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Overnight, In Chinese Stocks...

Tyler Durden's picture




 

As the afternoon session opened overnight in China, stocks were crashing 6-7% (after dropping over 10% and soaring over 15% in the 5 days prior). With record and exponentially growing margin trading one can only imagine the vast majority of new account-holding housewives were stopped out of various positions. Which makes us wonder, just who the mysterious buyer of last resort was that lifted Chinese stocks ever-so-linearly all the way back to unchanged (and in fact green for Shanghai). We suspect you know the answer, and sure enough, just as Bloomberg notes, who cares about China's economy when stocks are rising this much?

 

Overnight trading in China in all its BTFD glory...

 

As London-based head of emerging markets at Deutsche Asset & Wealth Management, Sean Taylor remarked, "the government wants a strong stock market, to privatize more companies and do more IPOs." Rising stock prices not only help Chinese companies reduce debt levels by selling new shares, they also make it easier for the government to boost budget revenue and push forward on privatization plans through stake sales.

But of course, it's a ponzi and as the following six charts underscore, the disconnect between Chinese stocks and the economy has never, ever been greater...

Shanghai Composite performance: The index rose last week to its highest level in seven years, while Bloomberg’s monthly gross domestic product tracker for China is near the lowest since 2009.

 

 

Financial stocks: The CSI 300 Index’s gauge of banks, property developers and brokers climbed to its highest level since January 2008 last week. Data on May 13 showed the M2 measure of broad money supply grew 10.1 percent in April from a year earlier, the smallest expansion on record.

 

 

Commodity producers: The CSI 300 Materials Index capped a 13th month of gains in May, its longest winning streak on record. Fixed asset investment rose in April by the least in almost 15 years.

 

 

Retail stocks: The consumer discretionary index has rallied 75 percent this year to a record. Retail sales grew 10 percent in April, the slowest pace since 2006.

 

 

Room for more stimulus: The central bank has lowered the amount of reserves lenders must hold to 18.5 percent from 20 percent this year. That compares with the average ratio of 12.6 percent since the start of 2000.

 

 

Stock sales: Chinese non-financial companies raised a net 230.4 billion yuan ($37.2 billion) in the first four months of the year, the best start on record, while net sales of corporate bonds totaled 543.8 billion yuan, the lowest for the period since 2012.

 

 

*  *  *

Simply put, this is bread-and-circuses distraction for the masses of Chinese facing the harsh economic reality of a post debt-fueled bubble bursting.

 

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Thu, 06/04/2015 - 13:25 | 6163503 walküre
walküre's picture

BREAKING: Jim Cramer reported boarding plane for Shanghai, pending contract with People's Ministry of Truth

Thu, 06/04/2015 - 13:30 | 6163535 theXman
theXman's picture

The selloff was halted by a phone call from the Premier's office -- they were not going to allow another "6/4 Massacre". It's not a joke.

Thu, 06/04/2015 - 13:38 | 6163572 PartysOver
PartysOver's picture

Extreme Volatility is a Day Traders Best Mistress.

Thu, 06/04/2015 - 13:46 | 6163606 NoDebt
NoDebt's picture

"Rising stock prices not only help Chinese companies reduce debt levels by selling new shares, they also make it easier for the government to boost budget revenue and push forward on privatization plans through stake sales."

You forgot one.  It also makes you look more legitimate to all the other paper debt ponzi countries of the world.

Thu, 06/04/2015 - 14:26 | 6163735 pods
pods's picture

It should be shooting to the moon though with all the new trader accounts opened up right?

I mean, you can't open an account, put some money in it, then SELL.

You gotta buy something first.

pods

Thu, 06/04/2015 - 15:13 | 6163929 actionjacksonbrownie
actionjacksonbrownie's picture

Maybe they are all new gold "investors".

Thu, 06/04/2015 - 18:30 | 6164632 Creepy A. Cracker
Creepy A. Cracker's picture

Total vomit inducing ride.  Like the U.S. just a tad bit more extreme.

Thu, 06/04/2015 - 13:25 | 6163504 Tursas
Tursas's picture

Well done Bilderbergs!

Thu, 06/04/2015 - 13:41 | 6163585 Bunga Bunga
Bunga Bunga's picture

bilderborgs

Thu, 06/04/2015 - 13:26 | 6163506 madbraz
madbraz's picture

tell me again why there were no quotes during the plunge, circuit breaker?  i mean, they don't use one when it goes up...

 

shytshow

Thu, 06/04/2015 - 13:34 | 6163551 Dindu Nuffins
Dindu Nuffins's picture

That's lunch. Chinese like long untroubled lunches to slurp them noodles.

Thu, 06/04/2015 - 13:27 | 6163516 Ruffmuff
Ruffmuff's picture

Mr marky is independent of reality.

Thu, 06/04/2015 - 13:27 | 6163520 KnuckleDragger-X
KnuckleDragger-X's picture

The Chinese have learned well from Wall St. This should attract a large herd of sheep.....

Thu, 06/04/2015 - 13:49 | 6163615 Salah
Salah's picture

world's largest lemming nation ...when it comes to money, makes imerial Japan look like the Founding Fathers

Thu, 06/04/2015 - 13:29 | 6163530 fremannx
fremannx's picture

"Simply put, this is bread-and-circuses distraction for the masses of Chinese facing the harsh economic reality of a post debt-fueled bubble bursting."

The one bubble chart that matters...

http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...

Thu, 06/04/2015 - 13:34 | 6163552 BoPeople
BoPeople's picture

Gee, its good to see that Wall Street is fully in control of the China non-markets as well. NOT!

Thu, 06/04/2015 - 13:42 | 6163592 JustObserving
JustObserving's picture

If manipulating the stock markets higher worked so well in the land of the free, why should it not work in China?

Thu, 06/04/2015 - 13:56 | 6163640 Dindu Nuffins
Dindu Nuffins's picture

At a guess, I should venture "lack of subtlety" when the rise is blatantly parabolic and condensed into half a year.

Reminds me of Colors...

Bob Hodges: There's two bulls standing on top of a mountain. The younger one says to the older one: "Hey pop, let's say we run down there and fuck one of them cows". The older one says: "No son. Lets walk down and fuck 'em all".

Young bull = China

Old bull = America

Thu, 06/04/2015 - 15:53 | 6164112 Mini-Me
Mini-Me's picture

What does Gartman think?  My entire portfolio awaits his every recommendation. 

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