Utter Desperation: Chinese Police Vow To Arrest "Malicious Short Sellers"

Tyler Durden's picture

In what can only be described as total and utter desperation, China's Public Security Ministry and China Securities Regulatory Commission are discussing a plan to take action against "hostile short sellers"... (via Google Translate)

[ Ministry of Public Security in conjunction with the recent Commission investigation of malicious short stock and stock index clues ] correspondent was informed on the 9th morning , Vice Minister of Public Security Meng Qingfeng led to the Commission , in conjunction with the recent Commission investigation of malicious short stock and stock index clues show regulatory authorities to the operation of heavy combat illegal activities .

Which in English means...

However, it appears thety are going to need to do more...

*  *  *

Just one question: Will the police also arrest the brokers who allowed their clients to lever up to extremes with no awareness of risk, encouraged by the government, buying the stocks of companies that make plastic umbrellas at x-thousand P/E multiples?

*  *  *



As we detailed earlier, China is a $hitshow again...

With more than half of Chinese stocks halted or suspended, traders are scrambling to hedge the potential vacuum under prices when (or if) they ever open again. With options limited to non-existent in China, ETFs around the world are under pressure (with significant discounts to NAV everywhere). The cost of protecting against significant downside is now at its highest on record and the skew (difference between optimists and pessimists) has never been higher... This 'protection' has seemingly relieved some of the vicious cycle selling as yet another round of financing to backfill liquidity holes in broker balance sheets, but Chinese stock futures are trading 2-3% lower in the pre-open (less than might be expected as much driven by margin hike forced unwinds as much as sentiment).



Pushing CSI-300 Index into the red for 2015...



*  *  *

But have no fear...

Another day, another round of liquidity poured into the leverage black hole...


And the politburo is getting serious!!


Next come the orders on pain of death!!??

And then there's this...


That's not what is supposed to happen!!!

But traders have been extremely active in their hedging...

Crash risk has never been more expensive...


While At-the-Money Vol has spiked to 4-year highs...


Overnight saw Flash Crash come to China...

Selling pressure is heavy on the ETFs with all major China ETFs trading well below their NAV (ASHR 4.6% below!!)

And if you thought it was time to BTFD... consider this...

Chinese stocks are still extremely rich relative to the rest of the world.

*  *  *

We have one simple question.

How do say "unleash the Bullard" in Chinese?

Charts: Bloomberg

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
kliguy38's picture

Last chance to buy some of those 1000 P/E chicom stocks folks

Pool Shark's picture



Last chance? Of course not!

They'll be even cheaper tomorrow...


Publicus's picture

I don't know why you guys are so excited, if you look at Chinese stock charts, they had bigger rise and falls just a few years ago. And nothing happened.

Pool Shark's picture



You're assuming the current 'fall' is over...


tc06rtw's picture

For years, I have been angry & depressed to see lying become such an easy & effective way to accumulate wealth…
I am truly grateful that, finally, everyone will come to see that lying is  just as unprofitable  as telling the truth!

nink's picture

This is China on the bottom of the world.  The charts are upside down. EVERYTHING IS AWESOME

TruthInSunshine's picture

Chinese equity "markets" are about to lose another 30% over the next 6 to 8 weeks, and then cliff dive down 40% from there once Chinese Central Command realizes trying to stem the bleeding by freezing out sellers is doing more harm than good.

Richard Chesler's picture

Mark it zero, like the quality of most shit made in China.


greenskeeper carl's picture

sooo, does this mean I won't be able to sell SPXS?


obviously this will happen here eventually

NoDebt's picture

China has lost control.  Prepare for the fecal matter to hit the rapidly spinning object.

If this was really about short-sellers they would simply have banned short-selling.

sodbuster's picture

>With options limited to non-existent in China,<  Somebody should tell the Chinese- it's easy to hedge!! Just buy US index futures- especially the ES- the fed's got your back!!! Kevin Henry could prop up a sick whore from falling off the piss pot!!

philipat's picture

The Central Planners have never seen a "Market" that didn't need manipulating. Why can't they just leave it alone and let the free market work. The quickest and esiest way to get over it is just leave the market alone and let it clear.

Manthong's picture

When the time comes here, they will probably just ship’em down to Gitmo.

pretty bird's picture

Everything is perfectly fine.  Have some fried rice and calm down.  China will be there tomorrow.

VinceFostersGhost's picture




Will stop shorting for gold.

Save_America1st's picture

It will now be referred to as "sharting" the market.


carry on...

Obama LaForge's picture

No, if we had free markets right now, millions of people would die in the streets. The government is not causing the bad economy, they are hiding it with endless debt and making it worse.

Apostate2's picture

'They' are filling in my septic tanks as I write but they will never take my rapidly spinning objects.


(Tyhoon a comin')

disabledvet's picture

Too funny.

Nice snapback rally for those "shadts."

In 1929 policy makers did nothing. Claiming "they tried everything and only fail" as it least wrong on this day.

aVileRat's picture

When God bleeds, will anyone believe him anymore ? Lets ask Gorbachev.

Controlled equity locks failed in 31, they will fail today as it does nothing to halt the margin calls or an investor's reflexive outlook. China at best will burn through their cred, possibly most of their M1 FX reserves to buy months of stability, but at this point I doubt much faith exists in "uncle" Xi anymore without a scapegoat. Markets always require fresh capital and limited outflows beget liquidity shortages and limited inflow confidence.

The other thing is that Chinese history is rife with govt's who overextend, respond with police action, and subsequently lose the People's Mandate. At this point, given the dispersion of the PLA and how vested Army Oligarchs were in the markets, this could rapidly spiral into a Junta if the market route lasts into August (possible given Greece).




Paveway IV's picture

How do you say "Sell in May and Go Away" in Chinese?

Oh, never mind - Google says "W? yuè shòu ch? xi?osh?"

Brack Rendsday SUCKS!

Bokkenrijder's picture

"Bing Bong, this is your wake up call"

Let this be a wise lesson/wake up call for everyone still naive enough to believe that China will introduce honest money, like a gold-backed Yuan.

They won't!

Tall Tom's picture

Neither will any other Nation.


That is the reason we need to execute the World Bankers and REAL World Leaders...not just the Figureheads.


I agree. This is the wake up call to cast off your shackles and KILL THE BEAST and all of its minions.

GoldSilverBitcoinBug's picture

Like you phone, you computer, your shit that you buy to your children even you car parts.

Everything Chinese.

booboo's picture

so the way I understand it is the shorts are banned from putting a floor in so they are essentially removing the bidder of last resorts.

cowdiddly's picture

^^^^  hard to slow a falling sword if the shorts don't get to cover a a lower price by buying the shares to return the loan.

Always blaming the shorts when they need to thank them for taking out that old  slow wildebeast thats lagging the herd leaving the remaining heathy and running as fast as can be. Weel they are like a pack of freakin hyenas but, Welcome to the Jungle.

Ill-news the Stormcrow's picture

I don't know what you guys are on about, short sellers are clearly nothing but vultures preying on the pain (and stupidity) of others.


Besides, short selling is stupid in itself: a stock can only drop to 0, while the price could rise all the way to the mooooonnnn!

cowdiddly's picture

"Vultures....preying on stupidity" guilty as charged. hope you don't mind if I don't you mind if I do a few more circles up here Squaaaaak. 

willwork4food's picture

+10 Cow. @ the former:

Yea the price can go to the moon, but when a short sells he's exposed all the way down to 0. IF he's got the money to cover. Both are needed. What's worse: a billionaire that buys a few thousands shares @ market each day for a week for a friend or a billionaire that sells them? Both have one reason to enter: GREED. Both have one reason to exit: FEAR. That is what makes true markets real.

brucyy's picture

You gotta be fucking kidding 

There is only one possible explanation : you are a politician , or a central banker

Ill-news the Stormcrow's picture

Hear that whooshig sound? It's not an aeroplane, it's the ironic use of language, soaring over your heads. Maybe you don't hear it, it seems to be going well over your heads.

Zhers pride themselves on being a bunch of clever trousers, way sharper than the sheeple, but still, they need a /sarc tag to figure out what's actually being said.

By the way something brucyy, that's two (2) possible explanations.

sodbuster's picture

Yep- the old Cliff Klaven beer philosophy!

Al Gophilia's picture

Sorry bro. I stole your thunder :-)  (up above). I saw the word "septic" and had to dive in (figuratively speaking).

Ghordius's picture

"Always blaming the shorts when they need to thank them for taking out that old  slow wildebeast thats lagging the herd leaving the remaining heathy and running as fast as can be. Weel they are like a pack of freakin hyenas but, Welcome to the Jungle."

that's the "the market is supposed to work like the jungle theory". highly debatable, but I'm fine with it

the problem I have is when firepower, i.e. extreme leverage is given to the hyenas

remember that Master Of The Universe Hedgefund manager that was considering a 100x "bet" of unicorn size against the Bund? those guys risk... Plenty Of Other People's Money

it is, imho, a bit like giving the hyenas tanks, and listen how they laugh while they try to annihilate the wildebeasts

yes, a healthy market needs shorters. we only differ on how much, how many of them, how well armed

China seems to want none of this, at the moment, which is on the other extreme end of the spectrum (well, look at that pack of wildebeast, and note how lame it is)

cowdiddly's picture

well if you do not think that that Rhino's horn in the Chinese market this year was made without "some extreme leverage" your daft.

I do agree that it is debatable that that is how these markets have been operating lately, and if the shorts would have been allowed to do there job in the U>S markets for, oh, about the last 7 years instead of getting slaughtered with QE money and leverage, then we would not be standing here wondering why that blood is starting to trickle out our nose with the air feels a little thin when you breath wondering when you are going to hear the first scaffold board make the inevitable cracking sound. But to the moooooooooon right?

And your also right in some markets like comex gold and silver where you are limited to like 1500 buy contracts, but the shorts are unlimited in amounts they can buy. And you wonder why you get those piledrivng unstoppable drops. Its a fraud designed to never allow it to function correctly and be under constant price control taken at at will. Its not a market

Kiwi Pete's picture

What about all the buyers that have been locked out? Oh the humanity!

HungryPorkChop's picture

'Unrewash' da Kraken bitchez!!  This fuzker Kraken is madder than a bull seeing red.  It's been stuck in a bubble and pimped like a ho' to any market with $20.  Let the circus ole' La' Kraken begin. 


mamasan's picture

Herro, the malket is going clazy.

new game's picture

FUCK CHINA, bitchez

i hate control, controls, controllers, autority, rules, rulemakers, teachers and fucking the type that think they are superior.

the controllers are making matters worse and are too stupid to see their folly. now that is dumb and dumber, by dumb fucks(leaders)...

Publicus's picture

Go look up a chart and you'll see how stupid you were.

magnetosphere's picture

i might be wrong, but i think total market cap in china is much higher now than in '08.  but i see what u mean with the shanghai composite index having a bigger drop in '08

Pool Shark's picture



Not to mention their GDP was growing at over 14% in 2007.

Now it's growing at less that half that rate, and their 'cooked-book' Ponzi financing is just beginning to be uncovered...


SMG's picture

Dow, S&P, and NASDAQ are up tonight, so far.   

They might be faking us out again for now.




Magooo's picture

So the market is off 30% or so.


Ask yourself - what would it be off if the PBOC were not acting as buyer of last resort?  


Ask yourself - what would it be off if half the companies had not halted trading of their shares?


Ask yourself - what would it be off if it pension funds were allowed to sell shares and it was not illegal to short the market?


If not for these measures this piece of dog shit would blow up in minutes....  because the whole pile of shit is based on nothing more than building of stuff that nobody wanted or needed.


China is insolvent.


(but one could say the same for the US --- because the Fed is loaning trillions to companies who buy back shares creative a false market)