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Bubbly + Help from state-backed margin finance company = What ??? Chinese shares dropped almost two percent in early trading, reversing much of gains made on Monday following unprecedented steps to stabilise a plummeting market. Asian assets were also increasingly burdened by rising concerns over massive losses in Chinese stock markets over the past month or so. Unprecedented emergency measures from Beijing helped Chinese stocks to bounce on Monday but trading remained highly volatile.
In an extraordinary weekend of policy moves, brokerages and fund managers vowed to buy massive amounts of stocks, helped by China's state-backed margin finance company, which in turn would be aided by a direct line of liquidity from the central bank.
"Prior to the selloff the Chinese market looked bubbly, kept rising even as the economy is slowing. It will take some time for the market to calm down," said Shuji Shirota, head of macroeconomics strategy group at HSBC in Tokyo.
"Judging from Japanese experience it is not easy to support share prices just by price keeping operation," he said, referring to Japanese attempts in the 1990s to shore up the stock market by using public funds to buy shares.
Fears of instability in the Chinese economy dented many types of assets that are thought to be leveraged to demand from China.
In the currency market, the Australian dollar fell to a six-year low of $0.7452 on Monday and last stood at $0.7485.
And copper damned well needs to fall, and by quite a bit. Anyone who works with copper, such as plumbing fittings, knows that in the last ten years the pricing has become totally absurd, undoubtedly due to China demand and market manipulation.
Comments
Chinese shares dropped almost two percent in early trading, reversing much of gains made on Monday following unprecedented steps to stabilise a plummeting market.
Asian assets were also increasingly burdened by rising concerns over massive losses in Chinese stock markets over the past month or so.
Unprecedented emergency measures from Beijing helped Chinese stocks to bounce on Monday but trading remained highly volatile.
In an extraordinary weekend of policy moves, brokerages and fund managers vowed to buy massive amounts of stocks, helped by China's state-backed margin finance company, which in turn would be aided by a direct line of liquidity from the central bank.
"Prior to the selloff the Chinese market looked bubbly, kept rising even as the economy is slowing. It will take some time for the market to calm down," said Shuji Shirota, head of macroeconomics strategy group at HSBC in Tokyo.
"Judging from Japanese experience it is not easy to support share prices just by price keeping operation," he said, referring to Japanese attempts in the 1990s to shore up the stock market by using public funds to buy shares.
Fears of instability in the Chinese economy dented many types of assets that are thought to be leveraged to demand from China.
In the currency market, the Australian dollar fell to a six-year low of $0.7452 on Monday and last stood at $0.7485.
Shanghai copper posted its steepest daily drop in 5 months on Monday, while Chinese steel prices are at their lowest level since the depths of the global financial crisis. Iron ore has fallen 17 per cent since mid-June.
http://profit.ndtv.com/news/market/article-asia-shares-win-reprieve-but-greece-china-concerns-limit-gains-778868
Related to China margin stabilization efforts.
"The stocks exemplify one of the keys to China’s recent market selloff: Some of the biggest losers are companies with a relatively small portion of their shares freely traded, many of them bought using borrowed money."
http://www.wsj.com/articles/chinese-firms-discover-margin-lendings-downside-1435653636