BREAKING: Chinese stock market ends 3% lower, w/ 1,200+ stocks down 10% daily limit; Chinese media admit gov “failure to boost market” today
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Chinese Stock Plunge Resumes With 1200 Stocks Halted Limit Down; Yellen, Greek Elections On Deck
Chinese Stock Plunge Resumes With 1200 Stocks Halted Limit Down; Yellen, Greek Elections On Deck
Just when the Chinese plunge protection team (and “arrest shortie” task force) seemed to be finally getting “malicious selling” under control, first we saw a crack yesterday when the composite broke the surge of the past three days as a result of yet another spike in margin debt funded purchases, but it was last night’s reminder that “good news is bad news” that really confused the stock trading farmers and grandmas, which goalseeked Chinese economic “data” beat across the board, with Q2 GDP coming solidly above expectations at 7.0%, and retail sales and industrial production both beating, but in the process raising doubts that the PBOC will continue supporting stocks.
After all, the only purpose of the stock bubble was to deflect attention from the bursting of the housing bubble and the collapse elsewhere in the economy. So if Beijing is willing to telegraph that the worst is over for the economy, there is no further need for SHCOMP 5000 which can now be carefully deflated, as otherwise a violent bursting threatens China’s social stability.
As a result the Shanghai Comp tumbled -3.0% and Hang Seng slid -0.3% with markets showing a subdued reaction as the data does dampen calls for further actions by the PBoC. However that does not do justice to yet another day of Chinese stock insanity. This does:
China Is Just Another Front in the Zombie War
China Is Just Another Front in the Zombie War
LONDON – This morning, a desperate message from our analyst in Beijing puts us in a lighthearted mood:
I’m sure you must have heard about the recent disaster in the Chinese stock market.
It’s my first time experiencing something like this. And it shocked me. It’s like the world is suddenly turning upside-down. Everyone is running for themselves.
People here feel hopeless, as they see so many government bailout plans fail.
There are so many rumors I can’t tell what’s true and what’s not. Some even said that it was U.S. capital shorting Chinese index futures.
Opportunities Everywhere!
At the Diary, we always look on the bright side: We see opportunity everywhere.
Investors in U.S. stocks seemed to wake up yesterday with a start. They didn’t panic. But they were at least beginning to worry. The Dow dropped 261 points – wiping 1.5% off its value. There is probably a lot more where that came – an opportunity on the downside.
To recap: Greece’s creditors have given Athens until midnight to come up with an acceptable reform plan. Nobody knows what will happen.
But Greeks are pulling as much cash out of ATMs as they can. There have been lines at gas stations and food stores. And Greek stocks are selling with as much as 20% dividend yield and just over two times earnings. This could be a (highly speculative) opportunity on the upside.
Meanwhile in China, investors have seen roughly $3.5 trillion in paper wealth evaporate over the last two months as stock prices there plunged. The Chinese are not sophisticated stock market investors. They have only been at it for a few decades. So, they tend to get over-excited in both directions.
It was only a few weeks ago that Chinese brokers were opening new accounts in record numbers. From farmers to hairdressers, everyone was itching to get a piece of the action, as the stock market soared.
…click on the above link to read the rest of the article…
