China Is Proud To Announce It Is Reflating The Bubble - Will "Actively Push" Investors Into Stocks
We did a double take when we read the following lead sentence from a just released Bloomberg report on what is about to take place in China: "China’s stocks regulator will “actively” push pension and housing funds to begin investing in capital markets, and encourage long-term investors such as insurers and corporate pension plans to buy more shares." To paraphrase Lewis Black - we will repeat this, because it bears repeating - "China’s stocks regulator will “actively” push pension and housing funds to begin investing in capital markets, and encourage long-term investors such as insurers and corporate pension plans to buy more shares." And that is the last ditch effort one does when one has no choice but to push "long-term investors" into the last giant ponzi. Of course, this being China, "long-term investors" means anyone at all, and "pushing" ultimately involves either 9MM or a 0.44 caliber. And what was said earlier about mocking mainstream media spin - well, the first opportunity presents itself a few short hours later - when Bloomberg, the same agency that wrote the above report, tells us that "Asian Shares Rise Amid Global Economic Optimism." Odd - no mention of the fact that China is now pushing habitual gamblers, which over there is another name for "investors" into what is openly an invitation (at gunpoint nonetheless) into the latest and greatest bubble. That said, we give this latest artificial attempt to boost stocks a half life of several days max before the SHCOMP plunges to new lows for the year.
More on this hilarious attempt at reponzification:
The China Securities Regulatory Commission will also allow the creation of sovereign debt futures and explore other new products such as high-yield corporate bonds and municipal debt, the regulator said in a statement on its website yesterday, citing Chairman Guo Shuqing’s comments during a national work conference in Beijing.
Guo, appointed Oct. 29, told securities officials China needs “systemic arrangements” to channel cash into under- funded areas and sustain growth. He echoed Premier Wen Jiabao’s message at last week’s financial work conference that the finance industry should serve the real economy.
The Shanghai Composite Index tumbled 22 percent last year, the most since 2008, on concern increases in borrowing costs and Europe’s debt crisis would derail economic growth. The 33 percent drop since 2009 makes the benchmark the worst performer among the world’s 15 biggest markets.
China should make investments using the 2 trillion yuan ($317 billion) in pension funds from its provinces and 2.1 trillion yuan in housing funds, Guo said at a conference in Beijing Dec. 15, without indicating where the money should go.
This explains the surge in US exports recently and the relative economic strength - it appears America has been exporting financial innovation (such as high yield corporate bonds and municipal debt) double time to Shanghai. Which in turn was tolled by domestic child labor sweatshops and resold to US investors via E*Trade and Schwab as quadruple levered ETFs.
And the kicker:
In a continuation of his predecessor’s policy, Guo pledged to “earnestly” tackle excessive initial public offering prices and to crack down on insider trading and market manipulation, according to the statement.
Chinese fraud? Unpossible.
Needless to say, this act has sown the seeds of the Great Chinese Stock Market Collapse: artificial and forced capital reallocation is always and without fail the coffin in the nail of any ascendent attempt at central planning. Of course, by then the global ponzi will have reach such dire proportions that somehow the ECB will lend money to Greece so that Greece can bail out China, because it is not in ECB's charter to bail out insolvent ponzi regimes (such as Europe of course). Or something just as ludicrous.