Yushui Village in Lijiang, Yunnan, with snow mountain backdrop and cascading waterfalls.
1/13/2015
China providing an alternative to the failed American model stock market
‘China now gives investors an alternative to (the)manipulated HFT U.S. stock markets - www.examiner.com
On Nov. 17, China finalized the completion of their linking the Shanghai stock exchange with the Hong Kong exchange, creating a $4.2 trillion capital market that is also open to foreign investors. Debuting yesterday during Asian trading hours, this new and dynamic market will provide an alternative for American and other global traders to invest in a massive stock exchange that is free from the manipulation and High Frequency Trading (HFT) that occurs on U.S. exchanges, and will even exempt foreign investors from paying capital gains taxes….
In March of this year, financial author Michael Lewis laid a bombshell on the investment community when he published his book Flash Boys: A Wall Street Revolt. In this fictional story based on real life factual data, Lewis showed how HFT was used so much by the primary brokers on Wall Street that it completely rigged the stock markets and allowed the siphoning off of hundreds of billions of dollars from investors simply because their machines saw trades before they happened, and bought or sold shares to follow trends.
It is perhaps ironic that for decades the perception has been that fraud, corruption, and manipulation has been projected upon Asia, and Asian markets that had limited regulation to protect investors. However, those days are quickly changing and with this new and transparent stock market merger between Shanghai and Hong Kong, opportunities now appear far greater and with much less risk of fraud overseas than they do in the U.S. and European based exchanges.’
The above article talked about the alternative stock market platform China is providing to the world of finance to overcome and to step away from the highly flawed, manipulated and failed American stock trading system. Fund managers would now have a more transparent and trusted stock exchange to invest their funds collected from innocent investors in. It is a fairer and less manipulated market than one dominated by high speed computers that made all the trading principles, fundamentals and methodology irrelevant, a joke. Traditional and conventional fund managers and retail traders have been robbed and massacred by the highly deceptive high speed trading programmes without knowing what really hit them, without knowing they have been cheated by them and the regulators of the exchanges.
High speed trading has violated and broken all the rules and regulations of stock exchanges for fair trading and have deceived investors that there was nothing wrong or illegal about their modus operandi. This does not mean that the govts, the US govt included, the regulators and the big fund managers did not know that the operations are illegal, criminal and fraudulent. They have been allowed to continue to operate and cheat other investors simply by virtue of their control over the regulators not to report or apprehend them for frauds and cheating. Everyone in the industry, the govt and regulators, are complicit in this crime while the investors are totally helpless about it except to lose their savings and fortunes. The wiser, or those who have lost everything, could only stand aside and watch in vain, not to participate or cannot afford to participate in the con game again.
China has seen through the deception and is offering genuine investors and fund managers a fairer and more transparent platform to invest and trade without being cheated by the computer traders. The American model is waiting to collapse just like the greenback, all built and propped up by sheer manipulation of the regulators/govt and the big computer operators.
Now that there is a reliable and fairer system to trade stocks, more fund managers are likely to shift their portfolio to the Shanghai/Hongkong market and leading to a quicker demise of the American model. The Singapore Exchange that is highly similar to the American model and would not be spared and would likely meet a similar ending once New York and London hit dirt at ground zero. Good riddance.
The end of the American model is near and a new and fairer financial centre in Shanghai/Hongkong would rise to take the place of New York/London and Tokyo. No more computer trading and no more manipulation of the stock market with impunity. There is new hope and a new world order at the horizon.
Kopi Level - Red
China stock market is even more rigged.
ReplyDeleteI wonder if RB has taken $ from PRC.
Wonder what's the Difference between Stock Exchange and Casino?
ReplyDeletepatriot
Are you guessing? The truth is where the fund managers would park their money. China would not be pushing out a new market model if it is no better than the American model and hoping to replace it as a better alternative. The fund managers are not stupid.
ReplyDeleteStanchart just closed down its operation here.
"Now that there is a reliable and fairer system to trade stocks,"
ReplyDelete- really? ruling class will still get richer and commoners will still be the exploited class.
- its the fight between two elite ruling class. may the less evil elite ruling class win.
Hi RedBean (this is the AngMoh again :) )
ReplyDeleteThe issue is a little more complicated than the way you present it.
I am a trader (private-consumer level) or gambler (as patriot says)
1. HFT is a method of trading used by some with access to extremely high speed technology that can intercept a trade and quickly make money out of it. For example if I (as a private person) want to sell stock A @ $100 in my online trading, these HFT traders can use that info to make money in the split second between me placing the order and the order being fulfilled.
It is in fact not illegal, albeit maybe not ethical, and I, as private person, am not affected. My trade will be filled at $100.- I don't lose anything.
So there is no "rigging", just opportunistic money making, which is a ethical question by itself.
For everybody who trades online, there is no consequence, as one would never notice the HFT, that may have gone on.
2, As to "transparency" of the Shanghai stock market, I would be cautious about using that word. The stock-exchange itself maybe transparent, but the underlying Chinese stocks are not always transparent. Having worked in China for 13 years, it is one of the most frustrating issues when dealing with Chinese companies. Their P&L and Balance Sheets are very "creative"
3. Finally, the Shanghai stock-exchange does not allow "short-selling" for private consumer traders like me, which means you can only make money on an upwards market.
The article you refer to is just one opinion. Being a daily trader (one the US market) I haven't heard anything like that.
Hi Angmoh,
ReplyDeleteIn trading, it is a zero sum game. When someone makes, another loses unless it is a rising market when the gains and losses are accumulated in the rising price of a stock.
When you make, when HFT makes, who loses? In all exchanges, fair play is a basic principle that must be protected. That is why there is no such thing as front running or insider trading. HFT is worst than these. And how can an exchange allow a system that guarantees the HFT to make profit only?
I agree with you that many stocks in the Shanghai exchange could be frauds. This applies to all exchanges, even in SGX and NY. What Shanghai/Hongkong is providing is an exchange with a level playing field, no special advantages to HFT and the likes.
The rest is caveat emptor.