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Chinese Crash Continues After PBOC Cracks Down On Brokerage Liquidity
Just when you thought it was safe to buy the 12% collapse (the biggest since Lehman) in Chinese stocks, they re-plunge another 3-4% with no dip-buyers evident. The drivers are twofold: first, China PMI beat expectations modestly (uh oh no more QDII, QE, PSL, etc.); and second - and much more critically - The PBOC Operations Office has called for stricter regulation of brokerage liquidity (implicitly clamping down on the seemingly infinite expansion of margin lending required to fuel the boom). CHINEXT has entered a bear market (down 21.5%) and the rest of the Chinese complex is down 3-5% today (down 15-20% from the highs).
Following the worst week since Lehman (and a holiday last night), the margin calls are coming...
As Bloomberg reports,
China should better regulate liquidity situation of securities firms, whose debt increases “fast,” Jiang Zaiyong, vice head of PBOC Operations Office, writes in a commentary in Caijing Magazine.
China should also strictly restrict entry of wealth-management funds in the capital market, the commentary on preventing liquidity risks in asset management products says
Furthermore, China Brokerages Must Meet Liquidity Ratios by End-June
Some context for this drop...Chinese stocks are now down over the past month and unchanged for 7 weeks...
And all of this after China hides the new retail account opening data and halts various members of the 500%-club. So there has been 3 weeks with no data since the open accounts spiked to 4.4 million in one week...
And we warned investors that the IPO canary in the coalmine had croaked... The Bloomberg China IPO Index is now down 24.5% from its highs.
To be brief - it's over!!
- China IPO Index -24.5%
- CHINEXT -21.5%
- Shanghai -17.6%
- CSI-300 -17.3%
- Shenzhen -17.2%
Without assistance (levitation) from the same PBOC that just clamped down on liquidity, the China bubble has burst.
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So the stock market in china is crashing? Ok. I don't own any chinese stocks. How does this affect the price of beans?
As formerly "rich" chinese investors cut back from the diet including meats to one mainly consisting of rice and beans, the global cost of beans will skyrocket.
The Chinese being the masters of reverse engineering (or IP theft, depending on how polite you are), it sounds like they need to build their own version of the Plunge Protection Team.
They've got one.
Due to an unfortunate typo, however, it is actually the Plunge Projection Team.
They are really sweating it out while they desperately recall all the textbooks, stationary, and employee badges.
they'll switch back soon as it threatens savings and housing more
stock market was kept on a leash because it's a good story but they run the risk of allowing it to become 'too good' an alternative to housing, and that's not in pboc's interest. they'll allow the stock market to go down precisely because they want to keep housing in a good light, but they'll likely use their ample tools (relative to the fed) to make sure any downtown is not too chaotic (and maybe still a bit of steam left it yet) AND does not coincide with any further housing decline.
dunno if both will ever really 'crash' but that day is a long time away with all the tools the pboc has left. they can draw out the stock market and housing a good 2-3 years yet to give the economy time to recover (which basically means, give us/euro time to recover to start buying their shit again) so that chinese incomes rise and then chinese can start buying chinese shit but that won't happen just based on stock bull market and a housing bounce -- they need manufacturing to pick up again if lower-middle class is ever going switch from a manu econ to a retail econ.
and the chinese market finishes up 2.19% today. the market had a 7.3% trading range today.
HO LEE PHUK
puppets on strings, ha fucking ha. mindless sheep going to slaughter or a casino. these yellows are dumb as the rest. been to a casino lately, yellow and black hair and brown eyes evvvverywhere.
sheeeeeeeeeeeeeeep baaaaaaaaaaaaaaaaaaaaaaaaaaaa
I don't think that is their goal. The Chinese are not interested in mutually assured destruction. It seems they are willing to accept some immediate pain now and wind things down rather than go tits up like the U.S. When the big one pops.
$10 trillion market cap is the big one.
Maybe, the Chinese government is not as all-powerful and johnny-on-the-spot with central planning as you think. Like when they lowered RRR and raised the dollar peg, loosening and tightening monetary policy at once, China is often not as savvy as the "they play chess while we play checkers" crowd believes.
Honestly the way China copy everything but can invent nothing I would not touch their stock market even if I had *your money*
have you look at the Dow or Nasdaq recently? :P
most of the top tech or financial companies got there by copying and stealing lol
isn't that pretty much how the ussa economy exists anyway? steal oil and gas and chinese crap in exchange for printing paper with some faces on it?
Yup, this is when the stray neighborhood dogs start disappearing.
I have Chinese stocks. The price has remained pretty stable. I would say the crash is affecting a large group of stocks that were very speculative right from the beginning. If you bought stocks evaluating them the way you should, you probably will do OK.
Oh Goooooooooooood For You!!!! I think CNBS is looking for another guest cheerleader.
u mad
Because the Chinese casino is tied to the U.S. and European stock market casino's.
Deriviative and securitization unwinds, something North of $500 Trillion.
But "this time is different" if you smoke crack.
May affect the price of waterfront California castles, as Chinese new stockmarket billionaires are forced to slow down their overseas real estate acquisitions. :-)
Look, all these new Mandarin traders graduated from the online trading academy and they all know how to use stops...that way, everyone knows how to limit their losses and no one will lose much money.
Stop-loss orders are the ultimate shearing machines.
People think they guarantee a sale at the stop-loss price point.
They will find out otherwise and then the riot will really be on like Konkey Dong-- whioch is the same as getting your pee-pee whacked.
If Chinese housewives jump, who cooks the dogs?
isnt that true they can eat crispy fied dogs at KFc?
Anyone know how Goldman was shorted on this?
So if folks thought growing the economy was tough with the biggest energy/tech and materials boom in US history try doing it after the Chinese economy tanks.
Talk about "price discovery."
The word "free" does come to mind...
At least the Chinese managed a market crash to correct the imbalances. I'm sure the US will show them how to blow a bigger bubble without crashing. Ever. Mostly not ever. Well, maybe not ever. Oh, screw it. It's coming.
Margin calls + Stop-loss Orders = Ho Li Fuk!
The US dollar is a poor debt substitute.
no, what they really want to do is to scare away those nasty mutual funds from aboard.
MY CHINESE CHECKERS STOCK .... NOOOOOOO!!!!!!!!!!!
Fewer Chinese colleagues next quarter.
I wonder if this is the start of the prick of the equity bubble world wide. We shall see.... . Probably not yet. Japan is still on a tear up at the moment.
Them housewives getting creamed good, aye ?
Well, Jim Rogers recently said he is still buying China.
LOL
Jimmy, that old man, is probably just a contrarian indicator (read: liar).
Last time he said to invest in agriculture because farmers will be driving maseratis, but I still don't see any farmers driving maseratis.
And I do know commodities have declined substantially.
he wears a bow tie - nuf said...
Can someone explain to me from what PERSPECTIVE we talk about Chinese stock markets crashing?
Since Jan 1 the Shanghai composite, as the other index, have risen upto 60% !!!
Have you seen any other index doing such an awesome bubbly spike?
The fact that it gives back 15% or 20% therefore is just an adjustment to irrational exuberance by local investors, given that China's shadow banking is a big hole and given that the real economic output has slown down even if China is still the world's factory for a long time.
Why all this "OMG look at China" type hype?
Speed kills. Imagine having bought into China late, and having chosen a 3x China fund "to catch up".