The Last Time This Happened, Chinese Stocks Crashed

Tyler Durden's picture

Chinese stocks are the most expensive relative to bonds in almost six years. For the first time since June 2009, Bloomberg notes, the earnings yield on the Shanghai Composite Index has dropped below the yield on top-rated corporate debt... and just like in now, stocks rallied 100% in the preceding year before plunging over 20% in the next month, and further still in the ensuing months. Already we are seeing Chinese stocks faltering - with a disappointying post-rate-cut move - which leads on analysts to note, "the market will enter a correction phase, and it will be very volatile," and comments by officials have raised concerns that PBOC will "quickly erode its credibility."



As Bloomberg reports,

The official People’s Daily said on its website Monday the bull market doesn’t just mean one-way gains, adding that the many people who have bought stocks using borrowed money may be hurt by a small correction.


Last week’s pullback doesn’t mark the end of the rally and could instead help the market enter a “slow bull” mode advocated by regulators, the official Xinhua News Agency said in a commentary on its website.


“The regulator must remember its primary role is to regulate and monitor market risks and it is not a strategist,” Hong said. “Its frequent switches between bullish when the market crashes and cautious when the market surges will quickly erode its credibility.”

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Oldwood's picture

Another BTFD opportunity??

The gamblers must just love this shit!

Come on! Somebody please tell me it's not gambling. Please!

DIgnified's picture




Gamblers deserve respect compared to these asshats.  At least they're honest about what it is they're doing. 


"Poker's an honest trade" 


Doc Holiday

Laowei Gweilo's picture

correlation is not causation...


you know what else is perfect correlated with that first "crash"?


the spring 2009 American stock crash lol


which do you think REALLY was more impactful? (especially considering the quick rebound, suggesting it was more symbolic than fundamental...)

sun tzu's picture

US stocks started crashing in spring 2009. It was in recovery mode in 2009 when 0bozo famously said that the profits to earnings ratio looked good.

i_call_you_my_base's picture

Gambling on CB intervention perhaps.

j reuter's picture
j reuter (not verified) TeamDepends May 11, 2015 8:06 PM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

Stormtrooper's picture

“The regulator must remember its primary role is to regulate and monitor market risks and it is not a strategist,”

Perhaps the FED can learn something from the Chinese bank.  While the FED is driving full speed ahead off the end of the dock, the Chinese are attempting to bring a little sanity to their market.

i_call_you_my_base's picture

The Chinese are going to learn the hard way that you haven't made any money until you sell.

With all of the retail people packing in, I have a feeling a downturn isn't going to go well.

Fred Garvin's picture

A word from some recent day traders of Chinese stocks...

Weaponized Innocense's picture
Weaponized Innocense (not verified) May 11, 2015 6:47 PM

Yoyo hearts on strings sings the middleman of eyeballs standing at attention.

pragmatic hobo's picture

looks like somebody is looking for shit to blow up near term. who could make $100m trade? i'm thinking either boj or snb hedging their aapl stocks;

JoWazzoo's picture

And lately i have to swallow hard when I buy 100 $ of Puts.  Heh.  100 MIL of Vix Calls.  Holy Shit batman.


From the aricle those are June & July.  Mid summer melt down?