Source: http://blog.smartmoneytrackerpremium.com/2015/09/chart-of-the-day-148.html
Showing posts with label China stock market. Show all posts
Showing posts with label China stock market. Show all posts
Sunday, September 27, 2015
Sunday, August 2, 2015
VIDEO - HOW A CHINESE FARMER LOST IT ALL TO THE STOCK MARKET
This remarkable CNBC clip about a rural farmer who bought $1 million in stocks at an incredible 6x leverage. You can probably guess how it ends, but you might want to watch the story anyway. The poor farmer in the video was sold out of his positions, and he now owes the brokerage company more than his original investment.
Anyone who reads this knows that investing everything you have and then borrowing six times more money that you don’t have to throw it all into a single stock is a really bad idea. Apparently this is not so obvious to Chinese farmers.
Chinese investors are basically momentum players. Combine that approach with the well-known Chinese predisposition toward gambling and you get an explosive mix.
Monday, July 27, 2015
Everything to worry about China stock market
I believe things will get worse in the coming days.
Artificially boosting the stock market will not stop the rot as the Chinese investors found out to their dismay yesterday - China market tumbled 8.5%, calling into question Beijing market rescue effort.
I'm just a layman in China market but I suppose when the stock market rebounded sharply after the initial 30% slide, those investors who did not get the chance to sell earlier gratefully just did it and this just snowballed into a collapse.
How sad.
Earlier there was an article I put up in this blog saying that the Chinese regulators were using the wrong ways by forcing the listed companies and stock-brokers to artificially support the sagging market.
When that support waned or stopped, that is what the rumors said yesterday, the market tanked.
According to the CNBC data I saw, the Shanghai Composite Index (SSEC) on the Shanghai stock exchange this current drop lowest point is 3,421 on 8/7/2015 which I think is the temporary chart support at the moment.
I personally think there is no way this support will hold.
When this happens there will be another round of panic among Chinese investors. I think they are not used to this type of volatility as most are newbies.
BBC news describe the mayhem in their report here.
The meltdown has affected the sentiment in KLSE but I'm not too sure that it's all due to China, world economy, drop in commodities prices or due to our own internal problems like 1MDB.
Maybe its' a bit of everything.
Thursday, July 9, 2015
How the China stock market crash affects Malaysia
China's stock market crash and the country's economic decline will have serious ramifications for Malaysia, which saw its currency remain at pre-Asian Financial Crisis levels yesterday after Shanghai Composite Index dropped another 1.29%, bringing its total losses to over 30% in the last three weeks.
Malaysia saw a third day of losses in both its share market and the ringgit, which fell 0.28% and 0.05% respectively yesterday.
The ringgit is predicted to slump to a low of 4.00 against the U.S. dollar on China's decline by the end of this year, said Hoo Ke Ping, a prominent economic macroanalyst based in Kuala Lumpur.
Some 90 million traders have been selling down their shares and wiping off some US$2.4 trillion of value from Chinese companies , which is seen as being significantly overvalued .
The price to earnings ratio of the Shanghai Composite Index is 23, compared with 12 for the Hong Kong’s Hang Sheng Index, on which many of the same Chinese firms are listed.
The Shenzhen Composite Index, which has seen its value drop by 30%, has an average P/E ratio of 50 .
President Xi Jinping's administration has reacted to the sell down through a series of capital controls, such as getting some 200 China-listed firms halt trading in shares, according to state media.
It has also obtained a pledge from China’s top brokerages to collectively buy at least 120 billion yuan of shares to help steady the market and not sell while the Shanghai Composite Index remains below 4,500 points.
In addition, the China Securities Regulatory Commission has opened an investigation into what it claims is illegal manipulation across markets but even this has been labelled a desperate attempt to direct attention away from the overvaluation of China's stocks.
Analysts say China will not succeed in stemming the decline.
“They will fail,” said Hoo.
Chinese investors trade some US$200 billion worth of shares on the Shanghai and Shenzhen markets everyday, and a proposed $19 billion fund does not look like it will have much of an effect, said Hoo.
“Nothing seems to have worked,” said Li-Gang Liu, chief economist for Greater China at Australia and New Zealand Banking Group Limited Bank in a phone call from Hong Kong.
“It appears that current share prices are still overvalued,” Liu told The Malaysian Reserve.
Liu estimates China's growth for the first quarter of this year to be 6.8%, lower than the People's Republic of China's forecast of 7%, which it revised from an earlier 7.5%.
The main concern for Malaysia is how China’s decline has affected many commodity-producing countries, which rely on the country as a key export market.
China's decline has resulted in a drop in global commodity prices, of which exports form a significant portion of Malaysia's gross domestic product.
“Export-driven economies have seen currency drops in tandem with the decline in commodity prices due to China’s slump in growth,” said Hoo.
Thailand, known as one of the world's biggest exports of rice , has seen the baht decline to 34.00 against the dollar this year from a previous 31.70 high, and Australia has also seen its dollar currency drop to a nine year low against the greenback.
“Already, the halving of China’s growth has wreaked havoc with global commodity markets and has negatively influenced growth in those East Asian economies that are a vital part of China’s manufacturing supply chain,” said Ira Kalish, chief global economist at Deloitte, said in a response to ChinaFile on July 2.
“It could be argued that the imbalances in China’s economy thus represent more of a risk to the global economy than the current and much discussed situation in Greece,” said Kalish.
The country which plays host to the world's biggest population is Malaysia's second biggest export market after Singapore, importing some 12% to 13% of Malaysia's exported goods every year.
Since earlier this year, Malaysia's exports have declined due to falling demand from China.
In 2013, growth in Malaysia-China trade was 12%.
But last year, it was just 2%.
Malaysia saw a third day of losses in both its share market and the ringgit, which fell 0.28% and 0.05% respectively yesterday.
The ringgit is predicted to slump to a low of 4.00 against the U.S. dollar on China's decline by the end of this year, said Hoo Ke Ping, a prominent economic macroanalyst based in Kuala Lumpur.
Some 90 million traders have been selling down their shares and wiping off some US$2.4 trillion of value from Chinese companies , which is seen as being significantly overvalued .
The price to earnings ratio of the Shanghai Composite Index is 23, compared with 12 for the Hong Kong’s Hang Sheng Index, on which many of the same Chinese firms are listed.
The Shenzhen Composite Index, which has seen its value drop by 30%, has an average P/E ratio of 50 .
President Xi Jinping's administration has reacted to the sell down through a series of capital controls, such as getting some 200 China-listed firms halt trading in shares, according to state media.
It has also obtained a pledge from China’s top brokerages to collectively buy at least 120 billion yuan of shares to help steady the market and not sell while the Shanghai Composite Index remains below 4,500 points.
In addition, the China Securities Regulatory Commission has opened an investigation into what it claims is illegal manipulation across markets but even this has been labelled a desperate attempt to direct attention away from the overvaluation of China's stocks.
Analysts say China will not succeed in stemming the decline.
“They will fail,” said Hoo.
Chinese investors trade some US$200 billion worth of shares on the Shanghai and Shenzhen markets everyday, and a proposed $19 billion fund does not look like it will have much of an effect, said Hoo.
“Nothing seems to have worked,” said Li-Gang Liu, chief economist for Greater China at Australia and New Zealand Banking Group Limited Bank in a phone call from Hong Kong.
“It appears that current share prices are still overvalued,” Liu told The Malaysian Reserve.
Liu estimates China's growth for the first quarter of this year to be 6.8%, lower than the People's Republic of China's forecast of 7%, which it revised from an earlier 7.5%.
The main concern for Malaysia is how China’s decline has affected many commodity-producing countries, which rely on the country as a key export market.
China's decline has resulted in a drop in global commodity prices, of which exports form a significant portion of Malaysia's gross domestic product.
“Export-driven economies have seen currency drops in tandem with the decline in commodity prices due to China’s slump in growth,” said Hoo.
Thailand, known as one of the world's biggest exports of rice , has seen the baht decline to 34.00 against the dollar this year from a previous 31.70 high, and Australia has also seen its dollar currency drop to a nine year low against the greenback.
“Already, the halving of China’s growth has wreaked havoc with global commodity markets and has negatively influenced growth in those East Asian economies that are a vital part of China’s manufacturing supply chain,” said Ira Kalish, chief global economist at Deloitte, said in a response to ChinaFile on July 2.
“It could be argued that the imbalances in China’s economy thus represent more of a risk to the global economy than the current and much discussed situation in Greece,” said Kalish.
The country which plays host to the world's biggest population is Malaysia's second biggest export market after Singapore, importing some 12% to 13% of Malaysia's exported goods every year.
Since earlier this year, Malaysia's exports have declined due to falling demand from China.
In 2013, growth in Malaysia-China trade was 12%.
But last year, it was just 2%.
Source: http://www.themalaysianreserve.com/new/story/china-stock-market-crash-seen-dragging-down-ringgit
#Editor comment: This is not the original post title, it has been amended by me to better reflect the article.
#Editor comment: This is not the original post title, it has been amended by me to better reflect the article.
Monday, July 6, 2015
China's stock market is crashing, and the Chinese are trying to do the exact same thing America did in 1929
While attention is focused on Greece, China is having a serious market meltdown.
After exploding earlier in the year because of deregulation, China's benchmark Shanghai Composite has collapsed a crazy 29% since the highs of early June. China's other stock markets have had similarly steep falls.
Bloomberg notes that the crisis is closely mirroring the 1929 Wall Street crash, which led to the Great Depression in the US in the 1930s.
China's government is now also using the same tactics as Wall Street did back then to try to prop up the markets.
Over the weekend China's top stock brokerages pledged that they would collectively buy at least 120 billion yuan (£12.3 billion, $19.3 billion) of shares to help steady the market, with backing from the People's Bank of China.
The central bank is effectively becoming the buyer of last resort, printing money to buy up shares and prop up prices.
In 1929, Wall Street's banks did something similar. JPMorgan and several other top financial firms agreed to pool resources and buy up shares to put a floor under prices. It happened after a drop of about 30% for the Dow Jones Industrial Average.
The effort by the US banking systems had only the briefest of effects on the index, and America was eventually plunged into the Great Depression.
It's too early to tell whether China's latest move will work, despite the insistence of state media. So far it has failed to curb the huge volatility that has been plaguing China's stock markets recently. The Shanghai Composite opened up over 7% and eventually slipped back into the red before ending the day up 2.4%.
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