China Stocks Plunge Into Bear Market | Latest (8/24): "Black Monday"

[blackzeus]

http://www.bloomberg.com/news/artic...ck-sales-by-major-shareholders-for-six-months

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.


“This is not something would happen in the U.S. or in any other developed market,” said Brian Jacobsen, who helps oversee $250 billion as the chief portfolio strategist at Wells Fargo Funds Management. “It does smell a little bit of desperation. But in China it’s a very unique system and they are taking unique steps to try to stop the drop.”

IPO Halt
The Shanghai Composite Index slid 5.9 percent on Wednesday as official attempts to stop the selling, including measures to prop up small-cap stocks, were overshadowed by data showing an unprecedented liquidation of margin trades on Tuesday.

Chinese authorities have also suspended initial public offerings, restricted bearish bets via stock-index futures and encouraged financial firms to buy shares. In perhaps the most dramatic effort to prevent investors from selling, local exchanges have allowed at least 1,331 companies to halt trading in their shares.

As the Shanghai Composite’s record-breaking boom goes bust, President Xi Jinping’s government is intervening in an attempt to prevent falling stock prices from eroding confidence in his leadership. The moves have cast doubt on the ruling Communist Party’s pledge less than two years ago to give market forces a bigger role in the economy, part of its largest reform drive since the 1990s.

Intervention Risk
China isn’t the only market with a history of state intervention. During the Asian financial crisis in 1998, Hong Kong’s government bought shares worth $15 billion to prop up the market. In the U.S., the Securities and Exchange Commission temporarily banned short selling on some shares during the global financial crisis in 2008.

“It may have a small impact in short term, but like all market manipulation, there will be a price to be paid later,” Gregory Lesko, a money manager at Deltec Asset Management LLC in New York, said by e-mail. “I recall a slew of short selling bans during the financial crisis. Nothing saved the day.”

Under current mainland rules, a single foreign investor can own as much as 10 percent of a company’s issued shares, according to the Hong Kong stock exchange’s website. International funds have gained unprecedented access to the Shanghai market through an exchange link with Hong Kong that began in November, and authorities have said they’re planning a similar link with China’s smaller bourse in Shenzhen this year.

Selling Pressure
MSCI Inc., whose indexes are used to benchmark an estimated $9.5 trillion of assets, cited China’s capital controls as a reason why mainland shares were left out of its global equity gauges in June.

Foreign investors have sold a net 33.4 billion yuan ($5.4 billion) of Shanghai shares through the city’s exchange link in the past three days. China has allocated investment quotas of about $138 billion through its so-called QFII and RQFII programs for foreign money managers, which include BlackRock Inc. and HSBC Global Asset Management.

“The extent to which they can apply this to foreign ownership interest remains to be seen,” Jacobsen said. “But to me they are grasping the straws to find a way to stop the selling pressure.”

Me love you long time for real, China is on some blood in blood out sh*t

 

[88m3]

was just reading that

 

[Big Jo]

holy

 

[Robbie3000]

make people go down with the ship brehs.

 

[Liu Kang]

@Scientific Playa, considering there have been numerous threads about China lately, I merged em all into yours and decided to sticky it. Feel free to edit the title if you feel like it.

 

[blackzeus]

make people go down with the ship brehs.

We go down together type sh*t

 

[tru_m.a.c]

This may be a stupid question but how does wealth disappear? Is someone lying on accounts or stealing money or siphoning it? I imagine all of those are true. Also could this affect the USA's debt to China? There have been rumblings on the Coli about China wanting to collect for over a month now

Much of that wealth is just paper money. It's no more realistic than its calculation. The "actual value" is "realized" when the money is taken out.

 

[newworldafro]

China stock market plunges on the same day .......

http://www.cnbc.com/id/102806720

http://www.prisonplanet.com/n-y-stock-exchange-shuts-down.html

N.Y. Stock Exchange Shuts Down

• 

“NYSE/NYSE MKT has temporarily suspended trading in all symbols,” stock market says

Prison Planet.com
July 8, 2015

The New York Stock Exchange was temporary halted due to an alleged “technical issue.”

“NYSE/NYSE MKT has temporarily suspended trading in all symbols,” the NYSE said in a statement. “Additional information will follow as soon as possible.”

Art Cashin, director of floor operations at the NYSE, told CNBC it had been a “bumpy day” before the stock market was shut down.

“We had some technical problems even before the opening,” he said.

The suspension of trading, however, will no doubt fuel concerns whether other factors also influenced the decision to pull the plug.

 

[Cynic]

Because it's all paper breh. Think about paper currency like your favorite has been rapper. Once Ja Rule lost his following, what was his club appearance worth? Same with paper currency, once it loses it's following it literally goes to zero overnight, similar to Ja Rule, Limp Bizkit, Taye Diggs, etc etc. The people with land, gold, and animals never go broke, because their wealth is not in a piece of paper.

Eike Batista is the best example of this......

 

[mson]

We go down together type sh*t

Kamikaze style.

 

[☑︎#VoteDemocrat]

Amazing Economist Article:











Uncle Xi's bear market
China learns that stocks are beyond the Communist Party’s control
Jul 8th 2015 | SHANGHAI | Online extra

• 

BEFORE it met a violent end last month, China’s stockmarket rally was more than just your run-of-the-mill mania. It was political. Many investors called it a “state bull market”, believing the government was firmly in control, guaranteeing that shares would only go up. Others said it was an “Uncle Xi Bull Market”, as if it were a gift from China’s top leader, Xi Jinping. State media lent its official imprimatur to the frenzy: a People’s Dailyeditorial in May, shortly before the bubble popped, predicted the good times were just beginning. Buying stocks “is buying the Chinese dream”, proclaimed a top brokerage.

World markets

• Asia-Pacific markets

• Chinese markets

• Business

• Financial markets

The plunge of nearly one third over the past four weeks has left the dream in tatters. Although the market is still up by 75% over the past year, many mom-and-pop investors were late to the party. Less than a fifth of respondents to a large online survey by Sina, a web portal, reported making any money off stocks this year.

For the government, the fall is damaging. Officials are seen to have promised the population a bull market, only to lure them into a bear trap. A flourishing of gallows humour in mobile-phone chat groups captures the sentiment. “Friends, don’t run, we’re here to save you,” cry the valiant soldiers in one joke, representing the state coming to the aid of the beleaguered market. Their refrain soon turns to, “Friends, don’t run, or we’ll shoot you.”

The warning signs had been flashing for some time. ChiNext, a board for high-growth companies, reached a price-to-earnings multiple of more than 150 at its height in early June, in the same region as American tech stocks during the dot-com bubble of the late 1990s. When share prices started falling, many assumed that regulators would stay on the sidelines and let the necessary correction unfold. But they lost their nerve after the market fell nearly 20% and negative headlines started to pile up, even in the domestic press.

Attempts to steady the market have been frantic and futile. Interest-rates have been cut; short-selling capped; IPOs halted; share-buying schemes, backed by central-bank cash, hatched. “We have the conditions, the ability and the confidence to preserve stockmarket stability,” blared the People’s Daily. Still the rout has continued.

The CSI 300, an index of China’s biggest-listed companies, fell 18% in the eight trading days after the rate cut. Some $3.5 trillion was erased from China’s stockmarkets, more than the entire value of all listed firms in India. By the end of July 7th trading in over 90% of Chinese stocks had been suspended, either at the request of the firms concerned, or because they had tumbled by the daily limit of 10%. “The government won’t let us take our money out of the market, and we don’t have the confidence to put any more into it,” said Wei Xinguo, a chef at a noodle restaurant in Shanghai and one of the country’s 90m stockmarket investors.

The preponderance of punters like Mr Wei makes Chinese stockmarkets volatile. Retail investors account for as much as 90% of daily turnover—the inverse of developed markets, where institutions dominate. But the government’s inability to calm things down despite such heavy-handed intervention is unprecedented. It stems from the degree to which the rally was predicated on debt.

At its peak, margin financing reached 2.2 trillion yuan ($355 billion), or about 12% of the value of all freely traded shares on the market and 3.5% of China’s GDP. Both figures are “easily the highest in the history of global equity markets”, according to Goldman Sachs. With Chinese shadow banks and peer-to-peer lenders also offering cash, the amount of leverage in the market was even higher. That helped propel the original rally. It is now compounding the downturn, as investors scramble to sell their holdings to cover their debts.



China's panicked market interventions are about politics, not economics
The sharpness of the slide has raised worries that Chinese growth itself is about to fall off a cliff. Mercifully, the stockmarket appears to be as disconnected from economic fundamentals on the way down as it was on the way up. At the same time as shares nearly tripled from the middle of 2014 until early June, China slouched to its slowest year of growth in more than two decades. In the past couple of months, the economy has actually started to improve. A burst of fiscal spending on infrastructure looks to have stabilised the industrial sector, while property prices, long in the doldrums, have started to tick up again.

The stockmarket is still just a small part of the Chinese economy. The value of freely floating shares is about 40% of GDP, compared with more than 100% in most rich countries. Stocks account for just 15% of household assets, so their slump should have a limited impact on consumption. The systemic consequences of the margin debt are also limited. The funding has come from brokers, not banks, and equates to less than 1.5% of total bank assets.

There will undoubtedly be some spillover from the panic. Futures contracts for raw materials from lead to eggs fell by their daily limit on July 8th as investors rushed to get their hands on cash. On international markets, the price of iron ore, which China consumes the bulk of, slid. Yet risks of a systemic nature remain remote.

The longer-term consequences could be severe, however. Like any big, sophisticated economy, China needs a healthy, functioning equity market. For investors from households to pension funds, stocks should, in theory, provide a better return over time than low-yielding bank deposits. For companies, equity financing would be an alternative to borrowing from banks, helping reduce their reliance on debt. The scrutiny and rules that come with a share listings should also help improve corporate governance.

Before the crash, China was inching towards reforms that would fix at least some of the distortions in its market. A programme launched last year connected markets in Hong Kong and the mainland markets. Though subject to strict quotas, it promised to introduce more of an institutional presence on China’s exchanges. Regulators had stepped up supervision of insider trading and had also planned to change the way initial public offerings work, giving companies more control over the timing and size of their listings. But as the government’s all-out, if ineffective, response to the crash shows, it is reluctant to cede control.

Meanwhile, the crash has scarred a generation of investors. Xu Pengfei, a 25-year-old fitness coach, put 100,000 yuan in the market in April, two months before the crash. He cashed out this week and plans to stay clear of stocks for a while. “I don’t have much faith now.”

 

[☑︎#VoteDemocrat]

Much of that wealth is just paper money. It's no more realistic than its calculation. The "actual value" is "realized" when the money is taken out.

 

[Domingo Halliburton]

After dozens of separate interventions, manipulations, and central-planning machinations over the past three weeks, China resorted to threats overnight when it called for the arrest of "hostile short sellers." The reason they went full Orwell, this is the great loss of 'wealth' in China's history...







China's $2 trillion loss in 17 days is the equivalent of 1 India, or the equivalent of 15 Greeces in market cap.

In other words, China has to stop the bleeding before it loses another India... or the socially-unrest citizenry will demand gambling returns elsewhere or, absent hope, demand change...

until they liberalize markets the Yuan will not be a reserve currency. they're now threatening to arrest short sellers

 

[Ed MOTHERFUCKING G]

this is a shockingly appropriate image to sum up the situation

 

[ill]

http://www.bloomberg.com/news/artic...ck-sales-by-major-shareholders-for-six-months
China Bans Stock Sales by Major Shareholders for Six Months

@Domingo Halliburton This has a bubble-popping crash written all over it. When they're banning big players from selling in order to prop up the falling equities market, that just screams red flag to me.