Remember in this new economy markets are only allowed to go up, they cannot go down, when markets go down central banks will do everything possible to intervene and create a distorted market place, just like here in the US back in 2008-2009, the fed has done everything possible to prevent market drops...markets are only allowed to go up, and when markets are only going up central banks and the fed will do nothing to prevent it from over heating, they will do nothing to prevent asset bubbles, they will do nothing to curb margin debt, they WONT DO A fucking thing... they will let it soar as high as possible, but when that first down cycle appears they will do anything they can to prevent a small little dip from becoming a bear market or a long term 4 year market correction, well here is what China has done since the collapse of their market.... ** June 27 (Saturday) - China's central bank cuts guidance lending rates and trims the amount of cash that some banks must hold as reserves, in a move widely interpreted as mainly a step to support the slumping stock market. ** June 29 - Markets continue to crash. The state-backed provider of margin financing, China Securities Finance Corp, publicly says that the risk of margin trading is controllable and margin calls are relatively small. Later in the day, China says it will allow pension funds managed by local governments to invest in the stock market for the first time, potentially channeling more than 1 trillion yuan ($161 billion) into the equity market. The China Securities Regulatory Commission (CSRC) issues a statement, attacking pessimists for "talking down" the Chinese market and economy, urging investors to remain calm. Rumors swirl about pending policy interventions, including a freeze on IPOs, official instructions to institutional investors not to sell shares, and the implementation of a stamp tax on share sales to dissuade selloffs. None are confirmed although some companies announce share purchasing plans. The securities regulatory continues to approve IPOs. Benchmark indexes shrug off the monetary easing to end down over 3 percent after a day of see-saw trade, leading domestic media to call it "Black Monday". The Shanghai Composite Index <.SSEC> closes down 3.3 percent. ** June 30 - Rumours spread that some overseas and domestic institutions had deliberately sold short to damage the market. China's Financial Futures Exchange denies rumors that foreign investors, including Goldman Sachs <GS.N>, have been shorting Chinese stocks using index futures. Primary indexes post a sharp recovery in afternoon trade to end up over 6 percent, the CSI300 index's <.CSI300> best single-day gain since 2009. SSEC closes down 5.5 percent. ** July 1 - Stocks tumble again, surrendering much of the previous day's sharp gains to end down around 5 percent. After markets close, the Shanghai and Shenzhen stock exchanges announce plans to lower securities transaction fees by 30 percent from August. Key indexes plunge again, surrendering much of the previous gains. SSEC closes down 5.2 percent. ** July 2 - The CSRC announces relaxation of rules on margin trading before market open, lowering threshold for individual investors to trade on margins and expanding brokerages' funding channels. The CSRC announces setting up a team to look into illegal manipulation and investigate cases if needed. Key indexes end down sharply. SSEC down 3.5 percent. ** July 3 - China Financial Futures Exchange (CFFEX) suspends 19 accounts from short-selling for one month, sources with direct knowledge tell Reuters. Benchmark indexes slump again despite the regulator's efforts to stop the slide. SSEC loses 5.8 percent. ** July 4 (Saturday) - China's top 21 securities brokerages pledge to invest at least 120 billion yuan ($19.33 billion) collectively to help stabilize the country's stock markets. Twenty-eight Chinese companies planning to list on the country's stock exchanges say they would suspend their initial public offering plans. ** July 5 (Sunday) - China state-owned investment company Central Huijin Investment Ltd says it has recently purchased exchange-traded funds (ETFs) to support the market and will continue to do so. The CSRC announces that People's Bank of China (PBOC) will inject liquidity directly to the state-backed margin finance company to stabilize the tumbling stock market. ** July 6 - Main stock indexes open up more than 7 percent on the rescue measures, but give back most gains during the day to close up 2.4 percent. Read more: http://preview.mediaexpress.reuters...0NH:1&search=all:china timeline#ixzz3fWSoOtJR
Anybody know the total Chinese market value vs the amount of capital controlled by the State finance companies?
Unbelievable The Chinese government can make the stock market go up if it really wants to In the United States, the government doesn't have much control over stock prices. President Obama can't ban people from selling shares, nor could he order the Federal Reserve to finance loans so people can buy shares.The specific measures the government takes are less important than how it communicates its goalsBut the Chinese government doesn't face the same constraints. It has the power to print an unlimited amount of cash, so in the worst-case scenario it could buy as many shares as it took to reach a target price. And as the last week has shown, there are a number of less drastic — but still heavy-handed — strategies the government can employ to boost share prices.Markets are heavily influenced by expectations, so the mere perception that the government is determined to boost share prices may be sufficient to cause a stock market rally. In this sense, the specific measures the government takes are less important than how it communicates its goals.For example, the Financial Times reportsthat students at Tsinghua University, sometimes described as the MIT of China, will be instructed on Sunday to chant the slogan "revive the A shares, benefit the people." Obviously, chanting won't directly boost stock prices. But by holding this kind of demonstration, the government can show that it's serious about its commitment to higher stock prices.Students at Tsinghua University will be instructed to chant the slogan "revive the A shares, benefit the people"And once the public becomes convinced that the government plans to push stock prices up, they'll start buying stocks themselves in anticipation of the increases, creating a self-fulfilling prophesy.The problem is that once the government commits to higher stock prices, its prestige becomes tied up with the stock market's performance. The people who bought stocks this week at the government's urging will feel all the more betrayed if prices crash again at some point in the future. That will make it even more difficult for the government to let stocks fall later if stocks become overvalued. Entire article is below.... http://www.vox.com/2015/7/11/8933341/china-is-destroying-its-stock-market-in-order-to-save-it
I think people over emphasize the value of the stock market in less developed countries. Perhaps, I am stuck in the 90s but the stock market is dwarfed by what goes on in the direct investment arena. This is just a hiccup. The Chinese govt is in control. Probably trying to enrich its leaders through controlled moves. A real estate crash would be the real deal, but notice that re has held up inspite of ghost towns.
On the other hand, there's a big liquidation underway http://www.agfuturestrading.com/chinas-stock-meltdown-spilling-over-to-commodity-markets/
China's biggest state banks recruited into stock market rescue China’s biggest state-owned banks have lent a combined Rmb1.3tn ($209bn) to the country’s margin finance agency in recent weeks to staunch a free-fall in the stock market, casting doubt on whether the recent equities rebound is sustainable without government support. China Securities Finance Corp was established in 2011 to lend to securities brokerages to support their margin lending to stock investors. Amid the tumble in equities beginning in late June, however, the government has deployed CSF as a conduit for injecting rescue funds into the stock market. CSF has lent to brokerages to finance their investment in shares and has also purchased mutual funds directly. But the latest revelations indicate that state support for the stock market is much larger than previously disclosed. The Shanghai Composite Index has recovered about 15 per cent since its low point on July 10, but the magnitude of state support suggests the rally is largely a government-driven phenomenon. Caijing, a well-known Chinese financial magazine, reported on Friday that the country's sixth-largest lender by assets, China Merchants Bank, provided the largest single loan, at Rmb186bn. The country’s five largest banks — Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications — each provided more than Rmb100bn. In total, 17 banks provided interbank loans worth about Rmb1.3tn through July 13, the magazine reported. The People’s Bank of China had previously said it was “actively assisting” CSF to obtain liquidity through interbank lending, bond issuance, and other methods. The central bank later confirmed it had provided loans directly to CSF, without specifying an amount. CSF also recently issued bonds worth Rmb800bn in the interbank market, where commercial banks are the biggest investors. Combined with the loans, that brings CSF's total war chest to over Rmb2tn even without including direct loans from the central bank. The Caijing report suggests that the PBoC is seeking to minimise its direct role in lending to CSF, preferring to rely on commercial banks to provide funds for the stock market rescue. “I think what the PBoC wants to achieve is like ‘Do whatever it takes’, as said by [European Central Bank president Mario] Draghi to boost confidence [in the euro], but no need to really print money to buy stocks. They want to do easing, but not this way,” said Larry Hu, China economist at Macquarie Securities. Still, the central bank regularly lends to commercial banks through various mechanisms, so the PBoC could have provided extra funds to support commercial banks’ loans to CSF. For the commercial banks, the burden of national service is not too onerous. Their loans to CSF carry little risk, given CSF’s status as a state-owned financial institution, and the return on their loans was “pretty good”, according to Caijing. The Shanghai Composite was up 1.4 per cent midday on Friday. http://www.ft.com/intl/cms/s/0/c30b6f3a-2c3d-11e5-8613-e7aedbb7bdb7.html#axzz3g86akxim