help me understand this shit /biz/
it seems like in some news reports, they are saying china is done with the circuit breakers, but it seems like they're still putting limits on how much some people can sell. what's the real government rules that they're putting out now? because last week's shit started because they pushed back when chinese could sell from august to january, so if they're just pushing the problem down the road another few months i'd like to be sure i know
What pisses me off is that the first two times CHina shat the bed, the US market goes down with it. But now it just wants to float between 1915 and 1925.
It's making me rage.
tl;dr this is what's happening:
A year ago the Chinese government started campaigning hard to get everyone into the stock market. This was done by rapidly relaxing rules for new traders (such as minimum income requirements) and by loosening up various bank policies. One, which is hugely important here, is that investors could start putting up their properties as collateral for their margin calls. This resulted in a temporary stock boom.
Six months ago it became clear that China's economy was slowing. 8% growth reduced to 7%. This is a big deal since everyone is trading on margin and their assets must grow 8% to break even. This did not occur and a sell off began on June 12th. After dropping 1600 points, the Chinese government stopped letting most traders (I think ones with new accounts) sell stock. This ban went into place on July 8th and was supposed to last only six months and expire last Friday, January 8th.
This didn't happen as in the run up to the expiration, larger and more institutional investors sold triggering a stock panic. The circuit breakers the Chinese stock market has exacerbated this, as once everyone hit 5% down they flooded the market with sell orders to sell before it hit 7% when markets re-opened (at 7%, the market shuts down for the rest of the day).
Thus, on top of about 14% in drops the Chinese government extended the sell ban another six months to next June. Either one of two things will happen:
1. The ban expires on time and their market crashes June 8th.
2. The ban is extended again. This is a bigger problem as it means investors are left holding the bag, their stock now becomes worthless as it cannot be liquidated. Sound familiar? It becomes a toxic asset. Meanwhile their banks are not on holiday and still need payments for loans and mortgages. The result is a wave of foreclosures, and potentially a credit crisis if property prices fall. Property prices *will* fall if nobody can buy, say being unable to liquidate their stock or because the factory they work at laid them off.
By the way, regardless of what happens the amount of foreign investors buying homes in Australia and Canada will decrease, meaning the housing markets there crash too. The only way out is IF China can somehow grow more than 8% and everyone breaks even, but forecasts are down to 5-7% and could go lower if the situation does not improve.
tl;dr we headed into mortgage meltdown: noodle cup edition
It's clear to see what China is *trying* to do. They're trying to ignore their stock market drops. They seriously think that just "letting the market cool off" is a replacement for any actual gains. It is seriously a situation where China's communist-styled politburo/bureaucracy is attempting to avert a selloff by simply not allowing people to sell.
They still cling to the idea that heavily "half-capitalism" can work. And they aren't going to let go of it, even as their stock market drops they will continue to sing about how great things are looking because they are not allowed to say anything else.
From June 30th:
from July 2nd:
From July 13th:
The Chinese government's attempt at cracking down on peer-to-peer lending happened six months after it mattered. At the same time they relaxed rules to allow people to put their properties up as collateral with the official banks.
From July 1st:
>Hours after a one-day tumble of 5.2 percent in the Shanghai Composite Index, China’s securities regulator eased collateral requirements for leveraged investors and allowed brokerages to securitize margin loans -- a move that frees up room to extend credit after a nine-fold surge in outstanding margin debt in two years. Brokerages have leeway to boost lending by about $300 billion, based on regulatory caps announced Wednesday.
All those margin loans are worth about $0 now since it is impossible for most investors to liquidate them, and thus generate revenue. Which means the bank takes their home. But what happens if the home's value hasn't grown 8% since it was bought? Then the bank takes a loss, as do all the investors in the bank.
>They still cling to the idea that heavily "half-capitalism" can work.
Kek. I love when Amerilards talk about China/Russia in communist terms. Both places have the rawest, wild-west style, up ur a$$ capitalism there is. Regulations? Nope. Unions? Nope. Pensions? Nope/miserable.
Where others see misallocated resources (ghost-cities/etc...) I see long term planning, something urgently needed outside of China.
They also have the most anti-capitalist thing out there: state owned enterprises. All of China's biggest companies are nationalized operations subsidized by taxpayers.
The logic ten years ago was that this was better than in the US/west, because then all the profits would go back to the state to be redistributed to taxpayers. Instead, all the money went into bureaucrats pockets who then used it to gamble on the stock market. At least here in the US, when these companies go bankrupt the people in charge loose money (in terms of their stock assets going to zero) and thus is less tolerant of incompetence.
>Where others see misallocated resources (ghost-cities/etc...) I see long term planning
That doesn't make any sense. Ghost cities fall apart due to a lack of maintenance, or require lots of paid maintenance for no gain. The whole point of these cities' creation was so that they could be sold off and generate a profit for the government-owned company that built them. No profit, no gains, investors take losses. This trend isn't sustainable.
Meanwhile, China itself has terrible pollution problems which are creating health crises for them right now. Desertification is causing their arable land to drop, which increases their dependency on cheap American imported food.
>They also have the most anti-capitalist thing out there: state owned enterprises.
>What is TARP
GTFO kid, learn some shit before entering discussion
TARP was shit but even with it people got burned. Bank valuations fell and investors took losses.
That's different then a company not making money continuing to exist because every year it gets subsidies from the government.
>That's different then a company not making money continuing to exist because every year it gets subsidies from the government.
are you an idiot?
>Regulations? Nope. Unions? Nope. Pensions? Nope/miserable.
as Russian, can confirm.
you forgot to add
>12% tax/5% tax for progressive industries
>mfw Russland becomes a capitalism-driven superpower while West drifts into socialism neetbux LGBT swamp
see u halfway
government will "throw" things at businesses. with TARP they gave the practically risk-free money. they still had to pay it back if they could. usually you'll see it come in tax benefits though: 0% tax for 5-forever years
Russia went straight from communism to oligarchy. That's what their problem is.
They are far from communists, much further than 60% tax rates europe. You have 10mill income you pay 11% flat tax. Something the west to learn.
I want to buy Russia equities because they're being pummelled rn and it has long run potential but I cannot seem to into this market without huge entry costs which warrant such a more illogical.
there are shit stox like YNDX, any blue chips etc.
however there's some godnòta with huge long-term potential ike GMKN, CHMF
basically any non-bluechip company looks good.
the market is still in development but stable; you would want to trade russian equities in mcx, and not in ny