By Kit Daniels. Chinese stocks were suffering huge declines prior to the New York Stock Exchange shutdown due to an alleged “technical issue,” fueling concerns whether the NYSE was actually halted due to the free fall in China.
Companies in China fell 20% from a May high and, right before the NYSE shutdown, the Hang Seng Index plunged its most since the 2008 financial crisis.
“The Hang Seng Index fell 5.8% to 23,516.56 at the close today, the biggest drop since November 2008, after slumping as much as 8.6%,” Bloomberg’s Kana Nishizawa wrote.
Overall, China’s stock market plunge has wiped out around $3.2 trillion since June 12.
“Investors are disappointed and afraid that the Chinese policy makers lost control of the market,” Mari Oshidari, a Hong Kong-based financial strategist, said. “With no end in sight to the plunge, sentiment has turned cold.” (Read more from “ALERT — Chinese Stocks Collapsed Right Before NYSE Shutdown” HERE)
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China Bans Major Shareholders From Selling Their Stakes for Next Six Months
By Reuters. China’s securities regulator took the drastic step of banning shareholders with stakes of more than 5% from selling shares for the next six months in a bid to halt a plunge in stock prices that is starting to roil global financial markets.
The China Securities Regulatory Commission (CSRC) said on its website late on Wednesday that it would deal severely with any shareholders who violated the rule.
The prohibition is also seen applying to foreign investors who hold stakes in Shanghai- or Shenzhen-listed companies, although most of their holdings are below 5%.
China’s stock markets opened down again Thursday morning before making up some ground. Shanghai Composite Index fell more than 3% in the first half hour of trading before reversing course and rising 1.4%, while the Shenzhen Component Index opened down just over 1%.
Asian equities also extended losses as concerns over China’s market turmoil spread, while the safe-haven yen shot to a seven-week high as global risk appetite ebbed. (Read more from this story HERE)
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China Nationalizes $6 Trillion in Stock Losses
By Chriss Street. China’s stock market had what traders call a “Dead Kitty” bounce on Thursday as the communist authorities dispatched police and security personnel to “encourage” insider-buying and to arrest short sellers. With the Chinese market still highly inflated even after falling $3 trillion in value, China took action last night to “nationalize” about $6 trillion in losses.
China is about to show its third straight quarter of negative real (after inflation) GDP growth. The nation had been relying on a stock market boom to play a “decisive role” in funding the nation’s “Silk Road” reforms to transition to a consumer economy.
But as Breitbart News warned in “China’s Lehman Brothers Weekend Begins,” the “Red Dragon” has suffered a financial collapse equivalent in degree to the U.S. stock crash in 2008-9. Unlike the U.S., which used a formal government bailout to stabilize markets, the Communist Party instructed the nation’s banks to use their own balance sheets to guarantee the current $8 trillion stated value of all of China’s 2800 listed stocks.
As Stratfor’s John Minnich points out, “market capitalization of Chinese stock markets hovered around $1 trillion to $2 trillion” before the recent stock boom. At its peak on June 12, “China’s stock market capitalization, all the markets across the country, was something in the area of $10 trillion to $11 trillion.”
Minnich comments that people before the boom might gamble some of their personal savings into the stock market, but “it wasn’t critical to financing, corporate financing in the Chinese economy. Almost all corporate finances came through the state-owned banks.” (Read more from this story HERE).
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China’s Efforts to Control the Market Will End Very Badly
By Nils Pratley. Nervous about the Chinese stock market? You should be. First, it looks expensive, even after a dip. Second, the authorities in Beijing, by adopting increasingly desperate measures to prop up share prices, are sending an unmistakable message that they fear a crash is a possibility.
The latest official attempt to manipulate the stock market would be laughed out of court if it were attempted in the West. The central bank is shoveling cash toward a state-backed finance company that lends to individuals who would like to make bigger bets on the stock market than they can afford. That’s right, in today’s communist China, there are subsidies for stock-market speculation.
By way of further encouragement, the state itself is piling in. A state-backed wealth fund is buying blue-chip stocks. Meanwhile, supposedly independent brokers and fund managers have decided this is the ideal moment to invest the equivalent of £12 billion ($18.5 billion) and pledge not to sell until the main Shanghai index has risen at least 20%. This extraordinary effort, apparently, is required to “uphold market stability.” (Read more from this story HERE)
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Siddharth Jaganath wanted to return to India after earning his master’s degree at Texas’ Southern Methodist University. Instead, he built a new life in the U.S. over a decade, becoming a manager at a communications technology company and starting a family in the Dallas suburb of Plano . . .
