China's Plunge Protection Team Bought ¥1.8 Trillion In Stocks In 2015

Tyler Durden's picture

There was a palpable sense of disappointment among US traders who woke up this morning, expecting China to have announced another major stimulus - whether an RRR or full-blown interest rate cut - following Saturday's announcement that after 46 consecutive months of wholesale deflation, not to mention a historic market rout, China had not engaged in another round of monetary, or at least fiscal, and very much self-defeating stimulus.

The mood turned even more sour when the same traders, used to getting bailed out by central banks or nation states, read the tape from the overnight Bloomberg, according to which China's premier was quoted by Beijing News as vowing that there would be "no more strong stimulus on the economy".

Just as bad, the prime minister added that China wouldn’t seek strong stimulus or flood the economy with too much money to expand demand, Beijing News quoted Li Keqiang as saying in Taiyuan city.

Li then added that China will try its best to develop new business models and create new drivers for the economy, which naturally is bad news for a market which is used to the old, conventional form of "growth": throwing trillions in cash at the problem and hoping something sticks. 

Finally, and most confusing, was Li saying that China must take concrete measures to ease overcapacity in the steel and coal sectors.

Why this is confusing is that just on Friday, CRI reported that China "will provide full support for the coal and steel sectors, which suffer serious overcapacity, to help them out of their current difficulties, according to an official statement issued Thursday. Since last year, overcapacity in those sectors became a prominent problem due to weak demand at home and abroad and dropping commodity prices on the global market, the statement cited Premier Li Keqiang as saying at a meeting on the topic."

This, to us at least, sounds like a promise of another bailout and quite contrary to the Beijing News report.

But where things get even more confusing is that despite intervening in the market, as it did on two occasions last week to prop up stocks, the PBOC is now increasingly shifting away from an activist approach toward the Chinese stock market.

Which begs the question: why spend all those billions to prop up the stock market in 2015 if China will no longer do this? And what will happen to the US if, as many expect, China not only allows the Yuan to depreciate aggressively in hopes of boosting inflation (even if all it will achieve is to stimulate social unrest) but steps aside the next time the market crashes.

But how many billions (or trillions) did China's so-called "national team" spend to prop up stocks in recent months? According to Goldman not less than CNY1.8 trillion in the June-November period.

Finally, why this is very bad news for Chinese stocks is that as Goldman further notes, "major individual shareholders (>5%) holding as much as Rmb1tn worth of shares are incentivized to sell."

If the PBOC is not there to provide the bid, all hell could break once again, as soon as start of trading tonight East Coast time.

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Looney's picture

The Fed must be drooling over China’s overt stock-buying…

When the next crisis hits, the Fed won’t be asking the Congress for a new TARP, they will demand the authorization to openly buy any stock the Fed wants on its balance sheet.


knukles's picture

Half measures availed them nothing ... They stood at the turning point
They asked the Fed's protection with Complete Abandon....
All the Steps the Fed took were the Wrong

tc06rtw's picture

  …  more Anonymity, please…

jefferson32's picture

All I know is that when China devalues, chemical plants blow up. Another one this week-end.

Kirk2NCC1701's picture

Would love to hear what the "Currency Wars" king, Jim Rickards, has to say about the beating that Team China is taking.

The Fed must be splitting its gut, at how inept Team China has been playing. Unlike Team USA, they have their hands full in keeping the whole thing together and running.

Until Team China comes out with (a) Gold Yuan, and (b) CIPS goes online/mainstreet, it all means little, as the Fed's USD hegemony is continuing its global carnage in the FIAT DOMAIN.  Duh!  Jump, frogs, jump!  LOL.

Kayman's picture

The Fed has been a buyer in every paper market for at least 7 years- through backstopped surrogates.  And through "swaps" they are the world's largest buyer of other currencies. The only question is that with a $4.5 Trillion balance sheet now, can the country carry the load of more Fed adventurism ?

Janet Shalom Bernanke's picture

The Fed better pay close attention to the lack of success in the National Team in their stock market manipulation.

As if the the Fed ever pays attention to anything.  You can depend on the Fed to do the same thing, to losing trillions in dollars, that is not only unauthorized but likely illegal.  The tide will eventually go out, and the Fed will be exposed.  This 'should' be enough to finally get the public backash to end the Fed and their crimewave.

nmewn's picture

"Why this is confusing is that just on Friday, CRI reported that China "will provide full support for the coal and steel sectors, which suffer serious overcapacity, to help them out of their current difficulties, according to an official statement issued Thursday. Since last year, overcapacity in those sectors became a prominent problem due to weak demand at home and abroad and dropping commodity prices on the global market, the statement cited Premier Li Keqiang as saying at a meeting on the topic."


"The US added 292,000 net new jobs, the Labor Department said Friday."

...nope, I don't see any similarities there at all, no, not any...lmao!  

knukles's picture

Not to worry.  Just think of all the new jobs to be created with all the new leeches upon the state...

_ConanTheLibertarian_'s picture

Yes they caused a bubble which is now halfway deflated. Way to go fuckers.

Drain Bamage's picture

So, what are these individuals going to buy? Tsys?

daveeemc2's picture

couple trillion yen is p-nuts. dont forget about exchange rates.

they got a lot more trillion to go to shore up the rape of china citizens savings accounts (aka junk bonds)


wake me up when news reels announce 15 trillion cny

Consuelo's picture

Any more cheap gold for sale from Uncle $Sugar and his toady Down-Under to Hong Kong...?

Fuku Ben's picture

There's nothing to worry about if they run out of money to keep things afloat their new partners in the IMF will gladly help them out.

boattrash's picture

Anybody know what the US PPT spent in that period?

SirBarksAlot's picture

And according to Karen Hudes, there is research proving that the top corporations are all owned by the same group of people.  According to the interviews by "V" the Guerilla Economist with Greg Morse, individuals aren't allowed to own stocks.  They own the beneficial rights for the time period that the hold the "stock."  But there is a complicated system of regulation that only allows the regulators (DTC?) to own the actual stocks.


The Saint's picture
The Saint (not verified) Jan 10, 2016 12:33 PM

The Chinese government knew this was all coming including the free-fall devaluation.  That's one reason why they have been buying so much gold.

orangegeek's picture

and while gold moves higher, silver and platinum tank - platinum is USD220 lower than gold - isn't that wow?

wmbz's picture

Time to double down bitches, throw 4 trillion Y in there and see what happens!

orangegeek's picture

...and triple down by blowing up more high rise buildings that are 2 years old or less


those fucking chinese communists - they so smart!!

two hoots's picture


Not a full thought but:

The/A problem is following paper money, like time, it is manmade.  It is something that helps keeps a sense of social order/control in developed/developing nations.


Did Hitler need money to continue?  No, just resources (including people) which he could take by force.  Does China need money?  Yes/Kinda as they chose to follow the paper money thing but they (have resources) and can shift to a pure military option and just take/build what they need, paper money be damned. Once you get the control you want you can start the paper money thing again.


Kayman's picture

"Did Hitler need money to continue?"

Yes he did. In invaded countries the Nazis issued convertible german notes that soldiers could take to any bank and exchange for the local currency.  With local currency, e.g. the French franc, german soldiers bought up whatever they wanted and sent it home to Germany.

Amish Hacker's picture

Swiss central bank buys stocks (esp AAPL), Japan's central bank buys all new bond issuance, China buys equities indiscriminately.

What is the end game of all this? Governments eventually become beneficial owners of all financial assets. Isn't this just another way of enslaving non-government life forms?

holdbuysell's picture

What central planning giveth, central planning can taketh away.

lester1's picture

If we were fully able to audit the Federal Reserve we would see that they have been buying stocks  too. The Federal Reserve's Plunge Protection Team operates via The New York Fed basically creating electronic money out of thin air and buying "mortgage backed securities" from their primary dealers. Those primary dealers then have freed up capital for them to buy stocks with to try and drive the market higher.


It's all an orchrstrated scam to prop up the assets of the .1% and protect the wealthy elites from the economic depression on Main Street.


Only problem is now the wealthy elites see the crash coming and are starting to sell and cash out to protect their wealth. They always get out first.


All these pundits on TV make a big deal of Chinese government manipulating their stock market. We do the same thing too. We just don't announce it.


Audit the Fed !!

I Write Code's picture

Just to be clear: they buy ¥1.8t, then sell ¥1.7t.  Just like our Fed does in the US markets. 

They don't buy and hold. 

sun tzu's picture

Is that why the fed balance sheet is $4.5 trillion and growing?

ThisIsBob's picture

About the PPT.  Well, I'm for a rusty jihad up the wazoo of the 1% and their ilk, but there are gazillions of retirees (miitary, government, pension plans, etc.) whose retirements are in large part dependent upon the price of stocks.  It would seem to be a logical political move to keep those assets from blowing up and pissing off a lot of wasp's.

lester1's picture

So basically the stock market has been nationalised? That defies the definition of capitalism then.

Bunga Bunga's picture

Who could have thunked that the corrupt get bailed out?

lucky and good's picture

With every market pullback as of late we are forced to wonder if this is the beginning of the end. Have we entered the period that may someday be referred to as "The Great Reset"? This is the period where after decades of modern monetary theory the world reverts back to the tried and true.

When it comes to a falling market however, the market can fall like a stone or in the case of a "realizing market" slowly grind its way downward. The slowly downward and bone grinding action of a realizing market tends to go on forever and a day with no respite. The article below explores this subject.

DeadCatBouncer's picture

"China's Plunge Protection Team Stole ¥1.8 Trillion from Taxpayers to prop up Overvalued Stocks In 2015"