China pensions taking part in the equity market is a significant news to the market. Based on the reported figures, the cash these funds available for equities is equivalent to the entire foreign reserve currency in Malaysia. Talk about big fish...
Unfortunately this morning drop has wipe out any benefit from that.
sent from my Galaxy Tab S
i was reading this book the shadow market. It is not true that everyone is bankrupt. China and other countries like Norway and some middle eastern countries have huge surplus. They have the money. In fact i will be even more worried for the western countries with huge sovereign debts.
And GG, I am not sure why u are so confident in CCP. The only advantage CCP have is that they dont have to worry about politics and not constrained to make short term policies to appease the population like other western democractic countries. No politican have the power to remove the pension schemes that most obviously there is no finances to support. CCP definitely are not dumb and always make long term plans. But ultimately they are still humans and no one can fight against natural laws of supply demand or the free market.
just adding another opinion to the discussion
(24-08-2015, 11:15 AM)BlueKelah Wrote: [ -> ]Unfortunately this morning drop has wipe out any benefit from that.
sent from my Galaxy Tab S
Actually these funds benefit from the drop. Pension funds don't enter market within a day. They will likely spread it over long period, hence the benefits are long term based and will soak up panic selling for lower prices, assuming they are run by competent managers. On the longer horizon, I personally think it is a big plus for China market.
(24-08-2015, 12:28 PM)financiallyfree Wrote: [ -> ]i was reading this book the shadow market. It is not true that everyone is bankrupt. China and other countries like Norway and some middle eastern countries have huge surplus. They have the money. In fact i will be even more worried for the western countries with huge sovereign debts.
And GG, I am not sure why u are so confident in CCP. The only advantage CCP have is that they dont have to worry about politics and not constrained to make short term policies to appease the population like other western democractic countries. No politican have the power to remove the pension schemes that most obviously there is no finances to support. CCP definitely are not dumb and always make long term plans. But ultimately they are still humans and no one can fight against natural laws of supply demand or the free market.
just adding another opinion to the discussion
I trust noone especially consters that get a block of voters to vote for them. In this case, they don't even need to be voted into the office.
Actually, u should ask Temasek why they are so confident in China. Ask Capitaland why they sold off ALZ when they can easily keep it and keep expanding in China.
(24-08-2015, 02:19 PM)arriyana Wrote: [ -> ] (24-08-2015, 11:15 AM)BlueKelah Wrote: [ -> ]Unfortunately this morning drop has wipe out any benefit from that.
sent from my Galaxy Tab S
Actually these funds benefit from the drop. Pension funds don't enter market within a day. They will likely spread it over long period, hence the benefits are long term based and will soak up panic selling for lower prices, assuming they are run by competent managers. On the longer horizon, I personally think it is a big plus for China market.
yes fund will benefit from drop, but talking about the effect on a crashing market will be minimal. Thus won't be expecting much effect that the pension fund can have on a sinking market. If for investment, the china gov should have moved the pension fund in when SSE was at 2000+points last year and cashed out as it went up to 5000points.
The coincidental announcement of using pension fund to help the market now just smacks of desperation
BUt then again desperate times requires desperate measures...
Any view if the recent china stock crash is a short term or long term?
Shanghai is somewhat over valued.
Singapore is probably about right but lacks growth.
U.S. is slowly getting back on its feet on its domestic front.
What now?
As previously mentioned, re-look and stay nimble.
STI 100 pt drop and a Dow 1000 point drop at the open can mean only 2 things.
Short term volatility is back. Those with weak stomach, stay out.
A sharp drop is never good, an indicator of how much lower it can go.
It could get even more ugly. More severe and may take much longer to ride out this storm.
Risk reward unfavorable for the short term.
Myself, holding on to some, but these are more resilient companies, not worried too much.
Watching and waiting is the name of the game now.
(24-08-2015, 09:49 PM)VIS Wrote: [ -> ]Any view if the recent china stock crash is a short term or long term?
After a bubble pops usually the market will go below where it was when the bubble started inflating. Should panic and fear really take hold, it should just take a few weeks.
when SSE goes back down to 2000 or below, you will get your answer.
However the effects of a significant crash back to where it started would be pretty longstanding.
- OPINION
- Aug 24 2015 at 3:34 PM
- Updated Aug 24 2015 at 8:13 PM
Chinese stock market: Has hubris got the better of China's leaders?
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/j/2/7/x/a/image.related.afrArticleLead.620x350.gj6eoc.png/1440411221884.jpg[/img]President Xi Jinping need may need to remember military power can only be sustained through economic success. Getty Images
[Image: 1426118157768.png]
by Angus Grigg
Philip Baker | China the tipping point in ASX sell-off
As the Chinese stock market melts down and the economy slides further, the Communist Party appears distracted.
The Shanghai market crashed 8 and a half percent on Monday but Beijing had no new statement on the economy. Instead its top leaders are more worried about what shiny weapons they'll show off at next month's military parade in Beijing.
President Xi Jinping's preoccupation with muscular nationalism has come at the expense of the economy, which has entered another period of instability.
[img=620x0]http://www.afr.com/content/dam/images/g/j/6/e/m/c/image.imgtype.afrArticleInline.620x0.png/1440394890663.png[/img]China's market has given up all the gains it has made in 2015.
The parade and China's posturing looks like hubris.
Beijing is stoking popular resentment against neighbouring Japan when the focus should be on growth.
Suddenly global investors have no faith in Beijing's ability to manage the economic slow-down, even though this trend has been playing out for the last five years. Anxiety is spreading like a wild fire in markets across the globe.
The trigger for the evaporation of confidence was the government's miss-handling of the currency re-valuation on August 11.
Rather than being seen as move towards greater openness it was interpreted as a sign the economy was slowing faster than expected and the Yuan was being devalued to boost exports.
The lack of signalling in the lead up heightened such fears, as investors hit the panic button and retreated from anything with an exposure to China.
No sooner had these anxieties been calmed than China's stock market regulator came out and suggested it would no longer stand as the buyer of last resort for the equities market.
Add in the worst showing for the Purchasing Managers Index in 6 ½ years last week and its no surprise the Shanghai Composite Index has fallen 12 per cent over the last two sessions.
The regulator's new policy is to only start buying when the market is either showing "unusual volatility" or poses a "systemic risk" to the economy.
Nobody knows what that means and shows the folly of its extraordinary intervention in early July, which effectively nationalised parts of the stock market.
The lack of government intervention on Monday suggests the central government may now let the stock market find its own level.
That could be vastly lower than Monday's close, as Bloomberg data shows the average mainland stock was trading at 61 times earnings late last week.
Even with Monday's carnage it still makes China stocks far more expensive than those in the S&P 500 in the US, which trades at an average of 19 times earnings
And it means Beijing may now have to manage a falling stock market at the same times as the economy is slowing faster than expected. Policy makers should be able to do handle this.
Over the last three years they have shown good dexterity in defusing a potential crisis in the shadow banking sector, while guiding the property market in regional cities lower without triggering widespread bankruptcies among developers.
The challenge now is to engineer a soft landing for the broader economy without resorting to major stimulus measures that will make structural imbalances worse and leave major problems for another day.
The more bullish economist believe the government has the issue in hand.
It has begun to gradually expand credit growth, which many regard as the single most important factor in China's economic performance, after a period of tightening.
Credit growth hit a 31 month high in July as has increased by 20 per cent over the last three months, suggesting activity will rebound later in the year.
But maintaining this delicate balance will require the full attention of leaders in Beijing.
And so as President Xi presides over his parade through Tiananmen Square on September 3, he might reflect that military power can only be sustained through economic success.
Nothing should make this point more strongly than the presence of Russia's Vladimir Putin as his guest of honour.