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Chinese Stocks Plunge Again, "VIX" Hits Record, "Nasdaq" Down 40% From Highs
Despite all the hopes and prayers of illiterate farmers everywhere, Chinese stocks refuse to hold a bid and down 3-4% at the open amid suspension of around 160 individual securities. In the pre-open to open, Shanghai Composite is down 3.2%, Shenzhen is off 3.5%, and China's Nasdaq - ChiNext is down 3.8%. This leaves ChiNext down over 40% from its highs as the cost of insuring downside in Chinese stocks explodes to record highs. As China goes through the 1929 playbook to save its 'market', it appears "momentum" has shifted.
- *SHANGHAI MARGIN DEBT BALANCE DECLINES FOR RECORD ELEVENTH DAY
- *HKEX DROPS AS MUCH AS 4.2%, FALLING FOR 8TH STRAIGHT SESSION
Not a good start to the day...
And the morning session ends NOT OFF THE LOWS...
Some context for the moves...
As we noted prerviously - psychology has shifted... every government-driven ramp is sold into by as many retail locals and foreign professionals as possible... and remember the local professionals are now stuck with losses as they are not allowed to sell.
Which explains why downside vol costs explode... (if you're not allowed to sell stocks... what's your next move?)
The cost of options protecting against a 10 percent drop in the ETF was 11.5 points more than calls betting on a 10 percent increase on Monday, according to three-month data compiled by Bloomberg. The price relationship known as skew climbed to 11.8 points last week, the highest since the ETF started in November 2013.
For Aberdeen Asset Management’s Nicholas Yeo, China needs to let fundamentals govern its stock market, not state directives.
“International investors are skeptical that all the government measures are short-term, cosmetic,” said Yeo, the Hong Kong-based head of Chinese equities at Aberdeen Asset, which oversees about $491 billion worldwide. “If you want it to be a proper market, there should be less interference.”
1929 Deja vu all over again...
“The more resources authorities commit to propping up the stock market, the more they ratchet up the potential fall-out risks should the market continue to collapse,” said Andrew Wood, an analyst at BMI Research. “This could give rise to a crisis of confidence in the authorities’ ability to support both the stock market and the real economy.”
And with 888 stocks down and only 29 up - PBOC is gonna need a bigger boat fund
* * *
On the bright side - though we are not sure of that - it seems the twice burned Chinese are greatly rotating their newly lost equity wealth back into real estate...Via ForexLive:
Preliminary results from the China Household Finance Survey
- 31.5% of respondents plan to reduce their stock holdings
- 12.3% said they plan to increase their stock holdings
- Remaining saying they do not plan to change their holdings
- For Q2 4.8% of stock investors bought homes, compared with 2.3% recorded in Q1
- Of those who bought property, 70% came from households that have made money in the stock market.
The China Household Finance Survey is a quarterly survey carried out by researchers at Southwestern University of Finance and Economics in Chengdu.
* * *
Will they never learn?
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What is shocking is that the market continues to fall even with overt government support.
Won't be long before the government starts buying stocks and outlaws short selling. Selling by pension funds has apparently be banned. Next the government may require pension funds to have a minimum allocation to stocks.
China's manipulation is overt compared to the refined techniques of the Fed.
Me Rikey! Who buy Nike?
Cink Too Lo!
Mek Go Hi Now!
You people not funny! Not funny! You buy China stock NOW!
Rero Hedge bad place!
China's economic cancer is going to be the catalyst that sparks the next global financial & economic crisis, not the EU PIIGS+France (though these will exacerbate the situation).
In about a year or so, everyone will say, given the privilege of hindsight, that this was "so obvious."
I wouldn't be surprised if China's economy was contracting at a REAL rate of 5% to 8% on an annualized basis as of now.
china has outlawed mutual funds from selling their stock, does hank paulson work over there now?
The fools have been spying on our defense contractors. They should have been spying on the plunge protection team.
Now is the time to invest in Chinese real-estate. The market has hit bottom. The sky is now the limit.
china has outlawed the truth(as elsewhere implied). everything needs to deciphered, a new world to navigate that even the manipulators of the finest origin are struggling to manip.. beyond a fucking joke...
My reply to you is above though I have no idea why.
chinese don't have problems saying Ls...
closer to a fifth of the most common words and most common surnames have distinct English-similar Ls....
....just saying o_0
but, it's not shocking considering you have millions of very active "day traders" who will sell into any profit at all now...and who will stop/loss on any weakness. The volatility becomes inevitable.....not to mention margin calls. As for me...tough to watch, I don't like seeing little guys get wiped out and thats what we're witnessing, as the uber wealthy who sold this stuff and now own three houses in San Marino will glide the rest of their lives.
1929 was nothing compared to this.
Interesting Epilogue to 29...as with 2008...many folks didn't see the collapse as a big deal at the time.
Not true of "officialdom" in 2008...which turned out to be a good thing.
"Europe" sure didn't see 2008 as a big deal...
We are always talking about waking up to the facts and whatnot, yet I don't see anything happening at all.
How long can this go on? I read posts about gold-manipulation years ago yet investors still buy in on the paper farce. I can't comprehend the stupidity, and I can't see it ending anytime soon, people are not going to change at all, they rather die.
Greece default - nothing happens. We fire the finance minister, the last person who gave a fuck about the people of greece, and now we're back to discussions?
China is crashing but in the west everything is still awesome? Who is going to produce all the cheap shit we are importing for our consumer-whores? There is no possibility for a wealth transfer like this to help the chinese economy in any way, the poor are way worse-off and probably starting to get angry. Yet there won't be change, they'll just incarcerate or kill anyone who opens his mouth.
Nothing will change until hyper-inflation hits all those QE junkies, and by then it will be far too late. Long shovel and coffin manufacturers, although we might have to burn the bodies as they pile to the skies.
China may outlaw all selling, as destabilizing.
banned pension fund SHORT selling... not selling
(Well unless they own about one of the 20% of stocks which have been halted from trading... but that's a different pile of bat shit)
Are you sure about that?
China's state pension fund ordered its asset managers not to sell any local shares on Monday, after Beijing halted new equity issues and forced the central bank to extend credit to brokers as part of emergency measures aimed at bolstering markets.
http://www.afr.com/news/world/asia/china-159-billion-state-pension-fund-...
Well at least there's one market somewhere crashing. And here I thought everything was fixed. The Chinese PPT must be new at this.
The smart Chinese money is cashing out and planning to buy condos in Miami.
Wait...did I say smart money?
Can someone please explain to the Chinese, If you want to copy the Dow index then the only prescription is More Cow Bell. Sheesh
Print you communist pricks, only Keynesian QE can stave it off for awhile.
Hyperinflate, hyperinflate, throw up all the profit you make, V-O-M-I-T!!!!!!!!
Rah rah ;-)
The entire left, right, communist, capitalist mem is laughable at this point...who ever took it all seriously should really feel like idiots.
I suppose you're right...to a certain point...whoever thought "buying" Chinese stawks (companies, owned by the Chinese government) was sound "investment" and/or capitalism should have their heads examined.
http://www.timesunion.com/news/article/Chinese-small-investors-look-for-way-out-of-stocks-6368442.php
"Bin Ladens dead and GM is alive!" - Biden, multi-event surgical brain patient, survivor.
The larger thing is this, the entire world now realizes its been living an economic fabrication, an unviable nightmare brought to us by TPTB and we are told by same that to change or restructure any of it will surely result in our doom, that we must go back to sleep now and continue living in the dream (the lie) of propping up the unprofitable, of regulating the cronyism as the election results come in, for the good of all humanity.
Well I'm more reality based, dreams & fantasies are for children.
and so it begins...sleep well Central bankers, sleep well for tomorrow is another day
But sleep with one eye open because your time is growing short.
Wi two gweedy.
Remember: the Chinese stock market went through a similar boom and bust just before the 2008 USA stock meltdown!
"1929 Deja vu all over again..."
I was thinking the same thing. I recall (from what I've read, not by actually living through it) the House of Morgan and other large investors got together and forged agreements to create purchasing pools to attempt to support stock prices. Like now, it wasn't all company stocks- just the ones they cared about. It didn't work. Not even for the companies they were trying to support.
If you think the 1929 numbers are ugly, go look up historical Dow prices for the next couple of years after that. From a high of about 381 in September of 1929, it tumbed largely unabated until July of 1932 when it hit..... 41.
41 still seems high. I coulda bought Seabiscuit for $2500.
You do realize I'm going to spit in the face of every panhandling parasite (crony or government parasite) I come across in the street right?
Don't think ill of me for it, just know what I did to his brother in the alley was much worse.
Do you think we’ll need to fill the gap back at DOW 39?
39 was pre-algo. Don't let the algos FIND that gap!
If one wants to really have some fun, look up the other historical DJIA low points, such as August 7, 1896 @ 28.96, November 9, 1903 @ 42.15, November 15, 1907 @ 53.
It would almost look like there is some long term support around 41.
Sit back and ponder about that.
That would be like breaching 1750 today.
This is kwazy!
I'm loving the Chinese stock market. FXP long, baby. :-D
I paid a year of car payments in advance.
LOL
Revolution is coming.
Might just see the primary, historic, reason for the existence of the PLA again soon:
Suppressing Chinese people.
Their moves reek of desperation.
the fascist bernank is not amused
Lets get it on............uuuuuuuuuu baby lets get it onooon.
The Mandate of Heaven never changes in Chinese history regardless of flag or ideaology. Xi has made some big time enemies in his latest purges.
If it keeps crashing it will have much larger fallout now that PBOC & the CentCommit are all in.
Hilarious to read the "because of Greece" headlines actually.
"Mexican Peso slammed due to Greek fears"
Who knew?
"Mexican Peso slammed due to Greek fears"
Who knew?
WTF? Mexicans are way more scary than Greeks.
So what's the difference between an illiterate Chinese farmer and a stupid, Gruberized American?
About 250lbs
touché!
Buy the fucking dip. If you don't you're an idiot.
https://www.youtube.com/watch?v=0akBdQa55b4
I bought CHAD in after hours today.
amateurs ...
it looks like a real market, but it isn't.
Here is a bit of Chinese psychology: stock market crash: all you have is a worthless piece of paper/real estate crash: you still have an apartment.
The PBOC can have fun convincing the banana dealers otherwise.
. . . but you also have property taxes & HOA dues.
That might be a really smart banana dealer indeed...
Not to mention the apartment might not even be built yet.
pretty low in a lot of cities...
except tier 3 cities but if you've got secondary properties there you're probably loaded anyhow lol
My property taxes were 666 this month.
US Indexes are green. How is it China can't prop up their "markets" with printed money but the US can?
My theory is that they got the timing all wrong. They let loose all their firepower in the first five minutes. Things go up, then people see that's it and prices fall.
The PPT waits til the last five minutes of the day before letting loose their firepower, ensuring that the day ends on a positive note.
So have the Chinese forgotten about gold?
Probably they got caught up in 'the Western Disease'...chasing currency instead of wealth.
Jim Chanos is making serious bank right now. He and his group have been short Chinese stocks for the "I can't remember when" period. A few years at least The CNBS stooges kept asking him if he was wrong and every time they did, he told them he'd added to his shorts on the Chinese Markets.
I totally gave up CNBS last year as a background ticker machine, muted of course so I haven't seen him on since then elsewhere but I'm sure given his conviction, he will walk away with multi billions before this rout is done.
Well done Mr Chanos.
Man with hand in mocket come out with empty fingahs.
Mek Go Hi Now!
Well that escalated quickly....
Someone should tell the Chinese about Gold.
Finally the world is starting to come apart at the seams at a rapid clip. Best time ever to load up on Gold, Silver, Platinum, Palladium, Guns, Ammo, heirloom seeds, food.
Anyone who cares about living a half decent life should have gotten outta dodge long ago. Now may be your last chance: better go very soon, before the cell doors slam shut!
Last Friday my GF in China was saying her friends wanted to buy the dip. I expect there is lots of room for it to get worse if that is a common idea.
Come on PBOC --- we need more gasoline on that fire --- the fucker is burning out!!! More gasoline Muther Fukkers!
Wait until they're down 50-60%, then watch the fireworks. It should only take about a week or two.
Would be interesting if it hit Germany, as lots of wealthy Chinese buy German cars.
That would be a nice roast of DAX, with a little spicy Szechwan cuisine.
Shanghai'd again -3.19%
CApitulaTiOn BiTcHeZz
As a friend in China says, the Chinese not really stupid, they know if government interfere it something serious.
Most people now know something wrong stock markets so want only get out.
But govt make a way to not lose, Govt only buy big corporation not small corporation,
So best buy Shanghai and sell Shenzhen.
Later Shenzhen will go too low, and govt will stop buy in Shanghai and start buy in Shenzhen, That when we take profit in Shanghai and cover short in Shenzhen and start buy there.
Then Shanghai will falling and Shenzhen booming again.
All Chinese know this. Everyone make nice profit
Time for the Fed to put on its spandex pants and cape.
Any reports of suicides? Are they jumping off buildings, out windows? Only when that happens and is reported will you know they have given up. Otherwise, the ywill be back at it shortly. Once bit, always gullible. It's called greed.
I wonder what Jim Kramer would advise??????
“If you want it to be a proper market, there should be less interference"
Is that message to the PBoC or the Fed?
23% stocks halted in Chinext http://stream.marketwatch.com/story/markets/SS-4-4/SS-4-83837/
Iron price is still continuing its plunge even as Aust production remains high so it looks like the biggest miners want to take this perfect opportunity to rid themselves of marginal producers. At that point they'll no doubt reduce production as there's no point driving price lower by over-capacity at that point. Stockpiles are filled and China is clearly going to go soft from here. So the cheap prices just mean Asia has been filling up its stockpiles into slowdown while price remains comparatively low.
So when China does go down, from here, iron ore demand is really going to plunge, and stay low thereafter sans a massive stimulus effort, as per 2009.
(Andrew Forrest is going to be shit out of luck this time)
http://www.infomine.com/investment/metal-prices/iron-ore/
Obligatory:
"It's different this time".
Carry on.
That bear ain't going to hibernate forever.
In comparison, the Shanghai started its parabolic run just in jan of this year, only about 6 months ago. Why not let fall back to dec 2014 levels. This is just a blip.
Why is this such a big deal? How much real impact did this market rise have since Jan and is worth supporting?
Seems bizarre.
Yeah, they're only back to April prices. It's not the end of the world. Just a healthy correction to a market that's gone up over 100% in a year. That was never going to last. If it goes down another 20% from here it will still be up for the year.
double post
TruthinSunshine,
I surmise that you are correct. Exacerbating, or encouraging deflection, China has a mini-war on the border with Myanmar (very nasty) as well as moving major HQ-9 air defense missiles to the Kashmir border in anticipation with an India border conflict. The PLA has held live-fire exercises in Hong Kong after the defeat of the Beijing pushed electoral 'reform'. A Russian press report says that the Vietnamese are locked and loaded with their Russian purchased subs and missiles to roll up the disputed Islands (the Chinese have rolled out their CNOOC floating oil rigs again just to raise the stakes). The Hague Court is now dealing with China's refusal to deal with counter claims over those islands in the southern sea. The Chinese Embassy has warned their citizens about visiting Turkey as there has been major reprisals against their nationals over the treatment of the Xinjiang Uyghurs perhaps encouraging China's floating the Greece bailout bid. And so it goes on.
For Aberdeen Asset Management’s Nicholas Yeo, China needs to let fundamentals govern its stock market, not state directives.
These bullshitters call for Government intervention to save 'the markets' (themselves) - then they call for no Government intervention to save the markets (themselves again).
So what's the difference between China and the US? (or anyone else for that matter)
Shysters of the highest order
Forget about China stocks- there is on US market plenty of a good sell shorts- without a problem to short it...
e.g. TWOU, DATA, DXCM etc.. More info you can find here:
http://prudentvalueinvestor.blogspot.com/2015/07/2u-inc-twou-sell-short....
Sum Ting Wong!
In Mandarin logic, why can't the Chinese government pass a financial market rule that the last sale price is automatically set as the new price floor, below which it is illegal to sell.
People can decide to dump at current prices, or await real world conditions to inflate to the temporary excess bidding that previously occurred on the markets.
In this way, it is impossible to have losers. Guaranteed winners everywhere. No revolution by peasants.
In Mandarin logic, why can't the Chinese government pass a financial market rule that the last sale price is automatically set as the new price floor, below which it is illegal to sell.
People can decide to dump at current prices, or await real world conditions to inflate to the temporary excess bidding that previously occurred on the markets.
In this way, it is impossible to have losers. Guaranteed winners everywhere. No revolution by peasants.