{"id":39261,"date":"2018-10-17T06:15:05","date_gmt":"2018-10-17T11:15:05","guid":{"rendered":"http:\/\/olduvai.ca\/?p=39261"},"modified":"2018-10-17T06:15:05","modified_gmt":"2018-10-17T11:15:05","slug":"forced-buy-ins-spark-liquidity-crisis-in-chinas-nasdaq","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=39261","title":{"rendered":"Forced Buy-Ins Spark “Liquidity Crisis” In China’s ‘Nasdaq’"},"content":{"rendered":"
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Forced Buy-Ins Spark “Liquidity Crisis” In China’s ‘Nasdaq’<\/span><\/a><\/h3>\n<\/div>\n
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Marking the worst year since 2008,<\/strong> China’s tech-heavy (Nasdaq-equivalent) Shenzhen Composite index is down a shocking 35% year-to-date, and it’s starting to become a self-feeding vicious circle…<\/p>\n

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As Bloomberg reports,<\/em><\/a> the most recent slump in the teach-heavy index comes despite regulators’ efforts to rein in risks of share-backed loans<\/strong> following reports over the weekend that insurers are being ‘encouraged’ to invest<\/a> in listed companies to reduce liquidity risks connected to such loans.<\/p>\n

Share pledges, where company founders and other major investors put up stock as collateral,<\/strong> have emerged as a pressure point in China\u2019s debt-laden economy, especially as the stock market tumbles.<\/p>\n

\u201cThere\u2019s a liquidity crisis in the stock market, and pledged shares are again starting to sound the alarm,<\/strong>\u201d said Yang Hai, analyst at Kaiyuan Securities Co.<\/p>\n

“Stocks in Shenzhen typically bear the brunt of loss of confidence in the stock market because of their higher valuations.\u201d<\/p><\/blockquote>\n

Bloomberg <\/a>additionally notes that this attempt to slow the impact of this crisis has been ongoing all summer…<\/p>\n

China in June told brokerages to seek approval before selling large chunks of stock that have been pledged as collateral for loans<\/strong>, according to people familiar with the matter…<\/p>\n

while the top financial regulator in August warned the industry that it\u2019s closely watching corporate stock pledges.<\/strong><\/p><\/blockquote>\n

And quite clearly, has failed… with two-thirds of Shenzhen Composite stocks now at 52-week lows or worse…<\/strong><\/p>\n

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And it appears investors are screaming for The National Team to step in and rescue them (just like in the housing market)…<\/p>\n

\u201cIf there are no real policies to cure the array of problems and ailments in our market, no one will be willing to take the risk,\u201d<\/strong> said Hai.<\/p>\n

\u201cAuthorities keep saying that there is room for more polices, but where are they?<\/strong><\/u>\u201d<\/p><\/blockquote>\n

Shock, horror! What are we to do in a ‘free-market’?<\/p>\n

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Forced Buy-Ins Spark “Liquidity Crisis” In China’s ‘Nasdaq’ Marking the worst year since 2008, China’s tech-heavy (Nasdaq-equivalent) Shenzhen Composite index is down a shocking 35% year-to-date, and it’s starting to become a self-feeding vicious circle… As Bloomberg reports, the most recent slump in the teach-heavy index comes despite regulators’ efforts to rein in risks of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[83,130,487,6697,11635,2443,4318],"class_list":["post-39261","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bloomberg","tag-china","tag-liquidity","tag-liquidity-crisis","tag-shenzhen-composite","tag-stock-markets","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39261","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=39261"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39261\/revisions"}],"predecessor-version":[{"id":39262,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39261\/revisions\/39262"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=39261"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=39261"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=39261"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}