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Economy

Demeter

(85,373 posts)

4. This Is Why So Many Chinese Companies Are Suspended

Reply to Demeter (Reply #3)

Wed Jul 8, 2015, 06:54 PM

Jul 2015

http://www.bloomberg.com/news/articles/2015-07-08/this-is-why-so-many-chinese-companies-are-suspended

China's corporations have been big fans of stock-based loans, too...At least 1,331 companies have halted trading on China's mainland exchanges, freezing $2.6 trillion of shares, or about 40 percent of the country’s market value, Bloomberg reported on Wednesday.

The Shanghai Composite Index fell 5.9 percent on Wednesday. It's now about 32 percent below the peak of 5,166 it reached on June 12. The unwinding of margin loans is adding fuel to the fire. Individual investors in China, as we all know by now, have used generous margin financing terms to enter the stock market and then build up their portfolios. Less-known is that Chinese companies have been doing the same thing by using their own corporate stock to secure loans from banks.

This means that they stand to lose a lot when those share prices start trending dramatically lower.

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STOCK MARKET WATCH -- Thursday, 9 July 2015 [View all] Tansy_Gold Jul 2015 OP

Message auto-removed Name removed Jul 2015 #1

That's why I transferred all my investments to Ceti Alpha Four. tclambert Jul 2015 #8

so should I load up on gold, silver or pop tarts? magical thyme Jul 2015 #10

Pop tarts, they are edible. :) nt mother earth Jul 2015 #11

And they store well pscot Jul 2015 #12

Also burn well, for heat and light Demeter Jul 2015 #13

Hmmm... I wonder what flavors would be best for bartering? magical thyme Jul 2015 #18

A multi-use product is always in demand. mother earth Jul 2015 #20

Yeah, I think they have a 5 year shelf life...maybe more... mother earth Jul 2015 #19

I think it's measured in a half-life. Fuddnik Jul 2015 #22

TY, Fuddnik, I was searching for the right words. mother earth Jul 2015 #23

Icees. Hugin Jul 2015 #17

Twinkies are back. tclambert Jul 2015 #24

Poroshenko’s pledge for Ukraine to join EU 'rather ambitious' – Euro Parliament president Demeter Jul 2015 #2

As China Intervenes to Prop Up Stocks, Foreigners Head for Exits FROM MONDAY Demeter Jul 2015 #3

This Is Why So Many Chinese Companies Are Suspended Demeter Jul 2015 #4

Some Chinese Are Taking 22% Margin Loans to Finance Stock Purchases Demeter Jul 2015 #5

China Market Rout Spreads From Stocks to Price of Pig Food Demeter Jul 2015 #7

NYSE Suspends Trading in All Securities FOR 3.5 HOURS! Demeter Jul 2015 #6

found this in GD. A tweet from anonymous dated evening of 7th magical thyme Jul 2015 #9

One cannot help but wonder Demeter Jul 2015 #14

ETA News Release: Unemployment Insurance Weekly Claims Report (07/09/2015) mahatmakanejeeves Jul 2015 #15

Too good to wait for the WEEkend. MattSh Jul 2015 #16

Nigel Farage is a force to behold, gotta love him. OTOH, I do feel for Tsipras, he is between a mother earth Jul 2015 #21