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China Scrambles to Put Plunge Protection Team Together: Banks Pledge Support For Crashing Market
“The market is now a falling knife”, BofAML said on Friday, referring to the harrowing 30% decline in Chinese stocks that has unfolded over the course of just three weeks, leaving the PBoC and various other government agencies scrambling to arrest the slide.
Cuts to both policy rates (benchmark lending rate and RRR) and daily “remain calm” pronouncements by various government agencies have so far proven woefully inadequate to combat the country’s margin mania unwind, leaving BofA to conclude that the only thing which can help Chinese equities now is direct buying on the part of the government.
As a reminder, the problem here appears to be related to the hodge-podge of backdoor margin buying vehicles that have combined to channel between CNY500 billion and CNY1 trillion in unofficial, off-the-books margin lending into stocks via umbrella trusts, structured funds, P2P lending, and a variety of other mechanisms that allow China’s millions of newly-minted retail investors to skirt minimum balance requirements and margin limits at brokerages.
Combatting the unwind may mean, in BofAML’s words, making the government “the buyer of the last resort in the market, similar to what HKMA did in 1998.” This would however, be complicated by the fact that “much of the unauthorized margins were used to buy small cap stocks, so the authority, with or without PBoC’s direct involvement, may have to buy stocks on a very large & very broad scale.”
One day later and China has already moved in the direction of direct intervention in the markets, although it appears Beijing will try to orchestrate a “private” sector (whatever that means in China) solution first before going the nuclear route with the central bank’s balance sheet. As Bloomberg reports, the country’s largest brokerages are teaming up to invest nearly $20 billion in “blue chip” Chinese equities:
Chinese brokerage firms have come together to set up a stock-market fund, the latest effort to stem the biggest three-week drop in China’s key share index since 1992.
The 21 brokers led by Citic Securities Co. will invest the equivalent of 15 percent of their net assets as of the end of June, or no less than 120 billion yuan ($19.3 billion) in total, the Securities Association of China said in a statement on its website Saturday. The fund will invest in blue-chip exchange-traded funds, it said.
The move comes after measures to shore up equities failed to stop margin traders from unwinding positions at a record pace, with the market losing more than $2.8 trillion of value in three weeks. The People’s Bank of China cut interest rates last week, while margin-trading rules were eased and trading fees were cut Wednesday.
The group of 21 brokers said the economic fundamentals that had justified the stock market’s rally before the rout hadn’t changed.
According to Caijing, they aren't wasting any time getting started (Bloomberg, citing Caijing):
China Securities Finance, which manages the nation’s short selling and margin trading, will pay for the brokers and buy ETFs at Monday’s market opening, Caijing reports on its website without citing anyone.
While selling, it appears, is quickly becoming taboo:
Top executives from 25 Chinese mutual funds, including China Asset Management and E Fund Management, promise to hold their stock funds for at least 1 yr, according to statement on Asset Management Association of China’s official website.
The move by the broker consortium is reminiscent of an ill-fated 1929 effort by JP Morgan and others to support the US market after Black Thursday and is, according to some, doomed to fail because i) it is a laughably small effort compared to daily turnover in China, and ii) it targets the wrong kind of stocks. Here’s Bloomberg again:
The new fund to bolster equities may have only “a fleeting effect when daily turnover has reached 2 trillion yuan”, according to Hao Hong, China equity strategist at Bocom International Holdings Co. in Hong Kong.
“This 120 billion yuan won’t last for an hour in this market,” Hong said by phone from Beijing Saturday. “It might benefit blue-chip stocks, as investors may see them as value, but the bursting of the bubble in small-cap/tech stocks is likely to continue.”
“The market’s most acute concern is still these smaller cap stocks, as investors levered up to buy them and now margin lending curbs hit them the hardest,” Hong said. “With their valuation in the stratosphere, nobody is willing to step in and bolster these stocks.”
In other words, this pilot program (so to speak) is woefully inadequate and by many accounts will be almost entirely ineffectual, meaning it will either have to be expanded meaningfully, or someone with some real firepower will have to step in instead.
The takeaway: it's probably just a matter of time before the PBoC interevenes to provide Kuroda-style plunge protection when "sentiment" looks to be souring, only in China, because the reckless margin buying is concentrated in small caps trading at nosebleed multiples, the central bank's balance sheet will become a repository for umbrella manufacturers, real estate developers-turned P2P lenders, and ponzi schemes unlike the BoJ's equity book which (at least as far as we know), is comprised mostly of ETFs.
So, for anyone wondering what the future holds for China's (formerly) world-beating equity markets, here is a hint:

* * *
Full statement from Securities Association Of China:
2015 On 7 July 4 days, 21 securities companies held a meeting to analyze the current stock market situation, confidence in China's capital market development, agreed that firmly maintain the stable development of the stock market. It was decided :
First, the 21 securities companies in 2015. In June of net assets at the end of a 15% contribution for investment in blue chip ETF .
Second, the Shanghai Composite Index at 4500 points or less, in 2015 on 7 May 3 , based on the balance date, the securities company's own stock plate is not underweight, and choose overweight.
Third, the listed securities companies will actively promote the company's stock repurchase and advance major shareholders of the Company increased its shareholdings in stock.
Fourth, in accordance with the relevant provisions of the CSRC issued the "margin trading business management approach", the perfect counter-cyclical adjustment mechanism, timely adjustment margin ratio, discount rate backed securities, securities lending business scale and other related indicators, in the risk controllable smoothly as possible under the premise of good customer defaults disposal.
Full statement from Asset Management Association Of China:
July 4, 2015, 25 companies raised funds held a meeting, in-depth analysis of the current capital market situation and the fund industry's overall trend. This year, despite the sharp adjustment of market experience, as of July 3 accumulated net partial stock funds average growth still reached 31.87%. At the same time, partial stock funds share a substantial increase, since nearly two weeks I. The state as a whole is still showing.
Participating companies to the capital market confidence in the future, convinced that the parties to the collector of the market, fully qualified, have the ability and confidence to maintain stable and healthy development of capital markets. The meeting held that the capital market is an ecosystem that has its own operating rules, irrational chase and sell are dangerous. After the recent sharp correction in the market, many stocks have been shown to investment value, number one hundred billion additional funds raised to provide a rare investment opportunity.
Participating companies will actively practice initiatives:
First, open the subscription period before purchase fund to provide investors with more choices.
Second, market opportunities, speed up the declaration and issuance of partial shares of the Fund, and in accordance with the provisions of the fund contract, the completion of the new funding positions.
Third, the company chairman and general manager of the fund participants promise: The company actively purchase partial stock funds, and hold at least one year or more.
Participants will actively act, continue to carry out "entrusted by the people, generation financial management" duties, adhere to long-term investment, rational investment, work together to maintain capital market stability.
Participating units: Huaxia Fund Management Company, E Fund Management Company, ICBC Credit Suisse Asset Management, Harvest Fund Management Co., Wells Fargo Fund Management Company, China Southern Fund Management Company, Penghua Fund Management Company, China Universal Fund Management Company, the Bank Fund Management The company, investment fund management companies, CCB Principal Asset Management Company, Guotai Fund Management Company, Boshi Fund Management Company, Yinhua Fund Management Company, Dacheng Fund Management Company, Central Fund management companies, Societe Generale Global fund management companies to finance the fund management company, Hua Tai Borui fund management company, Chinese fund management companies, Oriental fund management companies, Post & Capital Fund Management Company, Manulife Teda Fund Management Company, Changsheng Fund Management Company, the State General Fund Management Company
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Easiest way to wealth is with fraudulent, manipulated markets as the Fed and the ECB have demonstrated since 2008.
Chinese Stocks Just Lost 10 Times Greece’s GDPhttp://davidstockmanscontracorner.com/chinese-stocks-just-lost-10-times-...
Step right up....git your hot fresh stocks here........hot fresh stocks here
Scrambles to Put Plunge Protection Team Together
We're sending a printer to help to help with the cause......we're sending Smoky Number Six....it may smoke, but it never stops.
Just remember to oil it every other day....should be fine.
Sell Mortimer-san, SELL!!!!
Why???
because they haven't screwed enough Chinese muppets out of everything they have left yet.
Might be easier to just do what Mao did for fuck's sake. That's what the scumbags in charge have planned for us anyway at some point.
Why? Because when the music stops the Ponzi fails. So strike up the band.
Is craigslist the only real market left in this world?
sssshhhh. don't give the securitizers any ideas.
Calling Brad Sherman, calling Brad Sherman...... cue his martial law speech
They need to support the market long enough to dump all the IPOs onto it, so the oligarchs can get their money out before they hop on a plane to Seattle.
This year is the last year for Chinese economy. Its already turning Japanese.
As I've posted many times before, this all works as long as the CTRL ALT PRINT button works. Real value to pay wages and buy hard goods is created out of thin air. This puts Rumpelstiltskin's fairy tale to shame.
Disclosure: I'm long ink, security paper and industrial printers.
Happy 4th Everyone!
silly Chinese... you're supposed to have your PPT ready to go _before_ the plunges start happening, not after...
...but but but, I thought the Chinese were doing everything right when fighting the Western hegemony.
I've said it before, and got loads of red fiat kudos for it (haha), but all the Chinese CAN and WILL do is copy the West...including our fiat currency system.
The only reason why they have developed a (relatively recent!) enthusiasm for gold, is so that they can use it as leverage to muscle into the IMF's Special Drawing Rights, and NOT to introduce a gold backed Yuan/RMB.
yes... funny thing about the IMF and SDR, though... if you go in there trying to swing your big dick around with how much gold backing you have to bring to the table and how you want all these special privileges etc, you have to be able to _prove it_ ... notice how they pulled out of that approach right fucking quick when the IMF basically said, "oh, you want the yuan to wear the big boy pants and be part of the SDR currency basket? you want to belly up and hold a huge chunk of voting power? that's great, prove how much gold you have"... at which point the CCP tucked tail and ran as fast as they could from the table...
funny how afterwards we see the loser ankle biter approach of the AIIB and how that is going to be the final nail in the western financial coffin... no, really, this time it will do it we swear... lol, fucking losers...
frankly I was surprised the RThedge crowd let that article onto the page... it's so diametrically opposed to every argument that's been made about how China is going to "take over" that I didn't think such info would see light of day here... I guess credit where credit is due...
"...the RThedge crowd..."
Ha, nice one! So I'm not the only one who noticed that! ;-)
That's a big 10/4. China = lol... or ror, so solly.
Bokkenrijder, exactly what Chinese stock market, which is not even open to foreign investment, has to do with fighting world hegemony?
"I've said it before, and got loads of red fiat kudos for it (haha), but all the Chinese CAN and WILL do is copy the West...including our fiat currency system."
No doubt their citizens are copying the West, but as a matter of economic policy, their government has been earnestly copying the Japanese since about 1980.
1. capture the low-value labor intensive export markets.
2. defer social costs (wages, labor laws, unions etc) in exchange for undercutting foreign competitors.
3. move up the value chain into high tech exports (foreign investment/technology transfer)
4. once secure in your position, only then raise the living standard.
They made it part way to #3, unfortunately they neglected to contain the financial aspects of their economic policy and fell into the same speculative trap as Japan. To be expected of course, since the same players that set the policy were its main beneficiaries.
Financial shenanigans aside, China faces another virtually intractable problem. While Japan has 147 million people, China has 1.3 billion - a fifth of the world's population. So, how does a nation that's late to the party build a first world economy on export trade when they already have more people to support than the nations they export to have people to buy their products (leaving aside the fact that their main customers are essentially broke)? Simple math says it can't be done, and that the only way to reach that goal is to liberalize and thus grow the internal economy which runs headlong into CCP hegemony, which if recent events are any indication, will not go down without a bitter fight.
The CCP oligarchy (let's call it what it is) has a stranglehold on the Chinese economy and will not let go. They're in the same position as the USA and the EU in that regard. Their recent alignment with Russia may slow the decline, but Russia alone is too small to absorb their exports, meanwhile other Japan copiers such as Vietnam, Indonesia, Malaysia and Bangladesh are nipping at their heels (to say nothing of India).
This crash may not be the beginning of the end, but the writing is certainly on the wall.
Yawn.... the prophesies of the wise ones were laughed at, now the day of reckoning is upon us.
Should be a great week with the financial world falling apart. Stocks up, Gold and Silver pounded down. Happy 4th of July. Oh yeah...here in Oregon Pot is now legal, all forms for recreational use, but you can't buy it. HAHAHAHAHA...does it ever end.
That stand to reason since you also were quick out of the gate with legal homo marriage citing biblical reasons that levitical law states that any man that lays with another man should be stoned. Missed the mark but give them a E for effort.
More flooding the markets with paper will eventually lead to these metals to go ballistic but timing is difficult. Patience is a must and don't overextend your self so you are never forced to sell until gold hits, lets say, $5,000 or so and silver corrects back up to $50 or higher.
metals to go ballistic but timing is difficult
I would have used the word bitch....but difficult works too.
If it goes and you're not in it.....it ain't gonna be happening for you.
I've said it before (and got loads of red fiat kudos for it haha), but all the Chinese CAN and WILL do is copy the West...including our fiat currency system.
The only reason why they have developed a (relatively recent!) enthusiasm for gold, is so that they can use it as leverage to muscle into the IMF's Special Drawing Rights, and NOT to introduce a gold backed Yuan/RMB.
Next time you have vacation, book a trip to China and you'll see for yourself: the Chinese government does NOTHING for the well being of it's own citizens, let alone for the welfare of foreigners. The polution, the housing bubble, the traffic jams, the stock exchange bubble, driving tanks over their own citizens. Nothing is better, or different than what we have in the Western world, but the scary thing is that the government simply DOESN'T CARE. There is however one red thread running through all of this: the Chinese government likes control! So why restrict their control by introducing a gold standard?
It's just not logical to think that "it will be different" if and when China is in control of the IMF or the BIS. They copy Louis Vuitton bags, DVDs, Rolex watches, a housing bubble, a stock exchange bubble, they copy the US by building military bases everywhere, and they will also continue copy the Western fiat currency system for world domination.
The only part where they actually lead the way is in designing a totalitarian society, as the NSA probably uses China as their blue print. (try for yourself by going on the internet without a VPN whilst 'vacationing' in China!)
Go ahead, vote me down, I don't care, but the Chinese will NOT come to your rescue. They are the NSA, Goldman Sachs and Halliburton combined into one government. They are pure evil!
Just returned from China. Lived and worked there for two years. I can confirm that some of what you say is spot on.
They do love control....
...and a gold-backed currency would topple the US and the US$ hegemony. To me, that sounds like an awful tempting stab at real control on a global basis.
I think that, in the short run, the whole world is going to suffer when the fiat ponzi finally collapses. But any country with a meaningful supply of bullion has a better shot of coming out on top in the new normal.
"...and a gold-backed currency would topple the US and the US$ hegemony."
As a foreign nation trading with China, how do I ascertain that:
a) China has the gold they claim they do
b) that it's really gold and not coated tungsten
c) that it hasn't been pledged multiple times
Assuming you can meet all the above conditions, you still have the problem of demand payment. With a convertible Yuan (essential under gold backing) what is to stop foreign holders from demanding gold in the face of Chinese profligacy, mismanagement and fraud?
As I see it, you have the same set of problems and contingencies as the US had in its attempt to maintain a gold standard with the added feature of a government that's even more authoritarian and less trustworthy than the US.
I just don't see it happening, and I think this market meltdown supports that view. This is a nation that, even without convertibility, cannot control the creation of money within its own territory, and they're somehow going to gain the confidence of international investors to the point where their currency will be regarded as "good as gold?"
Dream on.
No worries. The Fed will just do an under the table bailout of all these firms. The Fed is unaudited, so they can get away with doing whatever they want. Heck, they are already directly buying US stocks right now to prevent a crash here in the US.
Everybody is going full Zimbabwe. All the CB's will have to print truly awesome amounts of magic money and can imagine thrill all those investors will have from being paid off in toilet paper. Fun for the entire family.....
Zimbabwe... is that an App???
iFucked..... ;-)
it's a printer app
Correlation does not prove causality but Zimbabwe and Robert Mugabe were printing Zimbo $ like a witchdoctor out of control before Obama. Obama has literally copied everything that Mugabe has done (except for gay marriage) including working with the Central Bank to print like an African.
Amazing transformation. Wonder how its going to turn out in the States.
"Hey I have an idea...let's fix our broken economy by following all the mistakes the West has made..."
The stock market is down in China. But the Chinese economy is not broken. Totally different things
Long Duk Dong
Is he related to my neighbor, Bang De Ho ?
Wi Tu Lo
Uncle of Kok Tiu Long, perhaps?
China's political solution to their stock market..an analogy would be like the US Feds buying all the abandoned Detroit houses at full face value..Detroit real estate is now healthy again...
Interesting that the Fed decided to buy unlimited quantities of Treasury paper instead.
You would think in a market crash the last asset you would want to be buying are Treasuries since when markets panic they buy them hand over fist anyways....but it had the impact driving down the dollar and keeping the "post 9/11 Ponzi" alive.
All the folks wilding in the commodity space have been wrung now though...and now rather than an equity market collapse we have entire countries now going full on "Detroit."
The history of Standard Oil still stands out to me in all this: "all the oil in the World owned by one company for forty years."
Prices were so low we had to invent entire industries in order to find out what to do with it all...
No-one so far has made the obvious connection here.
Sure Chinese economics have made them vulnerable, much more vulnerable than
the Russians proved to be earlier this year, but this is economic warfare writ large.
This is but a part of Uncle Scams Asia pivot.
There are no coincidences in (geo)politics.
Currency war>economic war>shooting war.
Are you saying the US ran up the super bubble in Chinese stawks?
You think Chinese people couldn't do that?
Visit a casino in Hong Kong or the Philippines, they are the craziest gamblers I've ever seen, it's all they ever do, virtually a cultural stereotype of their typical behaviour.
It's their debt, their stawk, their choice, their bust.
I know the Chinese proclivity for gambling on anything, along with group think, weaknesses even
Uncle Scam must be well aware of.I'm saying those weaknesses could easily be
exploited against them.After the concerted attacks on the ruble and Russian economy in
the last 9 months and the timing of this, you don't think this stinks to high
heaven right now ?
I'm not that naive my friend.
All's fair in love and war, and we are definitely in an undeclared war now.
Its hard to counterfeit your enemys money fiat,an old tactic, with the CBs already doing
it.This is just a step up.You don't think the Pentagon's economic warfare unit was for defense did you ?
eh? Cart before horse. That's like saying a sex addict who spends all their money on porn was taken advantage by the porn seller! Market advertising takes advantage of us in exactly the same way every single day. Are you going to blame the advertiser for you running up debts to buy what was advertised?
See comment:
http://www.zerohedge.com/news/2015-07-02/perversion-capitalism-credit-ba...
Are you quite sure you're a libertarian market-economy capitalist?
(if you had actual evidence of that sort, that would be different)
Oh I am, but in a world where every market is rigged and "managed", nowhere more than
in China,how else do you explain this unless someone is actively destabilizing the rigging ?
I don't buy it Winston. It implies the organization planning to pull the rug out, also did the buying to make the bubble highs.
It's pretty clear, that's not the case.
It's what it is, a bust after an insanely epic speculative rise.
Even if it is, the chicoms will be looking for a scapegoat in any case.It won't be
hard to sell either.
Thats how wars start..
If China were looking for war with the US, it will always find a reason. In the same way you're looking for a reason to blame someone.
The Chinese themselves rigged the Chinese market, covertly, and now they've lost control of that rigging. So now they're trying to rig it overtly instead, but they still wont be able to control it like they had supposed. they have destabilized their own market (if it can still be called a market and not just a pile of bullshit).
But yes, China is looking for a reason for conflict, just look at the South China Sea. A few days ago Japan was openly pondering the pros and cons of shooting down Chinese UAVs which keep ignoring their warnings, and are still intruding over the disputed Islands that that have been in Japanese control for many decades.
If you are interested in such things, read the following pdf link, which is a US global military threat review document. It's not a politically driven review, its a formal US JCS internal global military evaluation. It was released a few weeks ago. The last one of these was released in 2011. They create these every few years when they assess the military situation or risk of war has changed significantly. The linked document acts as the Joint Chiefs 'White Paper' for all Pentagon procurements and training programs and planning and it is used to guide formulation of all force structure priorities and readiness levels, forward deployments and basing. It also informs all diplomacy and foreign relations developments and of course US politicians are briefed using it on what the JCS think the chances of war realistically are, and with who.
In paraphrase, they currently assess that a major conflict that produces a significantly different global situation, to the situation prior to its commencement, is becoming more likely, and they are actively getting ready for that conflict.
The United States Military's Contribution To National Security June 2015
http://fas.org/man/eprint/nms-2015.pdf
Within it the Joint Chiefs of Staff Chairman’s foreword says:
In other words, they're planning substantial change in US global forces positioning and readiness to cover off an expected series of large protracted armed conflicts, in which the escalation can not be managed as before, because the other side wants war. So the document explains the situation in frank, clinical military and non political terms, and puts US commanders and diplomats on notice that if and when that happens the Pentagon intends to order US forces to fight it out. So it is telling them to get their subordinates and forces and hardware and software battle ready, and prepare for large and protracted conflict.
They've not said things like that since Reagan. I've also not seen the sort of arming of US forces with every sort of weapon, as occurring right now. The US MIC factories are churning out missiles and bombs at war time production rates and the US and Allies are buying them as quickly as they can be manufactured. They are going all out to put as many offensive and defensive weapons as possible on everything that floats and flies, and major US allies have begun to do the same.
At the end of Desert Storm 1.0 it was totally unquestionable that Western alliance air, ground and naval forces were far stronger, far faster and far more effective than ever before (much more than anyone had predicted btw), ad clearly stronger than any potential challenger. The Western alliance suffered spectacularly few casualties or losses, even on the ground. The modern world had never seen anything like it before, no one even in the west had any idea how fantastically effective the precision air power would be in reducing casualties and losses and totally smashing a well armed, experience and prepared large aggressive conventional military force.
But now there are states and groups who think the Western alliance has become weak and incapable of that military effectiveness or that they have become strong and immune to military force. So it will be necessary for a Western coalition force to take the gloves off and totally smash that perception, until that sort of view is clarified. Consequently I expect at least one major conflict involving at least 30 to 50 countries, because apparently humanity again wants to establish who's strong, and who's weak.
So we're going to find out, and when we know who's who, we'll get back to hating and whinging about the stronger side, and blaming them for everything we can pretend and assert they have done wrong in the world. ;-)
Even if it is, the chicoms will be looking for a scapegoat in any case.It won't be
hard to sell either.
Thats how wars start..
Eh. I'm just as cynical as you are my friend, but the enormous Chinese real estate bubble was largely the politburo's doing. And when they moved to pop that bubble, they prodded the equity market bubble, to partly offset the negative "wealth effect" of declining real estate. If Chinese equities crashed concurrently with real estate, they'd already have a full blow financial crisis underway. By the way I'm not saying that was avoided by their actions, I'm simply justifying why they are currently in this self-made predicament.
I would say that's a fair assessment
Churchill, the Chines stock market is not open to foreign investment yet. There is little outside influence - so much for your "Asian Pivot" meme.
Of course! Every bad thing that happens in the world must be due to the US. No other country is capable of producing its own corrupt, incompetent politicians.
"Private sector initiative" means the same thing in Oligarchy China as it means in Oligarchy USA.
Only one BIG difference : China is a one party Centrally planned social market economy; aka the state LEADS private initiative in the market.
Whereas the US is an Inverted Totalitarian Oligarchy construct ; where the private Oligarchy sector RUNS Congress and the elected as surrogate "shoe ins".
The dividing line between these two Oligarchies is thus clearly defined and will condition how the world evolves if no true democratic model sees the light of day as a result of this incredible demise of US democracy and the collateral/consequential implosion of the EU/Japan members of this Trilateral of Dear Henry's days, now thrown to the dogs by Casino finance.
One thing to remember is that the Chinese stock market climbed 60% since beginning of year before going into tailspin; as a consequence of "hot money" speculation from global shadow banking that wants to make a killing on the financial Titanic; irrespective of the consequences of not having enough life boats to save its Oligarchs.
iF the systemic crisis, as a result of this " every man for himself and may the devil take the hindmost" paranoid morph to system we call financialized capitalism gone global, devolves into hitting the iconic Iceberg.
A typhoon (tai foon) hits the Spratly islands !
Spratrey! Spratrey! You no rern! Spratrey Irand!
Wonder if they have some guy named Kevin Henly over there?
Investor money has been shanghied alright, and you can watch the rest of the collapse here live when futures re-open tomorrow:
http://www.investing.com/indices/shanghai-composite-advanced-chart
most of them are worth zero
The folks on "Comission" have been doing great.
So you're saying they have jews over there too huh?
some people try to strike it rich by panning for gold... others try (and usually do) strike it rich by selling those damn fools the equipment they need... same as it ever was...
Is HFT present in all markets globally - or just a US phenomenum ?
Also - how much of the market 'plumbing' do you think is in common between say the US and China (or Mexico for that matter) ?
QUICK! Get to work on another Ghost City. Ah, make that two.
https://youtu.be/pbDeS_mXMnM
So wadda we do now? Make 'em pay for iron ore in AUD? :D
Sorry, but this move by TPTB in China offends my libertarian views:
They've tipped their hand that they are NO different than the USSA in their financial and monetary corruption and manipulation.
These fuckers are NOT the Saviors of gold (in a gold-backed currency). They are merely the beneficiaries or active but hidden participants in the gold manipulation and transfer to their CB. The fact that they 'encourage' their serfs to buy gold, means nothing. They will simply nationalize that also, when the time is right. If they're ripping off their own on the stock market, why would they not do so with gold also?
China's desire for the Eurasian Silk Road may be legitimate, but their path to it, via such chicanery in their stock markets is not legitimate.
Time for ZHers to wake TF up, and realize that China is not and never was your Libertarian 'Friend'. Even in all matters of your 'Precious'. Best worry about and cheer for your own circle of Allies and Friends, than for anyone overseas. .
China is totally different from the USSA. China has $21 trillion bank deposits and 0 derivatives. The USSA has less than $12 trillion bank deposits but $30 trillion derivatives, which is nothing short of a time-bomb.
Government agencies and banks world wide are now trying to prop up stawks issued forth from the ether...lol...just strips of digital paper really with exactly zero tangible value.
Nothing to see here, just move along.
But pass me some very much real overly buttered & salted popcorn and a cold drink first so I can watch the entertainmaint in comfort ;-)
All overblown, this is a standard long overdue market correction that will self-balance when the mark to market price is justified. Its like the MICEX plunge, it dipped and bounced. The FTSE in 2008 etc. best thing the PBOC can do is ensure volatility is minimised and equilibrium is achieved as gently as possible. Yes there will be losers, but thats what market corrections are all about. in the end the markets will be stronger for it because it will be based on price discovery not retail investor hysteria and a fantasy that everyones a winner.
March 2009
So I was just wondering, when you go to the Fed and you need a couple of trillion thrown at you... what kind of Presents do you take...
"As Bloomberg reports, the country’s largest brokerages are teaming up to invest nearly $20 billion in “blue chip” Chinese equities"
As was heard in the movie Jaws, "you're going to need a bigger boat"
"The move comes after measures to shore up equities failed to stop margin traders from unwinding positions at a record pace, with the market losing more than $2.8 trillion of value in three weeks."
20 billion sounds so small next to 2.8 trillion. Jaws.
These are the guys that are supposed to rescue everybody?
Print.
This is what happens when you allow foreigners into the tent.
North Korea had it ready within hours.
Paging Wing Ding Corzine.
Too bad they aren't smart enough to figure out that this shit just prolongs the wait for the inevitable. This is one tactic they shouldn't rip off from the West.
Because, as we all know, markets that are at stratospheric bubble levels due to a buying mania must be maintained at that level using as many public funds as possible.
“Psychopaths are unable to form emotional attachments or feel real empathy with others, although they often have disarming or even charming personalities. Psychopaths are very manipulative and can easily gain people’s trust. They learn to mimic emotions, despite their inability to actually feel them, and will appear normal to unsuspecting people... When committing crimes, psychopaths carefully plan out every detail in advance and often have contingency plans in place. Unlike their sociopathic counterparts, psychopathic criminals are cool, calm, and meticulous.” - Psychology Today
The end is near, even China going full Western insanity and going CTRL+P Chinese what happened to your legendary commonsense and philosophy.
Let's pop that bubble already !
Jesus save us !
...conclude that the only thing which can help Chinese equities now is direct buying on the part of the government.
So basically the Communist Party of China are going to actually be communists again??? Or is it fascist because they even have a stock market at all? Figuring out how to label the various totalitarian dystopias is difficult...
good point
If the state owns the majority of the investment banks and owns the commanding heights of the economy, is it still capitalist? Something like 4% of government revenues come from the SOEs, and something around 1% of total government spending is covered by SOEs.
Like I said, long-term, the CPC ought to be Goldman Sachs with an army and navy; it's that scene from Animal Farm where the pigs sit down with the humans and play poker together, and sooner or later you can't tell them apart.
Just to correct, I mean 1% of GDP is covered by SOE expenditures and thus 4% of tax expenses. The "your government moonlights as Goldman Sachs" schtick is actually viable if the SWF pays enough attention to be profit generating, alongside the fact that the CPC can only recruit new commies for its government organs by presenting the opportunity to embezzle money from the SOEs. Once the embezzlement opportunity is gone thanks to their new aggressive anti-corruption campaign, the CPC can only recruit by giving the opportunity to cheat retail investors and national governments instead.
DUH. DUH. DUH.
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I don't suppose anyone in government realizes the following. If they backstop the stock market so gains are large, eternal and guaranteed... then who in their right mind would buy government bonds, which offer much less return.
The obvious consequence: all government borrowing is done by central banks, and all private investment shifts to stock markets. This does serve government purposes, because they can keep the interest rates they pay on government debt low, lower, lowest.
Of course, this also leads to currency destruction... unless they keep their economies in absolute disaster mode to counteract the massive inflationary forces with similar magnitude deflationary forces. This does seem to be the plan of major governments.
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DUH. DUH. DUH.
As someone who made a decent killing getting in and out of the Chinese markets via ETF (got in when you were calling it a bubble, got out when you were calling it the next best thing since sliced bread), China's "optimal" solution is to push the SHComp and related markets to somewhere in the 3.5k to 4.5k range. The markets had gotten out of hand lately, and honestly it would have been safer for the markets to sit between 3k and 4k, but according to analysis dropping below 3.5 (3.333 or 3.2, actually) would trigger a cataclysm of margin calls.
Beijing's optimal strategy is to use the markets to enable corporate deleveraging and pass off debt and equity back to households via the markets. For it to do so, though, the markets have to be reasonably vigorous, and at the same time, the markets need to be within a stable "sane" bound. 5k was just asking for it, and hopefully they can figure out how to keep the market between 3k and 4.5k until the real economy can justify higher valuations.