Thread: 'Don't Panic,' Say China's State Media, Amid Ongoing Market Mayhem

While most recent financial news has focused on the crisis currently facing Greece, another disaster is stirring further east that makes Alexis Tsipras's problems look like chicken feed.

Since the middle of June, the prices of Chinese company shares have fallen by 30 per cent. That amounts to around $3.2 trillion dollars that has been wiped off the stock market in only a few weeks.
It's hard to make sense of such a huge number, but this figure is higher than the UK's GDP in 2013, a comparatively modest $2.7 trillion.
The sudden drop in prices came after months of solid growth. Since November last year, Chinese stocks had more than doubled, largely due to small retail investors - 'mum and dad' investors playing the stock market - using borrowed money.
There are concerns that the Chinese government's response could be partially responsible for the sell-off.


Acting quickly to prevent a crisis by ordering brokerage firms to keep buying shares, suspending new share offerings, and keeping people from selling shares, the Government may have unintentionally provoked panic, with their large-scale response sending signals to inexpert investors that things are going wrong and it's time to take their money and run.
According to the BBC, around 80 per cent of investors in Chinese stock markets are small investors - individuals just looking to make a little money on the stock market.
Last year, the Chinese government, through its media outlets, encourages citizens to start buying more stocks, in an effort to boost the market. The campaign appeared to have an effect, but now it's causing more problems for the market.
Some commentators worry that these investors largely base their decisions on a herd mentality - and if people's friends and family start selling, it doesn't take much for a domino effect to occur where a lot of these investors start getting out of the market en masse.
Many Chinese investors are 'mum and dad' investors, buying small amounts of shares, with the aim of making a little money off the stock market. And while the rapid growth of the Chinese stock markets was a source of pride for the government and the nation's financial industry, it could have played a part in the current sell-off. Many investors, seeing the prices of their shares rocket in a fairly short period of time, were happy to take their money and get out once things started getting difficult. Again, as more investors do this and the stock market begins to fall, the effect is amplified.
Today, Chinese stocks continued to plunge, with CNN reporting that the Shanghai Composite plunged by eight per cent when the market opened this morning.
In a statement, the China Securities Regulatory Commission said: "At the moment there is mood of panic in the market and large increase in or irrational dumping of shares, causing a strain of liquidity in the stock market."

Despite the best efforts of these regulators to increase liquidity and restore investor's confidence, stock markets continue to fluctuate wildly, and many companies are suspending their shares, preventing them from being traded amidst the panic.
As of today, around 1,400 of the 2,800 companies traded in the country have decided to pull their shares to avoid taking damage.
However, it's a temporary fix, and when they resume trading, their problems could surface again.
Unless they manage to calm things down, China could be looking at a major downturn after months of massive growth.


China stocks: The financial crisis that has wiped $3 trillion off the stock markets - Business News - Business - The Independent

http://www.aljazeera.com/news/2015/0...012228346.html

China's market regulator has barred major shareholders and executives of listed companies from selling their shares for the next six months, it said in a statement, the latest government action to stem a slide in the markets.

these hedge funds are going to take a major haircut - wonder how many will fail because of this ruling - it will just cause more contagion

Originally Posted by Takeovers

Anyone who believes this will hurt China in the long run, is delusional

this is a growing pain that they had to have - unfortunately the rest of the world is going to have to have it with them

"If the Chinese government needs to use its resources to shore up the share market, the work that it has been doing in supporting jobs and construction will be more limited, so as a result there will be less building and there will be less demand for our commodities like iron ore and copper,"

http://www.xxx.xxx.xx/news/2015-07-0...t-rout/6605990

Originally Posted by Seekingasylum

The return of manufacturing to quality

not everything manufactured in china is destined for walmart - in my experience they were making international quality industrial equipment 10 years ago

Originally Posted by Takeovers

Maybe it gives the West time to breathe and come to our senses on many levels.

they will move more unskilled manufacturing to africa , only because wages will be cheaper ( an MBAs main claim to fame ) - lots of fabric factories there already

the west need to export more food to china - not franchises and tricky financial scams

boon me is going to delete snubbles' thread as there is already another one running

^Well here is a post I made, on it, mid deletion.

A true market showing that stocks, bonds, PMs and currencies go up and down. The Chinese have yet to master the "invisible political" buy/sell.

Somewhat different in the USA? If the markets show any inclination of dropping mysteriously the markets STOP. From yesterday's "free" market.

http://www.zerohedge.com/news/2015-0...-all-went-down



The "Historic NYSE Halt" Post-Mortem: The Shock And Awe When It All Went Down



"What began as a glitch in pre-market trading turned into the NYSE's longest trading halt since Hurrican Sandy battered the East Coast. The ever-increasing complexity of US equity markets combined with an ever-decreasing pool of greater fools leaves windows open on down days (for it appears these 'glitches' only ever occur on down days) for markets to break. While NYSE traders defended the very market structure they have abhorred in the past as evidence that today was "not a failure," we can't help but find CNBC's Scott Wapner's amusing remark that "if retail investors want low cost liquid trading they are going to have learn to live with it" the perfect post-mortem for a rigged system brimming with confident insiders ever excited to take mom-and-pop's money.

"Stocks rallied into the open while the NYSE was broken.
The issues were resolved shortly after the market opened... and stocks then plunged:"





And later this




Yes, just turn themselves off. Some say due to cyber attacks, some say due to an "technical" glitch others consider it US Government financial policy.

But who knows why the NYSE bought Chinese routers?

Originally Posted by OhOh

Yes, just turn themselves off.

A non event. It was only trading on the floor that was stopped. Computer trading was normal and that is now 90% of the trading volume. It may help end trading on the floor completely. Poor stock brokers getting broke. I will cry for them if I can find the time.

Marc Faber on China equities right now.

Famously bearish investor Marc Faber says he wouldn't touch Chinese stocks even after their precipitous decline, instead pushing the investment case for Vietnam equities, Hong Kong-listed Macau gaming stocks and gold mining shares.

"I am a buyer when markets are undervalued and attractive and then I get out relatively early. So we were buyers a year ago in June/July of 2014," Faber, the author of the "Gloom, Boom and Doom Report", said, referring to Chinese equities. "Now, I don't think that Chinese stocks are attractive and I would just stand aside."

Chinese equities have taken a severe beating in the recent weeks as panic selling gripped the market, but stability appears to have returned after a series of series of government measures to shore up investor confidence. The benchmark Shanghai Composite is down 24 percent from its June 12 peak, but up 21 percent on a year-to-date basis.

Faber contends that growth in world's second largest economy has "slowed down to trickle", adding that 6-7 percent growth is a "pipe dream."

Don't touch China stocks, go here instead: Marc Faber