7/09/2015

Shanghai and Hongkong stock exchanges, a time to learn the hard way

The recent run up in the Shanghai and Hongkong stock markets and the tumbles they took in the last few days are exactly the kind of things they should be wary of and to avoid at all cost.  It is elementary, set pieces that do not need much intelligence to know that it will crash.  When PEs are too high, when there is irrational exuberance and a big bubble, what would you expect?

The high manipulation of stock markets, when the big boys are able to use their war chests, working in cahoot as a gang, to drive up and down markets, are dangerous to stock market operators and small investors. The big sharks are there to gobble up everything, including the bones if they are left free to do as they liked.

The Shanghai and Hongkong exchanges have been under tremendous pressure by the western manipulators using the excuse of liberalization and non interference as the new international norms of exchanges, to allow them to do as they pleased. Both exchanges should not be seduced and conned into allowing these international financial bandits to run wild in their exchanges. They should not forget the basics of a stock exchange and proper supervision to stop wild manipulations of the market.

The most dangerous things to come, and they are knocking at the doors, are derivatives and computer assisted tradings like algo and HFT. The former is anything but rigged gambling and the latter is simply unfair trading. Both are crimes against the innocent investors.

Take heed, learn from the current upheavals and steer a path that is fair and sustainable for the growth and proper functioning of stock markets. Do no allow the stock market to be turned into free wheeling casinos under the full control of these financial bandits. They are very destructive and will drive stock markets to their early demise. Never allow the bandits a free hand to do as they pleased.

A good example is the Singapore stock market. It still does not know what is going on or in a state of denial.

28 comments:

Anonymous said...

Since the 2nd week of June, abt 30% cliff like plunge in the Chinese mkt. Estimated SGD5 Trillion wiped out in less than a month up to yesterday 8 July 2015. Most of the financial carnages are the villagers, pensioners, etc. SGD5 trillion is about RMB25T. A huge chunk of the Chinese population life time savings are wiped out in less than 4 weeks. Thanks to the promise of new economics initiatives of the AIIB, new silk roads, one road one belt. If the Yankees go for the kill just like they finished off the Japenis in the early 1990s and the FED raise interest rate in the near term, highly leveraged and inputs investments driven economies like the Chinese and ........ ah hem ....... a giant construction site economy on a tiny island ....... boom ......... or shouldn't it be ...... BUST! The happenings are linked and ultimately can be traced to the ideas of some "genius" ......

Anonymous said...

It is noted that in the past few months especially last 2 to 3 months, huge chunks of stocks owned by large share holders in Chinese companies are off loaded to the Chinese retail investors. Now they are stuck holding "almost useless papers" bought with their life time savings ...... Many of the stocks are with prices so high it will take NOT decades but literally several centuries just to recoup the investment. Imagine like investing SUPER LONG TERM for like 700 years to get back your investment. ..... what kind of value investing is that? Did Benjamin Graham or Warren Buffett ever do this type of value investing? When even food court and toilet cleaners start getting in the market, it always end in years and real life tragic super men and women flying off from many modern super sky scrapers long built for them ...... it is like 1907 in New York all over again but this time 2015 in Shanghai. .......

Anonymous said...

Typo should be *** end in tears

Anonymous said...

With the gargantuan excess capacities in their investment heavy economy and now huge chunks of the Chinese consumers losing their life time savings, how are the Chinese going to steer their economy away from export-led growth to consumption-led growth and digest the excess capacities popped up by huge loans and leveraging?

Anonymous said...

This thing is likely going to end "very ugly" for the Chinese in the near and even middle term .....

patriot said...

Watched Chinese Experts debating about their Bourses on CCTVs. Majority are confident that Chinese Bourses are well govern.though a few debaters were offering very valid reasons of an impending meltdown.
In any case Sin Stock Index stands about its highest now and it was reported that trading volume was healthy and on the increase recently.

Some Western Experts have said that there is no danger of the Chinese Bourses getting into big trouble in the foreseeable future.

On balance, it seems that there are much more optimism for Chinese Bourses and those that are influence by them.

patriot

Anonymous said...

The most devastating blow is that after this financial meltdown, they have very little options to soak up the excess capacities in their economy. The next domino to fall is their employment and that's the biggest elephant in the room in ensuring stability in the Chinese society. After PBOC uses up their bullets in the coming months, they will be in the same situation like the Yankees in 2008/ 2009 but without the type of sophisticated capital markets the Americans have in their economy.

Anonymous said...

Watching CCTV talking about CCP and their bourses is like watching Mediacorpse talking about ...... eh ..... Pay And Pay and ...... eh ..... casinos ...... eh ...... oops no ...... eh ....... Talk about daft or patraitors. .......

ℳatilah_$ingapura said...

Please lah, at the end of the day it has got nothing to do with "manipulators" or being Shanghai or HK per se.

When a market is hot, people do silly things---like pump all their life savings into trades without any risk or money management in play.

All bourses are more or less "open" to the world---so anyone can go long and short, anyone can spread misinformation, and anyone can (attempt to) "manipulate" the market as long as they have the resources and be the first to get data.

China's bourses will end up like every other cuntrees bourses---with derivatives, algo trading and HFT. These are unstoppable trends.

Human nature lah.

Anonymous said...

Patriots, u talking about economics? U know what is national income accounting, how GDP is computed? The circular income flow in a national and international economy, the various injections and leakages in an economy? The various fiscal policies, monetary policies etc ... What is the liquidity trap? Paradox of thrift? The J curve, modern Phillips curve, Okun's Law, Mundell-Fleming model IS-LM-BOP analysis on an open economy etc etc? What are u talking about??????

patriot said...

Me not talking about economy per se.
Just parroting both sides of the Experts.
Neither do I trust any experts anywhere in any field. There are too many experts ruining the World.

As a whole, I do not need any expert myself being a nonentity.

Thank You much and Your Expertise in Economy and in Other Areas hopefully will save many people if not the World.

patriot

Anonymous said...

Building bubbles is like athletes taking steroids. U get the initial short term boost. But long run the price to pay is so heavy it will wreak the economy just like steroids will definitively wreak the athletes.

Chua Chin Leng aka redbean said...

Don't believe anything you read about out market. It is dying and in a state of denial.

What is happening to China is a repeat of our bull run in 1993/4. I thought they would have learnt from our experience and would not repeat allow history to repeat itself. They did not learn anything.

Hope there is a second chance and they take this lesson seriously, though very painful.

I am also surprised that Hongkong allowed the slaughter yesterday. Thought they have a standby fund to guard against such wild sellings. They have seen it done before and know what to do with their war chest.

Not knowing history, not learning from history, from past or other people's mistakes is not excusable. The game of finance today is pure gambling and hassling. If they let their guards down, they would be torn apart and looted.

Anonymous said...

U claimed nonentity but call yourself patriots but cannot save the cuntry much less the world and calling an anonymous entity to save the world. In the first place dun put words in an anonymous mouth that anonymous have any intention to save the world or have any expertise in economics or anything else. Anonymous know peanuts about economics or anything else but enough to know some people know nuts but try to tell the whole wide world Web about his opinions. The Chinese have a saying: "显丑不如藏拙" 。。。。。。。People dunno how ignoramus u are until u open your (rubbish) mouth .....

Anonymous said...

Rb, thank you for reminding some DAFF, ignoramus and patraitors not to believe everything they hear from CCTV or Mediacorpse. Listening to them is akin some parents who listened to some sickos and egoistic megalomaniac bent on scoring brownie points and sent their children on Via Ferrata and Walk the Torq need to sign 生死状expedition with the Sabah police authority at the foot of Mt KK. If claiming Mt KK is a walk in the park, why climberd need sign the 生死状with the Sabah police authority at the foot of Mt kk before they are allowed to climb? Why did MOE sanction these types of extreme mountaineering activities without telling parents? Heard about asymmetric information. People only tell u what they want u to hear and know. They will "hide" what they dun want u to hear and know. So pls listen to a 老江湖like RB and dun be stubborn. Dun jump into the market bcos some x-see-perts said this market or that market very healthy. If very healthy, even ah Kong Khum or ah gong or ah ter also can see. No need them to tell people. When they say market very healthy, only Kong Khum or 3 years old gong gong believe. Better jump into ah Neh ocean, drink/ eat one oil tanker load of salt then after somber talk again ......

ℳatilah_$ingapura said...

Most people don't like falling prices.

So I must be different: I luuurrrrve falling prices! People clamoring, stampeding in mass panic for the exits when there are no buyers, which then results in a free fall in prices----wah lau, this makes my DICK HARD lah.

When prices of stuff you like fall to ridiculously low levels, you can pick up the stuff you like for damn cheap cheap. So cheap sometimes that you feel a little "guilty" for "stealing" it. However, no matter. Since you did nothing wrong, the "guilt" will pass ;-)

The shiok thing about capitalism, is you get many players in The Game who don't know shit, but still like to "play big" using fear and greed as their guide. And let us not forget the CLASSIC human trait of being very LOUSY at PROBABILITY.

You have Greece in the shitter. China stockmarkets freezing up. Many other cuntrees have domestic budget woes...the mighty US Fed tapering off...wow. So many factors to wallop the bulls of the world :-)

Got sell short?

Anonymous said...

What is happening to China is a repeat of our bull run in 1993/4.
RB 10:04 a.m.

Ya lah, but have we not prospered since our bull run in 1993/4?

If we can, China will also can what, so what is there for China to learn from our experience? It's just a matter of up and downs, and up again, as typical of stock markets. And win and win again, as typical of PAP every election.

Chua Chin Leng aka redbean said...

With the media and news pronouncing the end of the China market, and Hongkong falling as collateral, Shanghai is now +33 and Hangseng +789. It is a big battle and a lot of factors and forces are involved. It is war of a different kind.

Anonymous said...

Ha ha ha ....... hope is not dead cat bounce ....... good luck ......

Anonymous said...

In this market, who has metal gloves to catch falling knives ....... no raining knives, swords, darts .......

Anonymous said...

It is war of a different kind.
RB 10:43 a.m.

Doesn't matter what kind of war lah, as long as China remain peaceful without another Tiananmen incident, and the Chinese continue to make money, and the rich ones come here to gamble, spend or park money, and doesn't matter what kind of money.

As the late Teng Xiao Ping had said: Doesn't matter black cat or white cat, if it catches mice, it is a good cat.

Anonymous said...

With the Chinese mkt tanking and the old hundred surnames ( 老百姓) savings wiped out, how many still have enough dough to visit the casinos? Won't be surprised summer in sin city but winter in its casinos. .... Talk abt Chinese tourists? Are u in illusion? Very soon the figures will be back to 10m and below, the numbers before sin city start taking steroids ...... oops. .... should be start building/ramping up vices oops ...... casinos ......

Anonymous said...


Stock markets are BIG casinos!

Very few became rich. Many many went under!

十赌九输! Yes 十赌九输!

Don't touch and sleep soundly at night!

Cheers.

Anonymous said...

Woah Patriot missile shot down and destroyed.

Chua Chin Leng aka redbean said...

The Chinese Govt is fighting back with all they got. Shanghai is now up 203 points while Hangseng is up 941 points. It was up more than 1000 point earlier.

Anonymous said...


Haha Patriot kaput !

Anonymous said...

Redbean, sorry this time has to disagree with you on China bubble:
1. The Chinese government was fueling and cheering the stock bubble despite slowing economy and an over-priced and extended property market. Not foreigners or outside sharks as you thought.
2. 90 million retail herd speculators allowed to buy stocks on leverage. Sheer madness! The financial authority was sleeping or sleeping with the stock broking houses. Very lax in basic regulatory requirements and compliance.
3. Within 12 months, US$6 trillion of bubble wealth was created through leverage and crazily lax margin financing. US$3 trillion are wipe out. And government is trying to holdout at this level; it will cost them another US$3 trillion.

Basic Problem: Government arrogance that it is bigger than the market. Speculators driven by greed and ignorance. It sure is a very expensive way to find out who you are.

Anonymous said...

chinese govt is merely testing their " free market" theory on their stock market.(pilot test)

it just prove that free market dont works in CHINA

1. herd mentality
2. irrationality
3. they seek for short term gains ( gambling) , not long term gain( dividend)

conclusion - china need to maintain certain degree of control over their market.
they need much more robust and stronger regulatory and monitoring body.

they need to educate their people about " long term gain" is much better than turning stock market into "gambling den."

because it also encourage company to work harder to improve their fundamental
if investor are buying for long term gains.