoke and mirrors" and collective state ownership without real businesses fund that?


    So you, too, have been conned into thinking that those, what, 2.4 million millionaires in China (including HK, btw) looks like....capitalism? 0.17% of the population? LOL





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    Jul 08, 2015 8:23 AM GMT
    China's stock market fall hits small investors
    They're migrant workers who arrived from Fujian Province five years ago and, through hard graft in their shop selling buttons to a bustling garment industry, they've saved themselves a tidy fortune.

    Then in May this year they ploughed a large chunk of it into the stock market, investing more than 200,000 RMB ($32,000: £20,000) into four separate stocks.

    "I've lost so much of the money that I've worked so hard for," she says. "Now I'm having to save and cut down on my spending. We don't earn much, it was all money from our hard work."

    http://www.bbc.co.uk/news/business-33425353

    Tragic.
  • WrestlerBoy

    Posts: 1903

    Jul 08, 2015 12:00 PM GMT
    Ex_Mil8 saidChina's stock market fall hits small investors
    They're migrant workers who arrived from Fujian Province five years ago and, through hard graft in their shop selling buttons to a bustling garment industry, they've saved themselves a tidy fortune.

    Then in May this year they ploughed a large chunk of it into the stock market, investing more than 200,000 RMB ($32,000: £20,000) into four separate stocks.

    "I've lost so much of the money that I've worked so hard for," she says. "Now I'm having to save and cut down on my spending. We don't earn much, it was all money from our hard work."

    http://www.bbc.co.uk/news/business-33425353

    Tragic.


    Tragic that the Chinese are completely addicted to gambling? Agreed.
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    Jul 08, 2015 12:20 PM GMT
    WrestlerBoy said
    Tragic that the Chinese are completely addicted to gambling? Agreed.


    Yes. There is certainly nothing wrong with speculating on the stock market once you have a decent cash savings buffer, but to borrow or use your main savings to gamble on a rising market is pure folly.
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    Jul 08, 2015 1:14 PM GMT
    WrestlerBoy said
    Art_Deco said
    WrestlerBoy said
    China is the biggest smoke and mirrors act around: they've got no money; businesses are "owned" by state banks - meaning they're not "owned", at all, in our sense, as they're not actually "businesses"

    What I don't understand, then, is how China can have billionaires, outside of Hong Kong. Or even millionaires. And how they've become a big market for Western luxury cars and other goods. The Chinese seem to have become personally affluent, as evidenced by being a big presence on the international tourist scene. How do "smoke and mirrors" and collective state ownership without real businesses fund that?

    So you, too, have been conned into thinking that those, what, 2.4 million millionaires in China (including HK, btw) looks like....capitalism? 0.17% of the population? LOL

    I didn't say capitalism, I referenced individual affluence. I also neglected to mention the example of Chinese buying up US real estate. Are you saying these people are fronts for Chinese banks, and hence the government? Nice work, if you can get it.

    And as far as percentages, those are unreliable, the Chinese system being largely inscrutable to the West, still shrouded in a Great Wall of Information Blockage. And since the Chinese population is roughly 5 times the US, that percentage you quote would make the actual number of millionaires begin to approach that of Western countries. Not bad only a few years after the Chinese economy was relaxed to allow limited privatization.

    But my point is, whatever the actual number, how are there ANY Chinese millionaires, if your model is correct? Where do they get their millions, if there are no true businesses? Do executive positions in China really pay that well?

    BTW, I read this morning that the Chinese market continues to tumble, despite additional government attempts to stabilize the situation. I read the total losses this year are now at $3 trillion.
  • Posted by a hidden member.
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    Jul 08, 2015 2:34 PM GMT
    Art_Deco said
    BTW, I read this morning that the Chinese market continues to tumble, despite additional government attempts to stabilize the situation. I read the total losses this year are now at $3 trillion.


    That is over eight times Greece's $356bn debt. Perhaps the Chinese government should have just bailed-out Greece and gained an instant ally in Europe. At least they would have had somewhere nice to escape to in the event of all those angry investors storming the Great Hall of the People.
  • tj85016

    Posts: 4123

    Jul 08, 2015 9:14 PM GMT
    lol margin call on the Chinese house of cards, Chinese ban stock selling

    http://www.bloomberg.com/news/articles/2015-07-08/china-bans-stock-sales-by-major-shareholders-for-six-months
  • WrestlerBoy

    Posts: 1903

    Jul 09, 2015 12:54 AM GMT
    Chinese stock market continues to tank. All NYSE trading suspended for three hours due to "computer glitch".

    Don't you just love it when they think we're this stupid???? icon_biggrin.gif
  • WrestlerBoy

    Posts: 1903

    Jul 09, 2015 12:56 AM GMT
    Art_Deco said
    WrestlerBoy said
    Art_Deco said
    WrestlerBoy said
    China is the biggest smoke and mirrors act around: they've got no money; businesses are "owned" by state banks - meaning they're not "owned", at all, in our sense, as they're not actually "businesses"

    What I don't understand, then, is how China can have billionaires, outside of Hong Kong. Or even millionaires. And how they've become a big market for Western luxury cars and other goods. The Chinese seem to have become personally affluent, as evidenced by being a big presence on the international tourist scene. How do "smoke and mirrors" and collective state ownership without real businesses fund that?

    So you, too, have been conned into thinking that those, what, 2.4 million millionaires in China (including HK, btw) looks like....capitalism? 0.17% of the population? LOL

    I didn't say capitalism, I referenced individual affluence. I also neglected to mention the example of Chinese buying up US real estate. Are you saying these people are fronts for Chinese banks, and hence the government? Nice work, if you can get it.

    And as far as percentages, those are unreliable, the Chinese system being largely inscrutable to the West, still shrouded in a Great Wall of Information Blockage. And since the Chinese population is roughly 5 times the US, that percentage you quote would make the actual number of millionaires begin to approach that of Western countries. Not bad only a few years after the Chinese economy was relaxed to allow limited privatization.

    But my point is, whatever the actual number, how are there ANY Chinese millionaires, if your model is correct? Where do they get their millions, if there are no true businesses? Do executive positions in China really pay that well?

    BTW, I read this morning that the Chinese market continues to tumble, despite additional government attempts to stabilize the situation. I read the total losses this year are now at $3 trillion.


    Because even THOSE millionaires are connected to the global market and have businesses in London and own half of the new apartments being built in Manhattan, that's how?
  • tj85016

    Posts: 4123

    Jul 09, 2015 2:15 AM GMT
    WrestlerBoy saidChinese stock market continues to tank. All NYSE trading suspended for three hours due to "computer glitch".

    Don't you just love it when they think we're this stupid???? icon_biggrin.gif


    gotta love a controlled "computer glitch" when the market gets dicey lol - what a scam this fake market is
  • WrestlerBoy

    Posts: 1903

    Jul 09, 2015 3:56 AM GMT
    http://www.theguardian.com/world/2015/jul/09/china-bans-major-shareholders-from-selling-their-stakes-for-next-six-months

    "China Bans Major Shareholders from Selling their Stakes for SIX Months"

    Looking any more like "smoke and mirrors" now? WHO is going to invest in a "market" when, on any old whim, a government can stop you selling what you own...for six months? Brilliant response!
  • Posted by a hidden member.
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    Jul 09, 2015 4:05 AM GMT
    JOKE!

    Not a free economy.
  • Posted by a hidden member.
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    Jul 09, 2015 4:44 PM GMT
    as with the US a tiny small percentage of Chinese are more free than most men.
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    Jul 09, 2015 5:45 PM GMT
    China's securities regulator, in its most drastic step yet to arrest a selloff on Chinese stock markets, banned shareholders with large stakes in listed firms from selling for the next six months.

    About 30 percent has been knocked off the value of Chinese shares since mid-June. Some investors fear that the turmoil in the Chinese market could destabilize the global financial system, making it a bigger risk than the Greek crisis.


    http://www.reuters.com/article/2015/07/09/us-markets-stocks-idUSKCN0PJ1AZ20150709
  • tj85016

    Posts: 4123

    Jul 09, 2015 10:35 PM GMT
    the funny thing is: China isn't doing anything new here that the US, Britain and Japan haven't done with their markets when markets tank