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

[greengiraffe]

If u are cashed up u will be fine. Hunting season officially open...

sent from my Galaxy Tab S

Over the years, WB has used many vivid terms to describe this situation:

The more recent one: loading up the elephant gun
The older classics: kid in a candy store, over-XXXed teen in a wXXXe house

In his words as well, for some of us whom bought call options (aka CASH) all this time, is it time to exercise the option now?

Tan Teng Boo, the guy full of white hair in the value buddies' advertising banner above, is sometimes quoted as Warren Buffet of the East by some pp. He say he will only be interested in KepCorp at S$3.50 and below. O&G counters have drop so much yet KepCorp is still way above $3.50. So do you think its time to load the elephant gun?

Since he said so, you should ask him to justify his target...

[greengiraffe]

Mr and Mrs Beijing reel from market shock

• THE AUSTRALIAN
  
• AUGUST 25, 2015 12:00AM
  

0

Scott Murdoch
[Image: scott_murdoch.png]
China Correspondent
Beijing

[Image: 281930-dbfa29ec-4a3c-11e5-9913-363a028f0bc1.jpg]
Chinese citizens watching the stockmarket board at China Securities in Beijing as equities tank. Picture: Shannon Fagan Source: Supplied

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[b]The Chinese equities market has suffered its sharpest fall since the peak of the global financial crisis, prompting global fears that the world’s second largest economy is slowing at a faster rate than ­initially expected.[/b]
The Shanghai Composite Index, mainland China’s most prominent market, fell by 8.49 per cent yesterday, the biggest one-day fall since 2007. Investors and analysts are questioning whether the central government or the People’s Bank of China will step in to provide support measures.
The massive sell-off was broadbased. All of the nation’s State-Owned Enterprises (SOEs) and major banks led the falls as investor sentiment towards mainland stocks plummeted.
The decline yesterday means the Chinese equities market has lost nearly 19 per cent in just one week, officially placing it in bear market territory.
At the China Securities office in Beijing yesterday, investors watched boards of green figures — which in China means a decline, unlike in Australia — and tempers were running high.
Some emotional investors ­argued with each other while others blamed the government for not intervening in the market selldown that has unfolded over the past few months. The losses yesterday mean the Shanghai Composite has now erased all of its gains for 2015 and retail investors are reeling.
Mrs Liu, 67, said she was lured to buy into the stockmarket after the Chinese government urged ­retail investors to start buying.
“I have invested tens of thousands of yuan into the stockmarket. You know we retired people do not have much money,” Mrs Liu told The Australian. “I just wanted to earn some pocket money but I have totally failed.
“The government said a little while ago it had rescued the ­market but I can’t see how it has had any effect.
“I have almost lost all my money and I can’t do anything but wait. I hope the government could do something but this is horrible.”
Mr Gu, 86, said he was now uncertain about his future after investing his retirement savings into the Chinese equities market while it was experiencing a bull run.
“I have invested all of my savings into the market, it is hundreds of thousands of yuan,” he said.
“We have been cheated by the government, it promised that it would save the market but you see what is happening now? I am so ­regretful.
“I should have left the market before the crash happened, but it came so suddenly we have had no time to flee.”
Another investor, Mr Zhang, 58, said he believed the government should intervene to help prop up the market. There has been speculation that the PBoC could cut the Reserve Requirement Ratio soon to help banks reduce capital levels and free up lending restrictions.
“I have been in the market for almost 10 years. A crash like this is very rare,” he said.
“The government has made some policies but they are useless. The market needs the government to inject some capital.
“We poor retail investors have little choice but to rely on the government. I don’t think they would let us lose all our money but I don’t know what to do but trust our ­government.”

[BlueKelah]

Shanghai Comp skids 7.63% to end at 8-month low

The mayhem in Chinese equity markets showed no signs of abating on Tuesday, with the benchmark Shanghai Composite index accelerating its downfall in the final hour of trading to settle below the key 3,000 mark.

Japan's Nikkei 225 index was the second-biggest laggard in the region, closing down 4 percent, after turning negative in the afternoon trading session. Earlier in the session, the Tokyo bourse had staged a ...................


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After a small drop of 3%+ this morning trade, it continue to crash, now its at 40% below peak which means around 4 trillion wiped off the market from 5000level.

Let's see what other tricks Beijing has. Maybe lower RRV? Maybe drop interest rate?

[swakoo]

Sculpture in Xiamen

[Image: FOREIGN201508242244000141312689316.jpg]

Even as frazzled Chinese investors endured another day of market tumult on Tuesday, there was some light relief. Chinese news websites featured images of a massive sculpture in the coastal city of Xiamen that depicted a bull astride a bear.

The sculpture was intended to symbolize bullish, upbeat market forces subduing bearish pessimism, according to the news reports. On the Internet, however, some Chinese commenters said the sculpture appeared to show something more intimate going on between the two beasts.

Cai Mingchao, the businessman and art collector who commissioned the sculpture, said he hoped it would ease some of the stresses of battle-weary investors.

“Actually, this is for stock investors to let off steam,” Mr. Cai said, according to Xiamen Daily. “If everyone is more upbeat, then maybe the stock market will be too.”

[Temperament]

Sculpture in Xiamen

[Image: FOREIGN201508242244000141312689316.jpg]

Even as frazzled Chinese investors endured another day of market tumult on Tuesday, there was some light relief. Chinese news websites featured images of a massive sculpture in the coastal city of Xiamen that depicted a bull astride a bear.

The sculpture was intended to symbolize bullish, upbeat market forces subduing bearish pessimism, according to the news reports. On the Internet, however, some Chinese commenters said the sculpture appeared to show something more intimate going on between the two beasts.

Cai Mingchao, the businessman and art collector who commissioned the sculpture, said he hoped it would ease some of the stresses of battle-weary investors.

“Actually, this is for stock investors to let off steam,” Mr. Cai said, according to Xiamen Daily. “If everyone is more upbeat, then maybe the stock market will be too.”

Ha! Ha!
Imaginations easily runs wild under panic. If BB are friends, then the Pig must have become ham & bacon. Don't ever be a PIG(too greedy in the market).

[CityFarmer]

Hi Uncle Temp.

There are VBs missing you already, including me. 

Wish you a good health, and good luck of course.

[Temperament]

Hi Uncle Temp.

There are VBs missing you already, including me. 

Wish you a good health, and good luck of course.

Same, same to you and everybody here.

And thank you very much!

[greengiraffe]

Chinese stockmarket fall leaves a trail of victims

• THE AUSTRALIAN
  
• AUGUST 29, 2015 12:00AM
  

0

Scott Murdoch
[Image: scott_murdoch.png]
China Correspondent
Beijing

[Image: 443712-00015980-4d55-11e5-8dd1-2cb6f8d6caf8.jpg]
Chinese investor Shi Haitong at the Zoo Coffee shop in Beijing. Picture: Shannon Fagan Source: TheAustralian
[b]Shi Haitong, a white collar worker from the inner suburbs of Beijing, sold his house in March this year to invest his life savings in the Chinese equities market but has seen his fortune abolished in just months.[/b]
Mr Shi, 35, told The Weekend Australian he knew the risks when he joined with a friend to invest nearly 2 million yuan ($440,000) in the volatile market but was still angry at the consequences.
The packaging company project manager poured 900,000 yuan into stocks and at least 700,000 yuan of that has now been lost.
“I know the market is not regulated and my family warned me about what I was doing,” Mr Shi said.
“But I didn’t think there was a better way to invest. The stockmarket has been performing so well up until now.
“I had been so excited and invested all of my money, and when the market was up we made about a million yuan. Then it started to crash all of a sudden in a panic in July.”
Mr Shi said as a first-time stockmarket investor he had been burnt by the equities volatility with Shanghai listed shares recording intraday share movements of up to 8 per cent. The market has tended to rally towards the end of the day, sparking speculation that the government was buying to help stem the sell-offs. “I check the stockmarket prices anxiously every day but the market seems to have no logic behind it,” he said.
“When the market was rising, I saw our account rise by 200,000 yuan in one day and I had all those ideas because the money was coming so easily. Thank god I did not quit my job. It’s just too risky.”
Mr Shi is now worried that his decision to invest in equities could have long-lasting consequences. “I am old enough to get married and you know here that girls prefer guys who own their own houses,” he said. “I didn’t tell my Mum that I sold the house; she would be too mad.”
On the Shanghai Stock Exchange, the sell-off which began a month ago has now wiped off almost all of the gains the market had made so far this year, with the Composite Index up only 2 per cent for the year.
The index had been trading up to 100 per cent higher over the past 12 months. The Shanghai Composite and the A-share market, which tracks mainland listed shares only, are both down by almost 14 per cent this month.
Across the country, there is mixed opinion about whether the market’s rebound over the past few days will be sustained as investors remain sceptical of the government and the intervention so far.
Guangfa Securities analyst Chen Jie said the interest rate cuts might not last long.
“As fiscal policy is being eased and rates are being cut, the pessimistic mood will change, as you would expect it to be. The mainland A sharemarket is expected to have a chance to rebound, but I don’t think the rebound will happen shortly — maybe in the fourth quarter,” he said.
Xingye Securities senior analyst Zhang Yidong said he did not think the rally would be maintained, with signs Beijing forced some state funds and pensions funds to begin buying to help stem the losses.
“Although the rate cut is helpful ... a rebound is hardly likely to happen, in my opinion,” he said.
Xiangcai Securities analyst Zhu Lixu said the People’s Bank of China’s decision to order an emergency interest rate cut on Tuesday night was prudent, but now the market was awaiting further signs.
“The whole market is still weak and the rebound probably will not be sustained,” he told Caijing magazine. “In long term, the downward pressure is still large. The final decisive element is performance of real economy.”
Additional reporting: Wang Yuanyuan

[greengiraffe]

What lies beneath China's financial tremors?
John Wong
Published
4 hours ago

China's financial fluctuations have sent world markets reeling. But fears of an imminent collapse in the Chinese economy are unfounded
The recent volatility in global currency and stock markets has continued to hog newspaper headlines around the world. It was triggered first by the devaluation of the Chinese yuan on Aug 11 and then the Shanghai stock market crash earlier this week ("Black Monday"). Such are the financial tremors in China that have wreaked havoc on the world's foreign exchange and capital markets.
Stripped of various media hype and sensational headlines for a cool analysis, many would view these developments as rather incomprehensible. The Chinese yuan, after ending its de facto peg to the US dollar in 2005, has been steadily appreciating over the years. Just how could its initial 1.9 per cent devaluation against the US dollar be dubbed "sharp devaluation" by Western media?
It was merely a small step primarily meant to correct the yuan's exchange rate misalignment caused by China's weaker macroeconomic fundamentals, including slower export growth and increasing capital flight.


Even after a second day of equally small devaluation, the yuan has since depreciated only about 3.8 per cent against the US dollar while it has since appreciated heavily against all major currencies: Up over 10 per cent against the South Korean won and the euro, and almost 20 per cent against the yen.
The contagion effect of the Shanghai stock exchange rout on the global capital markets is even more unfathomable. Granted, financial markets everywhere are often driven by sentiment, expectations and herd instinct, but it is difficult to explain and justify why "Black Monday" could have been triggered by the 8.5 per cent sell-off in the Shanghai market, which has been going up and down for several months.
 


Before this, it had already experienced three large single-day drops of 8 per cent since January. At its peak this June, the market had gone up 150 per cent in one year.
The market was over-valued, with the average price/earnings ratio more than 30 at its peak. Hence the inevitable but normal correction.
Furthermore, the Shanghai Stock Exchange is still a relatively small market (only the fifth in the world), which is essentially not widely open to foreign investors.
It is therefore hard to understand how a single-day market correction in Shanghai could have caused the Dow Jones to shed 1,000 points!
Is this just "irrational gloom"? Or we have over-exaggerated China's real financial muscles?
During the 1997 Asian financial crisis, as the region's stock markets all plunged, Wall Street held its ground. This eventually stabilised the global financial markets.
Why not this time? Has the US lost its former financial dominance? Or we have given too much credit to the rising yuan? When China catches a cold, does the US also sneeze?
MISINTERPRETING CHINA'S ECONOMIC SLOWDOWN
Behind all the panic and gloom was the heightened concern about the health of the Chinese economy - even to the extent of fearing its imminent collapse!
As China is the world's second-largest economy accounting for 13.4 per cent of global GDP (or 16 per cent by the purchasing power parity measure), as compared with 22.5 per cent for the US economy, its ebb and flow is apt to produce a significant contagion effect across the world.
Since 2009, China has become an important economic growth engine of the world, regularly accounting for a third of annual global growth. Not surprisingly, China has become the leading trade partner for 75 countries. Countries from Australia (one-third of its exports go to China) to Brazil have come to depend heavily on China as a market for their primary commodity exports while China is also an important market for manufactured exports from industrial countries, from South Korea (one-quarter of its exports) and Japan to Germany.
Any major slowdown in China's growth will therefore herald a potential global slowdown.
Economists have long been sceptical about the tenuous relationship between real economic growth and the performance of the stock market, with the former recording its activities at yearly or at most quarterly intervals, whereas the financial markets operate mostly on short term, daily or even instantaneously.
But this has not prevented financial journalists and market pundits from using certain macroeconomic indicators to generate the required "sentiment" to move the market.
This time round, the obvious culprit was China's economic "slowdown". Indeed, it is this perceived China slowdown that fuelled the contagion of the financial tremors. Unfortunately, China's economic slowdown has been grossly exaggerated and the nature of its slowdown widely misunderstood.
IT'S THE END OF HIGH GROWTH, NOT A COLLAPSE IN GROWTH
China's economy experienced phenomenal growth of 9.8 per cent a year during 1979-2013.
Growth first started to decelerate in 2012 to 7.8 per cent; and then to 7.7 per cent for 2013. The decline got more dramatic last year, with only 7.4 per cent growth, the lowest in more than two decades. For this year, growth is likely to come down to 7 per cent, or, as predicted by the International Monetary Fund, just 6.8 per cent.
No economy can keep growing at close to double-digit rates forever without running into various constraints. China's hyper-growth for well over three decades has been historically unprecedented, and was much longer than what Japan, South Korea, Taiwan, Hong Kong and Singapore had experienced before - just a little over two decades of such high growth for Japan, South Korea and Taiwan, and substantially shorter for Hong Kong and Singapore.
China has been the most remarkable for sustaining such a long period of high growth, partly because it has far greater internal dynamics in terms of having much bigger hinterlands along with a larger labour force, especially compared to other dynamic East Asian economies.
Still, China's growth must come down after so many years, due to the inevitable weakening of its major growth drivers or the drying up of its sources of high growth.
For years, its growth was primarily fuelled by the rise in fixed assets investment (growing at over 20 per cent a year) and exports (at over 10 per cent a year). In the first seven months of this year, investment was up only 11 per cent while export growth experienced a contraction of 1 per cent.
Clearly, its era of high growth is over.
China's economic slowdown had been widely reported and indeed expected, although some international media mischaracterise it with sensational labels like "hard landing".
Put into proper perspective, China's present "lower" growth is "low" only in its own context, as its current 7 per cent level of growth is still remarkably high by any regional or global standard, and certainly well above the average global economic growth of 2.8 per cent for last year.
In fact, given China's mammoth economy of over US$10.4 trillion (S$14.6 trillion) in GDP, a "mere" 7 per cent growth would enlarge its GDP in a single year by an amount equivalent to 80 per cent of Indonesia's total GDP or one-third of India's.
CHINA IS WELL-PREPARED FOR SLOW GROWTH 'NEW NORMAL'
This explains why the present economic deceleration has not much worried the Chinese leadership, which has officially embraced slower growth as the "New Normal".
Chinese President Xi Jinping had dismissed fears of 7 per cent growth as "actually not all that scary". He also pointed out that China's 7.7 per cent growth in 2013 had added to China an increment of GDP in a single year that was equivalent to its entire GDP of 1994.
Mr Xi clearly understands that economic growth is all about increases in GDP at compound interest rates.
What is more crucial to Mr Xi is whether the Chinese economy is on track to rebalancing its pattern of growth. China wants to have growth that is less dependent on investment and exports and more dependent on domestic consumption. It wants to continue to upgrade its economic structure towards a more efficient growth based on higher productivity.
China's present economic slowdown is also not just about the change in the magnitude of growth, but also the nature of its growth.
Years of hyper growth have left behind a lot of "excesses" in terms of over-production and over-capacity as well as a huge domestic debt overhang. Thus, the manufacturing sector that used to grow at double-digit rates, registered only 6 per cent growth in the first seven months of this year.
China currently has huge stocks of surplus raw materials and minerals, and this explains why it currently faces low import demand from primary-producing countries. This also explains why it is pushing hard for its One Belt, One Road project as a way to digest its industrial over-capacity.
More significantly, its growth pattern has started to shift, with growth increasingly driven by domestic consumption. This means that its future 7 per cent or so growth generates more GDP in consumer goods and services, and less in output from the heavy industry sector like iron and steel.
China's imports of certain raw materials and minerals are set to decline further. This is bad news for some primary-export Asean countries. In short, it is not just China itself, but the world at large that also has to adjust to China's economic slowdown.
But the story of China's growth has been well-forecast and is by no means unexpected.
The critical thing right now is not to misinterpret the fluctuations in the yuan and stock markets, which are just corrections to overvaluations in the past, certainly not a signal that the Chinese economy is about to collapse.

---

•The writer is a professorial fellow at the East Asian Institute, National University of Singapore.

[greengiraffe]

• Aug 31 2015 at 6:05 PM 
   
  
  
•  Updated Aug 31 2015 at 6:30 PM 
  

China launches crackdown following market rout

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[img=620x0]http://www.afr.com/content/dam/images/g/j/b/0/4/m/image.related.afrArticleLead.620x350.gjbis1.png/1441009843548.jpg[/img]Soldiers of China's People's Liberation Army march under the gaze of a photo of President Xi Jinping. Reuters
[Image: 1426320227568.png]

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by Lisa Murray
 
Chinese authorities have unleashed a regulatory blitz following one of the worst stock-market routs on record, detaining a financial journalist for "spreading rumours" and four executives from Citic Securities for alleged insider trading.
Citic's managing director, Xu Gang, and three other executives have admitted insider trading, according to the state-run newsagency Xinhua, causing shares in China's biggest brokerage to slump almost five per cent.
Meanwhile, Caijing journalist Wang Xiaolu expressed "remorse" for fabricating a story and causing chaos on the stock market in a confession that was broadcast on national television but has been criticised by advocates of market reform.

At the same time, an official at the China Securities Regulatory Commission, Liu Shufan, reportedly admitted to taking bribes from a listed company in return for securing approvals.
Far from being an effort to clean up the Chinese stock market, which has for years been likened to a casino, analyst Fraser Howie said the dramatic response from authorities was "more like a witch hunt."
"This is a case of let's punish someone because the market has fallen," said Mr Howie, co-author of Red Capitalism.
"There is no indication this is a genuine case of the regulator turning over a new leaf."


"The government's embrace of market reforms seems tenuous at best," he said.
Confusion about the government's intentions regarding the stock market has fuelled volatile trading in recent weeks. The benchmark Shanghai Composite dropped 25 per cent in the five days to Wednesday, sparking turmoil on global markets, before rallying at the end of last week.
The index also pared losses in early trade Monday to close less than one per cent lower at 3205.99, amid reports of government buying ahead of this week's military parade in Beijing.
The 70th anniversary of World War II's end is being dubbed domestically as a celebration of the "victory of the Chinese people's war of resistance against Japanese aggression." It will involve 12,000 soldiers marching through the capital on Thursday and be presided over by President Xi Jinping, allowing him to show off the country's military might.

But it comes amid great uncertainty regarding the country's economic outlook and nervousness among global investors and China's trading partners following the recent sharp declines on the stock market.
Caijing's Mr Wang wrote in an article on July 20 the CSRC was considering withdrawing its multi-billion dollar support for the market after it had pumped an estimated $US200 billion into propping up shares earlier that month.
The CSRC denied the story at the time but on August 14, the regulator did announce it would wind back its direct intervention in the market, stepping in only when there was "unusual volatility" or "systemic risk."
While a crackdown on insider trading is generally welcomed, analysts questioned the timing of the Citic investigation. China's regulator has also flagged new rules for high frequency trading but most of its actions are targeting activity on the market since it has been falling. No actions have been taken against trading during the year to June 12, when the Shanghai Composite more than doubled.

"The government wants to regulate the market but they are sending out a scary signal to global investors that the rules can change overnight," said Zhou Hao, an economist at Commerzbank AG in Singapore.
As a result, the government's response could complicate China's inclusion in the MSCI global emerging market's index or the yuan's chance of being added as the world's fifth reserve currency.
"China should be in any global index and any global currency basket but the problem is the volatility is so huge and it is not market-driven behaviour," said Mr Zhou.