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China Goes Full BTFD-tard: Record New Trading Account Openings Send Stocks Up 16% In 2 Days
After scaring millions of freshly created stock market speculators with a 10% 'correction' last week, it appears the PBOC's wealth-effect-creating, fix-the-leverage-overhang-with-temporary-stock-exuberance strategy was put into action with a record-smashing 4.4mm new accounts opened. Since Friday's lows, CHINEXT - China's tech-focused index - is up an astounding 16% (the largest ever 2-day swing). The Shenzhen Composite has also soared over 12% to fresh highs but we note the broadest-based Shanghai Composite has yet to make it back to last week's highs (even though it is up 9% from last week's lows).
Notice that while the high-beta muppetry of CHINEXT and Shenzhen are soaring to new highs, Shanghai is unable (for now) to make new cycle highs...
So how do we know this is a bubble?
The week that saw the largest drop in Chinese stocks in recent history, saw a stunning 4.4 million new retail accounts opened (over 4x the peak pace of opening in 2007's bubble).
* * *
One can't help but wonder if this 'distraction' for the masses is the bread-and-circuses to keep control as the debt-fueled Chinese economy collapses right in front of their eyes.
Charts: Bloomberg
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Fuck.
When shit finally hits the fan... there wont be anything left of that poor fan.
I remember when day-trading was cool and I would hear these future Warren Buffets talking about "hot stocks". Gee, I wonder whatever happened to all those optimists......
They are working in the rice paddys, speaking Chinese, trading with their IPhones while working.
I'm beginning to think the fan is made of shit as well.
Double fuck. Like moths to the flame. In essence the Chinese are manually doing what we do with machines here.
If China wanted to avoid a revolt by keeping the "middle class" engaged and happy there is going to be hell to pay. No wonder the upper echelons are fleeing in droves.
As the saying goes...
BTFTop!
And it's just starting...
I have 100 un-scratched lottery tickets in a box on my kitchen counter. Each one could be worth over $10mil USD.
Add it up: now that's wealth.
That's as good as money sir, those are IOU's.
Go ahead and add it up. Every cent's accounted for.
Look, see this?
That's a car, $275 thou.
Might want to hang onto that one.
https://www.youtube.com/watch?v=kO0uXmwxTNI
I'm sure the government has some sort of strategy on this, but man, from the outside it looks like one of the dumbest things anyone could possibly do. It's like signing your own death warrant.
Must be some indian guy in a basement somewhere opening new accounts. I don't blame the Chinese...we have a FED handing trillions to crooked mega banks and trading the stock market higher...the chinese always do things in large number....now they manufacture stock accounts....they will have 5 Billion stock accounts come next year. They should shoot for 10000% return... A this point everything is manipulated and no one does anything about...so go all in!
Never mind China, why has Google got such a hard on today? Just its turn to go up?
DavidC
Notice folks, they don't have to Helicopter drop all they have to do is keep funneling money into the fake markets into peoples hands. Nice scam.
Stocks are no longer based on performance, earnings or true value its a money laundering scheme.
Oooo Big ImProde to Mahket Comling!!!!
I can't wait to short this more than the U.S. Market.
They are all rich from real estate boom, now they are getting even richer from stock boom. Chinaman shows the world how it works. This time is different.
Did I tell you Apple has a new watch?
Do those Chinese all have broadband circuits in their villages… Is that why the buildings are all pointy – Wi-Fi?
What better way to soak-up excess liquidity?
Poof - Corizined.
Chinese stock market has been in depression for last two decades except two short periods. People have written off the stock market and concentrating on housing. Now the housing seems stalled, so people need something else to preserve their savings. Chinese do have large savings.
Savings in fiat funny money which has no intrinsic value. They might as well buy tulip bulbs.
Cash is trash regardless where you are.
And don't forget they are gamblers. Only way to play this one is to ride it up.
China can't afford to crash its "markets" anymore than the USA.
All the quick wits on ZH love to armchair quarterback but never take positions. (Like the guy that says he's going to short it . . yeah right.)
OK, commence down arrows
Ride it up you say, do you have a plan for getting those positions into cash or do you just like playing video games.
You should try to take a big position in cash sometime, get it in your sweaty mits then comment on positions.
Gamblers don't head home with a stack of chips in their luggage. They tend to like to cash out.
Do you know why Tyler is making fun of CHINEXT as high beta? Know what beta is? It's people who are not buy-and-hold market levitaters. It's millions of people cashing in and out at high volatility, like ... gamblers heading in and out of a casino.
Worries about bubble burst did not stop Chinese Prime Minister Wen from imposing punishing rules on stock market in 2007-2008 and sank the market from 6200 to 1800. He was furious about gambling habits of the people and businessmen and wanted to push their money to manufacturing re-investment. It has been the policy right to last year. In a sense he put the gambler’s tail between their legs. I heard speculation from China that the only motivation that Chinese government allows the stock market to rise is due to the fear of capital flow, which US has been engineering for the last couple of years and successful in Japan and Europe. I think everyone has heard safe haven talks.
You and I both know the Chinese "saver" was behind the mania in gold and silver in 2011.
And bitcoin.
Regardless of how you explain it away, the usual trajectories are well-known when all Chinese people get the same idea at once. No one likes a quick buck more than Chinese people.
I had silver too except I sold a lot in 2011. Silver will be good again in the next few years. Accumulate as much as you can afford.
The PBoC isn't opening fake accounts and pumping money into stocks through them or anything.
:)
Extremely unlikely. That leads to the market surging higher on low volatility, the time-tested Virtu way. This is high volatility of millions of independent and uncoordinated actors, and those accounts are retail who come to get quick money and flip it out.
Possible but they don't have to. A rising stock market is enough to attract those gambling Chinese to jump into the boiling pot. They really have to manage it well. Otherwise the losers will again block the government buildings and demand the money back.
Oh China, you fooling fickle fucks. Did you learn nothing from the implosion of the western markets... And these are the people we should fear...