Bloomberg: U.S. Dot-Com Bubble Was Nothing Compared to Today’s China Prices

(29-06-2015, 04:54 PM)greengiraffe Wrote: that is what value investment is all about... isn't it

(29-06-2015, 03:50 PM)opmi Wrote: Was catching falling knives this morning.

I am watching at the sideline, and turning greedier. I agree with BlueKelah, we may be able to get cheaper ones later...

(29-06-2015, 03:30 PM)corydorus Wrote: China even with 30% down, YoY is still ... double up. It will have a lot of room to go.

Frankly i do not understand why Greece matter to the world. Any sentiments due to it, is good opportunity for investor.

Agreed. My colleague and I were looking at 2014 world gdp from fbi factsheet.. Greece gdp of 0.3% is even lower than sg (~0.4%).

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(29-06-2015, 05:54 PM)CityFarmer Wrote:

(29-06-2015, 04:54 PM)greengiraffe Wrote: that is what value investment is all about... isn't it

(29-06-2015, 03:50 PM)opmi Wrote: Was catching falling knives this morning.

I am watching at the sideline, and turning greedier. I agree with BlueKelah, we may be able to get cheaper ones later...[emoji14]

Yes no harm watching from sidelines for better opportunity and feeling the greed as the market sinks.. IIRC, it was only a few years back, towards the end of 2011 where the sti went down to 2800 levels briefly, so feel that there is more room to down before plonking down some hard earned moolah..

Of course if one has eyes on stocks like OnG or shipping plays or commodity stocks which have already sunk from highs, then one might not need to wait as patiently for the sti to go down more..
sent from my Galaxy Tab S

Jun 29 2015 at 2:31 PM Updated Jun 29 2015 at 5:53 PM
Chinese regulator urges calm after panic selling smashes markets

China's central bank cut rates unexpectedly but it couldn't stop panic selling on Monday. CHINA DAILY
by Angus Grigg

China's stock market regulator has moved to reassure nervous investors saying the overall level of risk was "manageable", after an aggressive move by the central bank over the weekend failed to avert panic selling on Monday.
The Shanghai Composite Index was down 7.6 per cent in afternoon trading on Monday, before the China Securities Regulatory Committee released its statement.
"At the moment the risks associated with short selling and margin trading are generally under control," the CSRC said.
"Stress tests shows guarantees for short selling and margin trading are still well above the red line."
The statement released on Sina Weibo, China's version of Twitter, had an immediate effect and pushing the country's main index off its lows.
At the close Shanghai's main index was down 3.3 per cent at 4053 points. Even with the heavy losses of the last three days the index has still nearly doubled since June last year, although it has fallen 22 per cent over the last two weeks.
The technology focused CHINEX board in Shenzhen failed to respond to the regulator's statement, falling 8 per cent on Monday. It has now lost 33 per cent from its peak on June 5th.
The intervention of the regulator will only fuel speculation the central government is encouraging the share market boom in an effort to boost consumer confidence as the economy slows and gains from the housing market wane.
China's Finance Minister Lou Jiwei told Australian Treasurer Joe Hockey that policy makers were on top of the situation.
"There is no doubt China has fiscal capacity and monetary policy capacity to be able to respond to some of the immediate structural challenges," Mr Hockey said after meeting his counterpart in Beijing.
"They are very aware of the power of their levers and I have no doubt they will do whatever is necessary to ensure there is sustainable growth across the Chinese economy."
The big falls in the stock market over the last three days have been attributed to margin calls, where investors are forced to sell stock to cover loans that must be immediately repaid.
The CSRC attempted to downplay this on Monday, saying only 6 million positions had been "closed out" on Thursday and Friday and therefore such risks were "manageable".
Market watchers had thought the surprise move by the People's Bank of China on Saturday night would be sufficient to calm nervous investors after last week's sell-off.
The PBOC cut the benchmark lending and deposit rates by a quarter of a percentage point to 4.85 per cent and 2 per cent, respectively.
It also announced targeted reserve requirement ratio (RRR) cuts of 50 basis points for some lenders.
The last time the PBOC cut both the RRR and interest rates simultaneously was in 2008, during the global financial crisis. It has now cut interest rates four times since November.
In a statement, the PBOC said both steps were aimed at lowering borrowing costs and "stabilising growth" in the world's second-largest economy.
China's government is targeting annual economic growth of 7 per cent, a pace which would be the slowest since 1990. However, weak trade, retail sales and investment numbers have some analysts concerned growth may be even slower.

(29-06-2015, 07:12 PM)BlueKelah Wrote:

(29-06-2015, 05:54 PM)CityFarmer Wrote:

(29-06-2015, 04:54 PM)greengiraffe Wrote: that is what value investment is all about... isn't it

(29-06-2015, 03:50 PM)opmi Wrote: Was catching falling knives this morning.

I am watching at the sideline, and turning greedier. I agree with BlueKelah, we may be able to get cheaper ones later...[emoji14]

Yes no harm watching from sidelines for better opportunity and feeling the greed as the market sinks.. IIRC, it was only a few years back, towards the end of 2011 where the sti went down to 2800 levels briefly, so feel that there is more room to down before plonking down some hard earned moolah..

Of course if one has eyes on stocks like OnG or shipping plays or commodity stocks which have already sunk from highs, then one might not need to wait as patiently for the sti to go down more..
sent from my Galaxy Tab S

In the morning, some HK counters liquidity shrank jialat jialat.
People was panic selling. Fear was in the air.

Jun 30 2015 at 2:09 PM Updated Jun 30 2015 at 6:13 PM

China sharemarket jumps 5pc in biggest swing since 1992

China's main index has fallen 22 per cent from its high on June 12 Reuters


by Angus Grigg

Strong indications from the Chinese government that it would allow the state owned $US493 billion pension fund to invest in equities saw a near 5 per cent fall in morning trade turn into a 5 per cent gain by the end of trade on the country's volatile stock markets.

It was the benchmark Shanghai Composite Index's biggest intraday swing since 1992. The first rise in four days saw it close 5.5 per cent up at 4,277.22, the most since March 2009. The gauge swung 432 points from the highs and lows, propelling a volatility measure to a seven-year peak.

An industry group representing brokerages called on investors and fund managers to take responsibility to stabilize the market after a weekend interest-rate cut failed to stem a rout.

The country's main index has fallen 20 per cent from its high on June 12, but has still almost doubled over the last year.

"We should not be overly pessimistic on the market as there will be sunny days ahead after the rainfall," said Zhang Qi, an analyst at Haitong Securities in Shanghai. Mr Zhang said the falls were triggered by investors taking profits out of the market and others needing to repay loans by June 30.

"Confidence will return shortly," he said.

As if to confirm this, Chinese fund managers increased their suggested stock allocation for the next three months in the belief the market is near its bottom, a Reuters poll showed. Chinese fund managers raised their suggested equity allocation for the next three months to 83.1 percent from 80.6 percent the previous month, according to a poll of eight China-based fund managers conducted the week of June 22-26.

Mr Zhang said the series of support measures announced by the government would help lift the market. The most significant of these measures is a move to allow China's state pension fund to invest in equities for the first time.

Presently it can only invest in bank deposits and US Treasury bonds. Under the change it is expected to be permitted to invest 30 per cent of its funds in the stock market.

The official Xinhua News agency reported the guidelines for the changed investment strategy were being drafted by the Ministry of Human Resources and Social Security and the Ministry of Finance. They will undertake public consultation until July 13. Xinhua gave no indication on how quickly the state pension fund would begin investing in equities.

The move came after China's stock market regulator was forced to reassure nervous investors on Monday, saying the overall level of risk in the market was "manageable".

The regulator made its public statement after a cut in interest rates and bank reserve requirements over the weekend failed to avert panic selling on Monday.

"At the moment the risks associated with short selling and margin trading are generally under control," China Securities Regulatory Committee said in a statement. "Stress tests shows guarantees for short selling and margin trading are still well above the red line."

The intervention of the regulator and pension fund will only fuel speculation the central government is encouraging the share market boom in an effort to boost consumer confidence as the economy slows and gains from the housing market wane.

China's Finance Minister Lou Jiwei told Australian Treasurer Joe Hockey that policy makers were on top of the situation. "There is no doubt China has fiscal capacity and monetary policy capacity to be able to respond to some of the immediate structural challenges," Mr Hockey said after meeting his counterpart in Beijing.

"They are very aware of the power of their levers and I have no doubt they will do whatever is necessary to ensure there is sustainable growth across the Chinese economy."

China Stocks Fall: Shanghai Composite Index Drops 5.2%

Chinese stocks tumbled in late trade, with the benchmark index almost erasing Tuesday’s rally, as margin traders unwound positions for a seventh straight day and data showed economic growth remaining sluggish.

The Shanghai Composite Index slid 5.2 percent to 4,053.70 at the close, after surging 5.5 percent Tuesday. Thirty-day volatility on the measure jumped to the highest level since December 2008. Industrial, commodity and financial companies led the rout, while 13 stocks fell for each that rose.

The benchmark equity measure rallied the most in six years Tuesday on speculation the government would take steps to support the $8.1 trillion stock market after shares sank more than 20 percent in two weeks. Regulators are considering suspending initial public offerings, people familiar with the matter said Monday, while the Economic Observer reported stamp duties may be cut.

“Sentiment is still cautious after the rebound yesterday due to uncertainty over the short-term market trend,” said Qian Qimin, an analyst at Shenwan Hongyuan Group Co., by phone from Shanghai. “Earlier expectations of a possible stamp tax cut and an IPO suspension failed to materialize, also disappointing investors. Investors are likely to be defensive in the near term.”

The CSI 300 Index lost 4.9 percent. Hong Kong’s stock market was closed for a holiday on Wednesday.

Margin debt on the Shanghai Stock Exchange fell to 1.34 trillion yuan ($216.1 billion) on Tuesday for the longest stretch of declines in three years. A five-fold surge in leveraged wagers had helped propel the Shanghai index to a more than 150 percent gain in the 12 months through June 12.

World Bank is telling the obvious...

Jul 1 2015 at 5:48 PM Updated Jul 1 2015 at 5:51 PM

World Bank calls for urgent reform as Chinese markets dive again

China's stock market changed direction ten times on Wednesday before ending down more than 5 per cent. Reuters

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by Lisa Murray

China's financial sector is in need of urgent reform to address wasteful investment and excessive debt levels, the World Bank has warned in its latest economic update.

This includes addressing the surge in margin financing for buying stocks, which underpinned this year's stock market rally, the organisation said in its report.

The words of warning came as investors endured another day of volatile trading on China's stock market. The benchmark Shanghai Composite Index changed direction at least 10 times before closing down 5.2 per cent to 4053.70.

The fall reverses Tuesday's gains and took place despite the central bank cutting interest rates to a record low on Saturday and the government announcing it would allow the state-owned pension fund to invest in equities.

After more than doubling in the year to June 12 to a seven-year high, the Shanghai Composite Index has shed 20 per cent in the past three weeks.

Initially shares rose in early trade on Wednesday after two business surveys released by the government suggested economic activity was stabilising. The official Purchasing Managers' Index (PMI) was 50.2 in June, coming in above the important half-way mark for the fourth month in a row. The services PMI index, meanwhile improved as businesses reported a pick-up in new orders.

However, a private sector business survey, the HSBC/Markit PMI, which focuses on smaller manufacturing firms, showed conditions deteriorated in June. At the same time, investors have started to unwind their margin positions and this appeared to dampen sentiment among investors in afternoon trade.

Share market volatility adds to China's complicated economic outlook.

The World Bank said ongoing adjustments in real estate, a build up of excess capacity and decelerating export growth were all affecting industrial activity. At the same time, it said growth in services "remained robust as composition of growth continues to improve."

The group expects China's growth rate to slow further over the next few years, dipping below 7 per cent in 2017, due to an "orderly correction" in real estate and policies aimed at slowing the rapid build-up of credit.

It said this was a "not unexpected" and "desirable" outcome as it reflected Beijing's efforts to contain shadow banking, limit borrowing by local governments and reduce excess capacity.

However, the World Bank also found that "without fundamental reforms, the current financial system will be unable to support any substantial reallocation of credit to support productive growth."

It said Chinese authorities needed to improve regulation of the shadow banking sector, strengthen the investment climate and reduce red tape.

The group noted that unlike other countries, state ownership and control of the banking system in China was "pervasive." The state has formal ownership of 65 per cent of commercial bank assets and defacto control of 95 per cent of those assets. The Communist Party and the government exercise control by appointing and dismissing board members and executives. There are also internal Party committees which sit above these boards.

"Almost a decade after restructuring, state banks have yet to make real progress at commercialising their activities," the group said.

Over the next decade, the World Bank expects China will likely shift from rapid to moderate economic growth, with an average annual pace of around 5 per cent.

Mainland mkts (including all asset classes) are well controlled...

China relaxes trading rules to try to curb share volatility
AFP JULY 02, 2015 1:50PM

China’s share markets have seen some wild swings in recent weeks. Source: AFP
China’s securities regulator has relaxed rules on margin trading — borrowed funds that fuelled a spectacular stock market rally — after measures including an interest-rate cut failed to stop equities falling.

The China Securities Regulatory Commission (CSRC) removed some limits on investors’ minimum deposit requirements, it said on its website.

Margin investors only need to deposit a small proportion of the value of their trade, generating bigger profits for a given amount of money put down — but also bigger losses.

Authorities tightened rules on the practice in June in an attempt to curb enhanced market risks, but the move was among the triggers for the recent heavy falls in Chinese shares.

Shanghai closed down more than five per cent on Wednesday, resuming its downward trajectory after days of heightened volatility.

“Margin trading is a double-edged sword. It had driven the market up quickly and the process of deleveraging also caused wild market swings,” said Zheshang securities analyst Zhang Yanbing.

“However, now there are special circumstances and what’s most needed is to reassure investors’ minds to prevent further large sell-offs that could be triggered even by the slightest signs of disturbance,” he said.

When Shanghai peaked on June 12 it had risen more than 150 per cent over the previous 12 months, partly fuelled by margin trading.

The new rules let investors pay back losses in other ways than forced liquidation of their shares — which could prevent a vicious cycle of falling prices triggering sales, pushing values down further.

Investors whose market assets go below the 500,000 yuan ($US80,000) minimum will also be allowed to carry on trading.

Rules for brokerages were also relaxed, letting them lend more to clients for longer.

“The new policy with more flexible margin trading rules can help stabilise the market. It’s a buffer for nervous market sentiment,” said Qian Qimin, an analyst of Shenyin Wanguo Securities.

The Shanghai and Shenzhen exchanges also said they would lower securities transaction fees in a bid to head off the volatility, the official Xinhua news agency said.

However, the changes did not immediately stimulate markets, with the benchmark Shanghai Composite Index dropping 1.83 per cent this morning, while the Shenzhen Composite Index, which tracks stocks on China’s second exchange, was down 2.74 per cent.

AFP

(02-07-2015, 05:29 PM)greengiraffe Wrote: Mainland mkts (including all asset classes) are well controlled...

China relaxes trading rules to try to curb share volatility
AFP JULY 02, 2015 1:50PM

Astute folks have observed that the Chinese authorities have knowledged that the equity market is alittle bubbly and have been taking steps to temper investors' moods (contrast that to Helicopter Ben's testimony in late 2007 that the subprime market was 'under control'. This most probably reflects that the chinese equity markets are still not ripe enough for the bubble bursting. Now, it is informative to know that they are acting like they are succumbing to keep the punch bowl in the party longer.