Chinese Economics Thread

[Brumby]

Of course volatility is nothing new, but the factors driving it most certainly can be.
Its not particularly useful to compare a Blue Chip main Index Bourse with a highly speculative Forex exchange. Blue Chip markets are expected to slow, steady and reliable, while nobody plays Forex or Commodities unless they are serious adrenaline junkies.

The point I was alluding to in my previous post, is that in the West trading is mostly institutional and private investors operate either indirectly via managed funds or directly through a Broker. In China this is different, as we see small investors buying and selling directly through trader account software and phone apps.
Its a big difference.

I think our emphasis are somewhat different in that you are mainly focussing on the cause whereas I am highlighting the effect and is really no difference across countries or instruments. When the market takes a bath, whether it is forex (where less than 10 % are retail players) or the US markets (where 2/3's are automated trading driven by the likes of dark pool algorithm) or the Shanghai market with its retail gamblers and or investors, the effect on the players are just the same.

Likewise the big market collapses we have seen in the West have always been institution led, but in China it has been led by the mass public, in a market where the Institutional Investors have only now been earmarked for permission to invest.
It is a massive difference., mainly expressed by the difference between professionals reading financial forecasts and none professionals listening to a teenage girl on a video upload who does not think a latest product is pink enough!.

Asia Unhedged also makes another valid comment. If you take out a third of the market by banning margin investors, you reduce the investor pool by a third and prices will fall as a consequence.

There is no doubt time cycles are being compressed and the swings are more pronounced because information dissemination is operating at a quicker pace. The market will find new and quicker ways to execute trades with corresponding means to loose money at a similar rate. Bottom line, money lost has the same effect regardless of cause.

 

[broadsword]

it's been some time since I visited this thread

Jul 10, 2015


3633 at the end of the chart:

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Perhaps at the next rebound. But let us see where the current pullback goes first.

 

[broadsword]

China's yuan spreads to world’s biggest $15tn metals bourse

29 Jul, 2015

Reuters

The London Metal Exchange (LME) on Tuesday started accepting yuan as collateral against contracts after getting permission from the Bank of England.

“The renminbi [yuan – Ed.] is on its way to becoming one of the world’s most widely-used currencies. We are pleased to be able to help our members take advantage of the opportunities arising from the renminbi’s internationalization,” Trevor Spanner, chief executive of LME Clear, said in a statement.

There are now five currencies used at the LME: US dollars, euro, British pounds, Japanese yen and offshore renminbi.

The LME was acquired by Hong Kong Exchanges & Clearing Ltd. (HKEx) for $2.2 billion in 2012, and yuan trading is another stepping stone for China. The country accounts for about 70 percent of iron ore consumption, and more than 40 percent of the demand for copper, aluminum and nickel, according to the data provided by Bloomberg.


"This is an important development for the LME and LME Clear, and it highlights the stronger ties and synergy between Hong Kong and London since the LME became part of the HKEx Group," said Charles Li, Chief Executive of HKEx.

The LME is the world centre for the trading of industrial metals with more than 82 percent of all the non-ferrous metal futures business transacted on the exchange. In 2014 this resulted in $15 trillion worth of business, in 4 billion tons of metals, in 177 million lots, according to its website.

The Chinese expansion comes at the time when the national stock exchange is suffering its most dramatic fall in 8 years, down 8.5 percent on Monday. Despite the stock crisis the yuan has made another stride towards becoming an international reserve currency.

 

[broadsword]

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After the next rebound, there will be a longer correction wave lasting about three months. By year end or early next year, I will have a clearer picture.

 

[AssassinsMace]

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If it's salt water and not potable, it solves the problem of the shortage of water needed in fracking which happens to be sitting in the same area of one of the largest oil shale fields in the world.

 

[SamuraiBlue]

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If it's salt water and not potable, it solves the problem of the shortage of water needed in fracking which happens to be sitting in the same area of one of the largest oil shale fields in the world.

It's better for all of us if it's left alone.

'Carbon sink' detected underneath world's deserts
The world's deserts may be storing some of the climate-changing carbon dioxide emitted by human activities, a new study suggests. Massive aquifers underneath deserts could hold more carbon than all the plants on land, according to the new research.

Humans add carbon dioxide to the atmosphere through

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and deforestation. About 40 percent of this carbon stays in the atmosphere and roughly 30 percent enters the ocean, according to the University Corporation for Atmospheric Research. Scientists thought the remaining carbon was taken up by plants on land, but measurements show plants don't absorb all of the leftover carbon. Scientists have been searching for a place on land where the additional carbon is being stored—the so-called "missing carbon sink."..... to read more

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[Equation]

How a Chinese Billionaire Built Her Fortune


By

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JULY 30, 2015

Photo

Zhou Qunfei leading a media tour of her company, Lens Technology, which is a multibillion-dollar operation at the vanguard of China’s push into high-end manufacturing. CreditGilles Sabrie for The New York Times
Zhou Qunfei is the world’s richest self-made woman. Ms. Zhou, the founder of Lens Technology, owns a $27 million estate in Hong Kong. She jets off to Silicon Valley and Seoul to court executives at Apple and Samsung, her two biggest customers. She has played host to President Xi Jinping of China, when he visited her company’s headquarters.

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[tphuang]

I would buy some

You probably can't unless you have money inside China. I also wouldn't recommend it since the volatility is too much for the heart to handle.

I found this article very informative.

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There has been a lot said about factors of instability in the market; lack of major Domestic Institutional Investors, Margin Investors, Aggressive Short Selling etc, but this could help put context into the equation and one that I would say would be a uniquely Chinese phenomenon.
Essentially is this the cumulative effect of a young investor class, that have grown up on Online games and Social Networking? If so are they approaching the Investing in the same mindset - Investment as game play, plus investment messages to buy and sell "going viral"?
If so, then the cumulative effect of millions of young investors treating stock transactions like playing a game level or posting a picture of their cat, could seriously explain the bizarre volatility of recent weeks.
The other question is of course, is this a sign of things to come and phenomenon that will come to Western Bourses as well?

No, it's much simpler than that. When you have all the excessive credit which are going into the stock market instead of housing market, stock market goes up crazily and then ordinary people (a lot of them without college education) see this and pour large amount of money into the stock market. The investment is done based on superstition rather than underlying details like earnings and growth potential. And of course, the Chinese government starts a witch hunt against the evil short sellers and suspend most of he stocks from trading. It's complete madness. It happens in the west too when we have the bubbles, but the boom and bust cycle in China happens so much more quickly and often than in the west.

 

[B.I.B.]

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If it's salt water and not potable, it solves the problem of the shortage of water needed in fracking which happens to be sitting in the same area of one of the largest oil shale fields in the world.

It's not as.easy as that. Experience from North Dakota where the water used for fracking has a high salinity, freshwater is required to flush out the well from time to time to prevent the buildup of salt.

Also minerals in the rocks of the oil reservoir may clash with.the minerals found in the saline water

 

[shen]

... And of course, the Chinese government starts a witch hunt against the evil short sellers and suspend most of he stocks from trading. It's complete madness. It happens in the west too when we have the bubbles, but the boom and bust cycle in China happens so much more quickly and often than in the west.

just to clarify the behavior that's illegal in China is "naked short selling" is also illegal in the US and most jurisdictions in the world. normal short selling as a hedge for one's portfolio is perfectly legal in China.