BOT monitors China stocks

[webfact]

CHINESE ECONOMY
BOT monitors China stocks
The Nation, agencies

Continued sell-offs could result in serious ramifications for the Chinese economy, and by extension Thailand, says Thai central bank

BANGKOK: -- The Bank of Thailand is keeping a close eye on the consequences of sharp Chinese stock market falls over the past three weeks marked by yesterday's further 5.9 per cent drop of benchmark Shanghai Composite Index, which led to significant declines of Thai and other Asian share prices, said spokesman Chirathep Senivongs na Ayudhya.

The Stock Exchange of Thailand (SET) index fell 0.91 per cent to close at 1,470 while Hong Kong's Hang Seng index plunged 5.8 per cent to end at 23,516.56, the biggest one-day drop since October 2008, largely due to the continuing tumble on China's mainland exchanges and Greek's crisis.

Chirathep said investors have become increasingly worried by the sharp falls and volatility of Chinese stocks, but the impacts on the Chinese economy, the world's second-largest, are not yet clear at this stage. For Thailand, China is currently the biggest export market and the largest source of foreign tourists whose number is projected to top 7 million this year, up from last year's 4.6 million.

The Thai central bank's spokesman said that if Chinese stocks continued to tumble, there could be significant impacts on the international community's confidence in the Chinese economy. As trillions of dollars have been wiped off from equities and other financial instruments, the private sector's confidence would also take a hit and there would be a negative impact on the wealth of Chinese households in terms of savings and asset prices.

However, Chirathep said the impact on capital market mobilisation should be minimal because China's aggregate financing from stock markets is small, representing only 2 per cent of the total. Regarding Chinese stock investors, he said individual investors currently account for about 20 per cent of market capitalisation with their source of funds being household savings and margin loans, resulting in forced sales when share prices fall sharply.

On Thai investment in Chinese stocks, he said, the impacts are relatively small because most Thais invest through foreign investment funds which focus on deposits and debt instruments that have high credit rating.

As of yesterday, the trading of nearly 1,300 firm shares was suspended on China's exchanges, as China's central bank pledged to continue supporting stock market stability amid fears of a big increase in "irrational selling".

Meanwhile, BofA Merrill Lynch warned there is a risk of financial crisis in China as companies scrambled to escape the rout by having their shares suspended and indexes plunged after Beijing had struggled for more than a week to intervene.

Chinese authorities yesterday unveiled another battery of measures to arrest the sell-off, and the People's Bank of China said it would step up support to brokerages enlisted to prop up shares.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen closed down 6.8 per cent, while the Shanghai Composite Index shed 5.9 per cent.

With nearly half the market on a trading halt and another round of margin calls forcing leveraged investors to dump whatever shares could find a buyer, blue chips that had been supported by stabilisation funds earlier in the week bore the brunt.

"I've never seen this kind of slump before. I don't think anyone has. Liquidity is totally depleted," said Du Changchun, an analyst at Northeast Securities.

"Originally, many wanted to hold blue chips. But since so many small caps are suspended from trading, the only way to reduce risk exposure is to sell blue chips."

More than 30 per cent has been knocked off the value of Chinese shares since mid-June, and for some global investors the fear that China's market turmoil will destabilise the real economy is now a bigger risk than the crisis in Greece.

More than 500 China-listed firms announced trading halts on the Shanghai and Shenzhen exchanges on Wednesday, taking total suspensions to about 1,300 - 45 per cent of the market.

Source: http://www.nationmultimedia.com/business/BOT-monitors-China-stocks-30264076.html


-- The Nation 2015-07-09

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China's stock market is crashing, and the Chinese are trying to do the exact same thing America did in 1929
Business Insider By Oscar Williams-Grut

WASHINGTON: -- 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.

Full story: https://finance.yahoo.com/news/chinas-stock-market-crashing-chinese-095900183.html

-- YAHOO! FINANCE 2015-07-09

[Usernames]

Thailand has bet on China and the Chinese stock market is an opaque casino that is crumbling. Because there is no transparency ANYWHERE in the Chinese economy, the entire house of cards could easily collapse into rubble. People forced to hold stocks for six months. You can't sell, because the government is trying to manipulate things behind your back? Who in their right mind would put money is such a pit of corruption, lies, and falsification? And, here is Thailand, tying itself closer and closer to the Chinese and the Russians. About the only catastrophe they've managed to avoid is Greece.

[NeverSure]

LOL. I'm waiting for the European and Australian cheerleaders who have assured us that China is The Next Big Deal^TM soon to be the leader of the free communist world. What it really is, is a corrupt and secretive house of cards that could quickly melt back into the 10th century, especially if as it loses preferred trading and manufacturing status with the West.

I don't feel sorry for anyone who hitched his wagon to a horse called China and believed he had a good ride for life. The emperor has no clothes. All China is, is a corrupt beotch who makes money by manufacturing things invented in the West, with permission of and direction by the West. All China is, is a backward beotch which provides the West with cheap labor. End of.

Cheers

Edited July 8, 2015 by NeverSure

[NeverSure]

Oh wait. Why doesn't China just call in all of those fictitious loans it made to the USA and get a huge windfall of money? Problem solved LOL.

NOW we get to prove that China never, ever had enough loose change to loan the USA one dollar. Rumors and high fives aside, China is broke.

The feet of the Europeans who are on their lips and who were bailed out by the US Federal Reserve to the tune of USD$ 2 trillion 3.5 years ago, and the Australians who are on their lips due to lack of sales of commodities to China will just have to return to solid terra firma.

Everyone who hitched his wagon to China or for that matter the Eurozone is in for a bad time. The two are not unrelated.

Cheers

[Publicus]

This is not a correction, it is a crash.

Nobody knows what to do, nobody. The CCP Boyz in Beijing are frantically pulling levers and running about pressing buttons.

In the past 30 or so daze, the stock markets in the CCP China have lost the equivalent of the GDP of the United Kingdom. Fifteen daze ago it had been the equivalent of Spain.

Germany's GDP equivalent looks like the next station as this runaway train roars down the mountain.

[NeverSure]

It's a crash.

It will be ironic if the United States Federal Reserve Bank injects capital into China to save its ass as it did with the Eurozone in December of 2011 - just 3.5 years ago. The Federal Reserve's Covert Bailout of Europe.

BTW I also see a crash in the Eurozone - again. Greece is the canary in the coal mine, not unrelated to Portugal, Spain and Italy or to the general shrinking economies of the rest of the countries.

The Eurozone is also running around pulling levers trying to figure out how to save itself from a shrinking banking mess for which Greece is the fuse. Once one sector of an economy crashes the rest are usually dominoes. Greece is not only a contagion, but a window into the health of the rest of Europe.

Watch how badly the Eurozone doesn't want Greece to throw in the towel and ask why, considering that the pundits say it's no good and they don't want it's crap any more.

China + Europe = the next Great Depression.

Cheers

Edited July 9, 2015 by NeverSure

[webfact]

China's market crash dents nation’s aura of invincibility
By Simon Denyer and Steven Mufson

BEIJING — For decades, the Chinese Communist Party has been able to keep control of democracy protests, dissidents, the legal system and the military, but it is now facing an even more intractable foe: a plummeting stock market.

Invisible and fast-paced, mutinous market forces­ have defied the party-led government’s efforts to arrest the month-long slide in Chinese stock markets. If this continues, the slump in stock prices could slow the economy and undermine faith in the party’s leadership and power, experts on China and economics say.

Only three months ago, the state-run People’s Daily opined that rising stock prices were the “carriers of the China Dream” and affirmation of President Xi Jinping’s signature vision for what he calls the great rejuvenation of the Chinese nation.

Full story: https://www.washingtonpost.com/world/asia_pacific/china-stock-market-crash-punches-a-hole-in-xis-china-dream/2015/07/08/13d22e66-2579-11e5-b621-b55e495e9b78_story.html

-- The Washington Post 2015-07-09

[Guest]

Stock markets should be there only to support companies to share their responsibilities and revenues.

Now stock markets have become a horse race betting for folks who create absolutely nothing. It's time to get rid of short selling and micro time ownership. Chine just banned the big players to sell their stocks for the next 6 months.

That 6 months should be the overall minimum time of a stock ownership in any stock exchange. If one really requires to sell, before the 6 month period, the person or instance would have to pay 10% tax of the value of the stock.

[Scott]

Off-topic posts removed. The thread is about the BOT monitoring of China stocks.

[Srikcir]

What does the economic collapse of Russia, China, and Thailand have in common?

Each depends on its large foreign USD reserves to inject capital into their economic systems to forestall further economic deterioration.

The world isn't really so big that nations can operate with complete economic immunity.

[Srikcir]

Oh wait. Why doesn't China just call in all of those fictitious loans it made to the USA and get a huge windfall of money? Problem solved LOL.

NOW we get to prove that China never, ever had enough loose change to loan the USA one dollar. Rumors and high fives aside, China is broke.

The feet of the Europeans who are on their lips and who were bailed out by the US Federal Reserve to the tune of USD$ 2 trillion 3.5 years ago, and the Australians who are on their lips due to lack of sales of commodities to China will just have to return to solid terra firma.

Everyone who hitched his wagon to China or for that matter the Eurozone is in for a bad time. The two are not unrelated.

Cheers

The so-called chinese loans to the US are in the form of US Treasury Bonds. Like any bond so long as the bond issuer meets the bond principal and interest payments, the bondholder cannot "call in" the bond amount.

The US has not defaulted on its bond payments so China has no windfall that it can pull into its own economy. And if you think about it, if a nation did default on its bond obligations, the cause would be the lack of capital. So what would trigger a monetary windfall?

Edited July 9, 2015 by Srikcir

[F430murci]

Interesting that one of the most serious issues in the world gets so little attention here.

[NeverSure]

Oh wait. Why doesn't China just call in all of those fictitious loans it made to the USA and get a huge windfall of money? Problem solved LOL.

NOW we get to prove that China never, ever had enough loose change to loan the USA one dollar. Rumors and high fives aside, China is broke.

The feet of the Europeans who are on their lips and who were bailed out by the US Federal Reserve to the tune of USD$ 2 trillion 3.5 years ago, and the Australians who are on their lips due to lack of sales of commodities to China will just have to return to solid terra firma.

Everyone who hitched his wagon to China or for that matter the Eurozone is in for a bad time. The two are not unrelated.

Cheers

The so-called chinese loans to the US are in the form of US Treasury Bonds. Like any bond so long as the bond issuer meets the bond principal and interest payments, the bondholder cannot "call in" the bond amount.

The US has not defaulted on its bond payments so China has no windfall that it can pull into its own economy. And if you think about it, if a nation did default on its bond obligations, the cause would be the lack of capital. So what would trigger a monetary windfall?

Oh my. So you have never been told that there is a huge international market where people buy and sell bonds as they do stocks? Do you really think that anyone has to hold bonds to maturity? You don't know that some people play the bond market like others play the stock market?

If the Fed raises interest rates they don't increase on existing bonds and that reduces the value of existing bonds. The reverse is true if if interest rates decrease. If I'm holding bonds that bear 5% interest with a 20 year maturity and interest rates fall to 3% on new ones, my bonds just gained value. I can sell them in the open marketplace at a premium to face value.

The Fed is one of the players in that marketplace, buying and selling bonds to stabilize prices. If no one else, the Fed would buy them in the marketplace to keep liquidity in the market. Treasuries are liquid assets.

The real problem for China if they sold them would be that China would be out of international trade. China holds them only to have USD to back its trades because no one will sell or buy in Chinese currency.

Edited July 11, 2015 by NeverSure

[Publicus]

Interesting that one of the most serious issues in the world gets so little attention here.

Yes and one can't help but notice the huge silence coming from the extreme global right on this, the Austrian school doomsday economists and disciples who preach the impending fall of the West and the collapse of the United States in particular.

The CCP China rule the world boosters (who are also the Russia also rules the world boosters) are at this critical point the same as the mass of people in the CCP China, i.e., overwhelmed and overcome by the unmistakable disaster that is visibly and undeniably occurring (and also of a different nature in Russia).

The mass of the CCP China population is quite shaken by these disastrous developments. This has caused a questioning of their fundamental faith that the CCP Boyz in Beijing not only can fulfill their promise to deliver the goods, but that the boyz do unmistakably deliver the goods. It is clear now the CCP Boyz are much more promise than they are competent.

The predicate of the current loss of faith is the property bubble burst that began in March last year. Initially the Boyz had almost everyone persuaded they could control and command the bubble. However, as the burst has continued, intensified, expanded, people turned to the stock markets, which also went well initially. The equities bubble has now burst but, more significantly, the burst became a stock market crash.

The Deng Xiao Peng generation of economic boom CCP Chinese hadn't known crash as all the headlines there had for the past 15 years been good news only. Everyone there knows the economy is slowing, slowing and even slower. Now on top of the property bubble comes the crash in the people's stock market refuge.

The CCP Chinese have no information of the extent of the stock markets losses, which are $3.8 Trillion and counting, the equivalent of the GDP of the United Kingdom and the Republic of Ireland. They are only now beginning to find this out as the word spreads.

[Credo]

Interesting that one of the most serious issues in the world gets so little attention here.

I don't know much about the rest of the world, but here it's pretty easy to understand why. You have two of the least transparent countries in the world on this topic. The Chinese are noted for saying nothing and the Thai gov't is less than truthful.

Thailand will monitor the Chinese markets because they are not willing to accept any responsibility for the economic mess befalling the nation. They hitched their wagon to China, so they can't blame the US. But blame someone, they will do.

[Publicus]

At this point the CCP Chinese middle class are pretty ticked off at Xi Jinping and his CCP apparatus for selling 'em on the stock markets by means of mass tv media and the People's Daily newspaper, institutionally by brokerages, banks, government officials, and by word of mouth, among other officials means.

The CCP government had been cheerleader for unrestrained buying, promising the 4000 level at the Shanghai exchange would be the beginning of a "China Dream Market," when in fact Shanghai closed Thursday at 3709 and it is darkness at noon.

Neither do ordinary Chinese know that you don't put money at risk that you can't afford to loose, so now a great number of weddings that had by tradition been set for June were postponed and remain put off indefinitely.

This intervention to stop the stocks freefall has now put vital economic reforms at a great risk as everyone else is lining up outside the People's Bank of China and the Finance Ministry to demand their bailout to counter effects of what anyway were slow moving reforms.

Today is graduation day throughout the CCP China and the CCP Boyz in Beijing have put out the word that graduates will chant a slogan during their ceremonies:

Revive the A shares, Benefit the people;

Revive the A shares, Benefit the people’
Revive the A shares, Benefit the people.

As long as some people are chanting voo doo political economy, why not take a look at the triple whammy currently occurring in the CCP China....

The entire world is watching China's stock-market collapse, but it's important to keep it within the context of the greater Chinese economy.

And the context is pretty bleak.

The way Credit Suisse sees it, the Chinese stock market, as shocking as its slide has been, is the least of the country's worries.

The real problem is that all of this turmoil is happening in the midst of a "triple bubble."

"In our view, China is in the midst of a triple bubble, with the third-biggest credit bubble of all time, the largest investment bubble (proxied by the investment share of GDP) and the second-biggest real-estate bubble," Credit Suisse analyst Andrew Garthwaite wrote in a recent note.

"This is occurring against a backdrop of near record producer price deflation, near record low growth in bank deposits (the main source of internal liquidity), FX outflows (the main source of external liquidity), and falling house prices (with property accounting for the majority of household wealth)."

Read more: http://www.businessinsider.com/china-is-in-the-midst-of-a-triple-bubble-2015-7#ixzz3fe1LIgGk