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China Crashes Most Since 2007 Amid "Panic Sentiment"; Over Half Stocks Suspended, PBOC Promises "Liquidity Support"
Some context...
China has lost 15 Greeces in market cap in three weeks
— zerohedge (@zerohedge) July 8, 2015
For a record 12th day in a row, Chinese margin debt balances have dropped with today's 8.5% collapse the largest in history. As of last night, there were around 570/1694 Shenzhen stocks halted/suspended and hundreds more on the Shanghai bourse leaving more than 54% of all Chinese stocks frozen ($2.6 trillion or 40% of value). China continues to try to manage leverage down (raising margin requirements on stock futures) while encouraging speculation (easing rules for insurers to buy blue chips and financing the purchase of smaller company shares directly) and CYNK'ing the entire market - if it's not open, you can't sell it and the price cannot fall! It's not working as CSI-300 futures are now down 7.9% in the preopen.
- *CHINA TRADING HALTS FREEZE $2.6 TRILLION, 40% OF TOTAL VALUE
China appears to be trying to manage leverage...
- *CHINA RAISES MARGIN REQUIREMENT FOR CSI 500 INDEX FUTURES
- *SHANGHAI MARGIN DEBT FALLS 8.5%, BIGGEST ONE-DAY DROP ON RECORD
While encouraging speculation...
- *CHINA EASES RULES FOR INSURERS TO INVEST IN BLUE CHIPS: XINHUA
- *CHINA SECURITIES FINANCE TO BUY MORE SMALLER COS. SHRS: CSRC
China news is domninated by dozens of pages of this...
- *CHINA TRADING HALTS LEAVE 43% OF ENTIRE STOCK MARKET FROZEN
- *1,249 CHINESE COMPANIES HAVE HALTED TRADING IN SHARES
- UPDATE: Trading halts have left 1544 companies, equivalent of 54.7% of the Shanghai Composite and Shenzhen Composite, suspended today. (@GregorHunter)
With what we estimate is around 850-900 Shenzhen Composite stocks suspended (over half of the 1694 stocks in the index) and almost 25% of Shanghai Composite stocks, it appears China has resorted to the endgame in managing a collapse...
if it's not open, you can't sell it and the price cannot fall!
In other words - the whole Chinese market just got CYNK'd
Time to CYNK the entire Chinese stock market
— zerohedge (@zerohedge) July 3, 2015
* * *
It's not working...
- *CSI 300 JULY FUTURES PLUNGE 7.9% IN SHANGHAI
- *CHINA'S SHANGHAI COMPOSITE INDEX SET TO OPEN 7% LOWER
It looks like today could see China go red for the year...
* * *
China weakness and European rhetoric wearing S&P futures lower (down 11 points from cash close)...
* * *
Another day another attemnpt to stabilize...
Just add this to the list of interventions...
Perhaps if you just stare at it long enough, it will rise...
Just remember this crash is telling us somethinmg about China...
The stock market knows more than any individual investor, and China's is no exception.
As NYU Professors Jennfier Carpenter and Robert Whitelaw told CNBC in January...
This optimism should be taken seriously. This run-up is not a bubble, and so investors should not fear another crash.
Our research shows that after a rocky first decade, which earned China's stock market a reputation as a casino, stock prices in China predict future profits as well as they do in the U.S. Moreover, this predictive power is highly correlated with China's corporate investment efficiency, suggesting that stock prices are teaching corporate managers important lessons as well. However, capital in China is still allocated almost entirely by its massive banking sector. It is time to untie the hand of the stock market, reform listing standards, streamline the IPO approval process now holding up over 600 firms seeking equity capital, and let the stock market allocate capital, too.
Shut Up!!!
Exhibit 1 - Based on 'fundamentals', The Shanghai Composite has a long way to go...
Exhibit 2 - If Dr. Copper is right about the state of the world, The Shanghai Composite won't find support until it has fallen another 60%...
Exhibit 3 - Judging by historical analogs, The Shanghai Composite will need to destroy all gains in the last 2 years before 'value' is once again seen...
Chinese investor psychology has shifted. Period. The more the government intervenes to lift stock prices explicitly, the more local and professsional leveraged investors will use any strength to unwind their positions (profitably or unprofitably).
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For some reason this song kept popping into my head when reading this article...looked up the lyrics and found it somewhat amusing...
When are you gonna come down
When are you going to land
I should have stayed on the farm
I should have listened to my old man
You know you can't hold me forever
I didn't sign up with you
I'm not a present for your friends to open
This boy's too young to be singing the blues
So goodbye yellow brick road
Where the dogs of society howl
You can't plant me in your penthouse
I'm going back to my plough
Back to the howling old owl in the woods
Hunting the horny back toad
Oh I've finally decided my future lies
Beyond the yellow brick road
What do you think you'll do then
I bet that'll shoot down the plane
It'll take you a couple of vodka and tonics
To set you on your feet again
Maybe you'll get a replacement
There's plenty like me to be found
Mongrels who ain't got a penny
Sniffing for tidbits like you on the ground
So goodbye yellow brick road
Where the dogs of society howl
You can't plant me in your penthouse
I'm going back to my plough
Damn those little chinks. This is what they get for bullying those american allies in the south china sea. The US is doing this. I said right at the time of the south china sea tension that usa was going to "russia" china.
Effimg dumb ass professors don't know Jack Shit!!!
"As NYU Professors Jennfier Carpenter and Robert Whitelaw told CNBC in January...
What goes up...
It was all just fiat with nothing to support the valuations. I'm still not convinved the Shanghai is connected to the real ecconomy though , same as the fall in the micex had little effect on Russia. Still there'll be knock on in the UK and US re rich chinese buying stuff especially property.
Yeah, bubbled out USA property, but hey"" this time next month or year.. US might be the only place to park all that printed fiat..
Is this it!!!! Really this time!! WW3 finally!! Goddamn, been stocking all this shit for sump'in....
There is no way in hell this doesn't spread and whack the rest of the world. Chinks are a major player in us tech. Throw in a strong usd and these tech companies are in big trouble. The fed doesn't bail out technology companies.
Buy gold tomorrow... I own a pawn shop, my Indian guy, my Ching- Ching and my Jew called me today and said they would pay spot.. 10-15% over on coins... Sum thing big is happin'... Bart
Jade Helm begins July 15, any connection?
Pre game show, next they will trout out another school shootin'.. navy yard sum thin' or another.. Yeah, (takes a long drag on cigarette..) it's pretty much here...
Black Wednesday tomorrow?
To all the Chinese peoples waiting for your stocks to rebound in order to get out, best wishes.
Mr. Market kicks China's butt. China calls a time out. Come on out China says Mr. Market and I'll learn ya how the real world works!
Finally, a story that can give us all a warm fuzzy feeling, might even be worth throwing CNBC on tomorrow to watch the comedy routine of explanations regarding this and Greece.
Is this why an unlocked Blackberry phone costs 270 dollars? I bought one last month for $350. I should have waited.
Shanghai down 6% for the session still.
Buy the new highs guys.
Oh they already did.
Gold - Unchanged in AUD
Silver back to 3mos and 6mos ago, in fact there have been three spikes and falls in AUD price of silver in that time, in fact maybe I should start setting clock.
Got a 100oz silver cast bar from Perth Mint today, nice in the hands. Stack.
AUD has been banging on the door of 0.73 USD all day and it just went though to 0.738
http://www.xe.com/currencycharts/?from=AUD&to=USD&view=12h
http://www.xe.com/currencycharts/?from=AUD&to=USD&view=1M
Hang Seng down 9% right now.
With a name like "Hang Seng", where else would it go?
Hey, you are not allowed to mention the words 'diaster' or 'liquidity problem'. You can only say the market is still going up but in negative number. Pop corns never tasted so good.
Markets, irrational since 1600s Holland and Tulip Mania.
Gold is for currencies not stock markets.
Yeh the Chinese are pretty smart, they have a back stop for their currency if SHTF.
And I am pretty sure that any Chinese with spare cash would be putting some into gold. And Im totally surrounded by Chinese and it is what they do.
The backstop for the USD, its reserve status, else it would be a whole lot worse.
Bring out your dead!
Why not halt trading when its goes up 8%, seems rather biased.
They would save themselves a lot of pain if they did halt trading on large up moves.
You can put your faith in the USD or they will kill you.
PS. They're not kidding.
.
Get a load of this, bloomberg:
Yup, always trust the squid to play it as straight as a roller coaster.
"... middle class will be greatly hurt. ..." - Jingxi Invest.
“... It’s not in a bubble yet, ...” - Goldman Sachs
"Maw ... get the blunderbuss out!"
Anyone who is surprised China is getting hammered needs only to look to Monday evening commentary from the contra indicator Gartman. This guy once again proving he is worth listening to so saying he was looking to go long China
A good trading buy
China and a host of other countries listed as 'not free' by the Freedom Index support Argentina's Malvinas claims. They're backing the wrong side: https://www.academia.edu/10490336/Argentinas_Illegitimate_Sovereignty_Claims
US banks manipulating Chinese stock market. China declares war.
http://www.eutimes.net/2015/07/china-warns-russia-that-state-of-war-now-...
Aaah, the beauty of a "command" economy (sarc). Let's spin this..."No worries, we are just teaching it how to roll over and play dead".
bhahahaa ... Fluctuations? FLUCuASIAN ... FLUCuAMERICANS next!
If my hand is in the monkey jar holding peanuts and I can't get out, and I can't let go -I'm trapped. As soon as someone says "you can let go of the peanuts", I'm gone.
You can provide all the liquidity you want to a market - if the room is on fire, everyone is going to rush for the exits. Let's say I'm a farmer making more money from stawks than growing food. Now I see my winnings disappearing. I start to sell. The .gov closes the market. I can't sell. I pace and pace and pace. the market opens - SELL EVERYTHING! Before they change their minds again.
This is a bigger deal on ZH than it is in China.
Except that there are plenty of people - and charts - that show how big movements in the chinese stock market portend the same big movements in the US stock market. Certainly causes me to take pause.
the chinese were weaned/trained/schooled to react to certin instences, thuse react the same inmmasess when wanted to by their gov.. housing, te usa housing next..
http://goo.gl/cxiZvu - Link has an amazing collection of old US treasury certificates redeemable in gold.
https://en.wikipedia.org/wiki/History_of_money - a quick and dirty look at money
I like that people started 'loaning' money to the banks. Initially, you stored your gold at the bank, and you payed a fee for the service. They gave you a certificate, basically a promissory banknote, entitling the holder to the value of gold stated. You could avoid fees if you lent the bank your money to lend itself. You could even earn some interest. As they started lending their loans out at an interest greater than the interest they were paying for their loan, they soon realized they could lend more than they had, as on any given day, most people did not come in and demand physical ownership. Fractional reserve banking.
Gold is heavy, you don't want to carry around large quantities of gold for transactions, so you obviously would prefer to carry a stack of certificates. Remember, currency was a thing to facilitate trade. Many different things were used as currency in the past. Gold seems to have been the most suitable, and cash today was modeled on gold, as the certificates entitled the bearer to the value of gold stated.Then the certificates redeemable in gold got divorced with gold. Then they were just pieces of paper. Now governments are looking at a cashless society.
Where did it go wrong?
Credit creation
Does the government first, or the 'central' bank, first expand the money supply by issuing reserves, or do banks create loans and then look for reserves.
Someting wong?
TPTB believe in central planning, and rule by "experts" (whether or not the expertise can be empirically verified). They and their predecessors have believed in it for over a century. They are also the same crowd who once loudly, now quietly, believe in Eugenics.
The creation of the Federal Reserve and the advent of WWI were to cover the bankrupcy of the British Empire by these same folks. If one cares to look, the BOE suspended specie - the international currency - BEFORE the war ACTUALLY started...and only days after Ferdinand's assassination. I imagine the Warburgs were not pleased. Regardless, if you note the Gold inventory of the United States over those months you will note it greatly expanded at just that moment. The Fed was made into the 'good' bank. The BOE was made the 'bad' bank.
They believe in Central planning. And the belief is why they were so afraid of the Soviet Union. They were afraid because the Soviet Leaders were not themselves, but had vastly more central planning power and authority. To their way of thinking then, the Soviets were destined to win.
The bare Soviet shelves in the late 1970s, and throughout the 1980's simply made no impression on them. Because the core of their belief is elitism. Only they are real people. Those from whom they derive their power are chattel to them. And they see no consequences arising from starving masses.
Today's centrally-planned Utopia in the world is China. And given the degree of central planning power available there, these folks have been migrating their considerable wealth there for at least 20, if not 40 years. But while they've had significant success infiltrating the Chinese oligarchy, they are still outsiders...and they've been aware for a long time that time in Europe and the US was running out. They need a new 'good' bank, so that they can have a 'bad' bank, so that there can be a credit reset, without resorting to honest money.
So...here they are. One-and-a-half feet are in China specifically, and Asia generally...and it is still not ready to be the 'good' bank. But they can't keep their 'bad' banks alive in the US...and their longshot-reconstituted-Europe isn't doing well.
So, China and Asia have to be the good bank, and will conquer all with centrally-planned excellence.
Except the experts aren't expert. Central planners lack local values, and therefore lack the local knowledge needed to plan, and therefore plan for the wrong things.
Shortly, central planning doesn't work, and cannot work, because the field of economics is about the satisfaction of wants prioritized by individually-determined values...and the central planners do not and cannot know what those values are.