China stock plunge accelerates as regulator warns of 'panic'

[tomm2thumbs]

Source: REUTERS / via Yahoo

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 percent of the market - as companies scuttled to sit out the carnage. <snip>

Chinese stocks plunged on Wednesday after the country's securities regulator warned investors were in the grip of "panic sentiment" and the market showed signs of freezing up as firms scrambled to escape the rout by having their shares suspended. Beijing, which has struggled for more than a week to bend the market to its will, unveiled yet 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. <snip>

China has orchestrated brokerages and fund managers to promise to buy billions of dollars' worth of stocks, helped by a state-backed margin finance company which the central bank pledged on Wednesday to provide sufficient liquidity.

Read more: http://news.yahoo.com/china-stocks-nosedive-despite-fresh-regulator-support-022752926--finance.html

---

Artificially propping up the banks and securities.... sound familiar to anyone?

[tomm2thumbs]

1. ABC News Australia explains market freefall

ABC business editor Ian Verrender explains how China has engineered a bubble that is now bursting and breaking Beijing's traditional control of the markets, which includes a loss of 4 Trillion dollars so far.

[BumRushDaShow]

4. This almost seems similar to what happened to Japan 25 years ago

after which China apparently pushed to fill the market space (blowing past South Korea) that Japan once held at the time (using similar tactics). And come to think of it, 1997 was when Hong Kong was "officially" returned to ROC.

[cprise]

8. Does it now... Look here

The same programme is imposed regardless of circumstance: every country the IMF colonises must place the control of inflation ahead of other economic objectives; immediately remove barriers to trade and the flow of capital; liberalise its banking system; reduce government spending on everything bar debt repayments; and privatise assets that can be sold to foreign investors.

Using the threat of its self-fulfilling prophecy (it warns the financial markets that countries that don’t submit to its demands are doomed), it has forced governments to abandon progressive policies. Almost single-handedly, it engineered the 1997 Asian financial crisis: by forcing governments to remove capital controls, it opened currencies to attack by financial speculators. Only countries such as Malaysia and China, which refused to cave in, escaped.

http://www.theguardian.com/commentisfree/2015/jul/07/greece-financial-elite-democracy-liassez-faire-neoliberalism


But the Greek crisis was soooo 2008. Today we see China under attack, and I have to wonder what is going on.

[davidpdx]

9. I was in China in 2011-2012 and saw a lot of empty buildings despite the heavy amount

of construction. Even back then it was apparent a housing bubble was coming in China.

The place that I was working was near a very nice new set of townhouses. A friend and I walked over one day to take a look at them and a lot of them were empty. There was a security guard there and we asked him how much the houses were, the response we got was "a lot".

[Javaman]

10. part of their GDP is based on construction of buildings, not on purchases.

so they build and build and build. Artificially ballooning their GDP to unrealistic levels.

[davidpdx]

11. Yes, and things are going to get worse

I'm glad I didn't stay there.

[msongs]

2. unlike the USA where this stuff is rewarded china executes fraud committing bankers nt

[Sunlei]

3. probably the same bank corps who screwed everyone but I bet they have Chinese CEOs in China.

[Helen Borg]

5. ...and despite that...

They keep committing fraud. They must have been educated at US business schools.

[Fortinbras Armstrong]

6. You think that the Chinese are unable to come up with fraudulent schemes all on their own?

Mencius, circa 300 BC, wrote that one of the duties of the ruler was to root out fraud as it was pernicious to the state and the people, and if those committing fraud were seen to get away with it, it would encourage others to do the same.

[Helen Borg]

7. I'm sure they can.

And yet, I bet those CEOs were trained in the US.

[Cal33]

12. The way you write could be interpreted to mean that fraud is taught at business schools here, which

I don't think was your intent. What the students learn at school is one thing, and what they actually
see taking place in the world of business here could be something entirely different -- morality-wise.

[AZ Progressive]

13. Once emotions start talking over a stock market like this, you have a crash, and the bubble burst

It seems that China's economy has been building an economic bubble (based on overbuilding), and history shows that it takes just one trigger for the bubble to burst.


This can spread to the U.S., since we in some ways do have a bubble situation (the markets have been artificially inflated in the past several years.) This of course could lead to another recession, since plummeting economic confidence usually causes a recession (because fear leads to holding back money, not spending money, not hiring people, etc...)

The 98 crash in Asia did not lead to a recession in the U.S., so we can hope for the best.

[roamer65]

15. Here's the scary part. Chinese companies have used their own stock as collateral for bank loans.

Shades of 1929, folks.