“I can't explain myself, I'm afraid, Sir, because I'm not myself you see.”
~ Alice, from Alice in Wonderland
According to the South China Morning Post (subscription required), the Chinese government has taken to censoring the financial media in effort to stem the floodgates of discontent brewing over dismal market sentiment.
With the craziness of the financial meltdown in the United States, the Shanghai Stock Exchange has followed the rest of the world down the rabbit hole. Within 10 minutes of the opening of the SSE on Tuesday morning, right after the declared bankruptcy of Lehman Brothers, the SSE Composite fell by almost 5% but slowly steeled itself back around the 2000 mark.
The idea of the SSE breaking the 2000 barrier might have seemed impossible this time last year but the stock market has been free-falling, losing more than half its value since January. Frustrations have been mounting despite varied efforts by the regulators to stem the volatility (loan controls, bank reserve rates, administrative fiats, etc). Calls for government intervention have grown louder as fund managers, academics and regulators debate the efficacy and timeliness of a Chinese-styled bailout. The US Federal Reserve’s recent rescue package for Fannie Mae and Freddie Mac, and now insurance AIG have only raised the volume of why-them-not-us, whens and hows among Chinese investors.
SCMP reports that perennial fears of social disunity have led the Communist Party's Publicity Department (rather than the securities regulator) to verbally inform major financial websites to sift out negative and sensitive commentaries, reports and headlines about the hard-hit markets. There is no paper trail backing up such claims, but editors of online financial media have confirmed them.
Sound familiar? Regulators had warned fund managers not to say anything publicly that could harm the stability of the market weeks before the Summer Olympics. The gag worked only because international financial markets were quiet since half the world was actually in Beijing at the Olympics.
While we do not underestimate the power of censor, it may not work as well this time round. For one, the market doom and gloom is palpable as Asian economies, many of which have tight trade links with China, are tumbling faster than Jack and Jill. China’s capital markets may not be completely open, but some of the problems it has suffered thus far are of its own doing as well. Couple that with twitchy and inexperienced dealers currently panic-selling and a significant portion of Chinese investors who lack proper financial education, a shiny gold-plated band aid is surely not enough to address the roots of the problem.
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censor or censure?
They are two different words with different meanings.
because of inexperienced players and lack of confidence, the Shanghai index is now the world's worst performer this year so far , plunging 60% from last year value. if people just panicking like this then things just get worse, nothing will improve.
censor. Thanks for pointing out the glaring mistake, hotshot, I've made the change as you can see. Cheers.
---“inexperienced dealers currently panic-selling”?
You or SCMP don't know about stock trading at all.
In the 3-day since this killing Tuesday when SSE 2000 barrier was broken, only 3.6% or RMB113 billions changed hand which is an EXTREMELY small amount to be called as panic-selling, compard with the size of SSE and with 80 millions functioning investers and with any of other world markets and with the free-falling moment. The stats proves, by contrary, Chinese dealers are more than mature, after 18 years’ trading, and are not “inexperienced dealers” but more experienced than Western traders.
Only at the free-falling moment, a smart trader can become visible. If you ever saw the panic selling scence in NYSE in last few days, you could identify who are “inexperienced dealers panic-selling” or“investors who lack proper financial education”or what such education really means.
Eastman,
A recent bank survey showed that China’s fund managers are on average in the 30s, much younger than those in developed economies (which include US, Europe, Japan, Hong Kong, Singapore etc) and have a little over 10 years of experience. There are also legions of very young traders and fund managers. This also means a significant portion of them have never really experienced an economic recession like today. 1998 did not really count because the Chinese economy was not large enough and the capital market was rather insignificant. The recent history of wealth management, more specifically pension products also mean most Chinese investors do so for short-term gain, and hence do not really seek out long-term investment plans. Of which there are little anyway given the volatile nature of the market and lack of blue-chips companies in China, other than state-owned companies. Very few of them had 18 years of trading as you put it, because when the stock market was created, not all shares were tradable and the debacle of the early 1990s should remind you of how far the market has come, and how much potential it can achieve.
Comparing the SSE and NYSE is like comparing apples and oranges, or should I say a large apple and a small orange. I won’t go into that.
My point about a significant number of Chinese investors lacking proper financial education is not supposed to be a slight but a fact that is widely acknowledged even by local securities regulators who are taking steps to rectify the problem. Investors who do not have the luxury of sound advice or financial planners have a herd mentality regardless of nationality. In China’s case, given the short history of the stock market, they have less understanding of diversifying risks, for example, when the QDIII program opened up, people’s reaction are to invest heavily in HK stocks which they read about in China. This is the highest correlated market to the mainland stock exchange hence prone to be more vulnerable to the Chinese economy. That is one example. Another problem is taking bank loans to invest in the stock market, that is not trading, that is gambling. Things are getting better, and investors are getting smarter. Unfortunately, this is happening in the larger cities and as the market is becoming more accessible to the everyday investor, more widespread financial education needs to be undertaken.
There are some truth in what you say about some young Chinese traders. But what SCMP was driving at by the "inexperienced dealers CURRENTLY panic-selling" was not true. They can call Chinese traders this or that, but last 3 days poven just opposite by my stats that only 3.6% changed hand which is an EXTREMELY small amount to be called as panic-selling.
Anyway, unlike SCMP which always tend to paint a dark picture about China's boure, I am quite optimistic and love to see market fall to the bottom. Believe me, tomorrow will be right and bright day to buy China!
I know from reading the comments on this website that Eastman is right about everything. Period.
Me? I'm too old to know everything.
With the exception of real estate companies, I am tempted to think at the current index value there may be a number of good companies quoted at asset value or even below.
I do not think that the index would drop to the 1200 mark of a couple of years ago.
If I had money, I would research and buy now. Seriously.
I did I nearly passed out when Eastman agreed with me on some points.
I appreciate the mention of statistics here, but as I said, it’s comparing different fruits, rotten fruits to be accurate. SCMP didn’t say “currently panic-selling”, I did. The level of “panic-selling” these past few days, versus the “panic-selling” of about a month back in China, is different but it does not negate the underlying phenomenon.
I think it doesn’t serve anyone’s purpose to compare who is more in a state of panic as I do not wish to be in anyone of their shoes. But I do have to underline the point that while the Chinese market has been in rather stifling decline due to general business cycle reasons, what is happening in the US is unprecedented, which is reversing the Glass-Steagall Act of separating consumer and investment banks. China’s regulators have much to learn from this in determining the direction of their own financial sector. If you’re turning this into a West-vs-the rest argument, then I’ll leave it here because you’re detracting from my thesis.
SCMP is a more socially liberal paper but conservatism in finance is always warmly embraced and this is where their so-called pessimism is useful. So you say tomaytoes, I say tomahtoes, unfortunately, we can’t call this thing off for nobody really wins.
Pirx: A friend who covers Chinese funds informed me about 1 month ago that fund managers in China have indicated that once the index hit 2000, they should quickly “buy on the cheap.” They were expecting a gradual and eventual decline. This could already be happening. But what makes the timing tricky is the imploding nature of the US market and its impact on the Asia and hence China market. In the meantime, you have a couple of pennies right, you should be able to afford some Wall St stock.
To Pinkerton1
--"Eastman is right about everything, I'm too old to know everything"?
0930 of Tomorrow you'll know you are not that old because you'll know Eastman is at least right about the right day to invest, twice in one year.
To Pirx
--My advice for you though we spit to each other: Why get shit 2% interest from Chinese banks? Buy their stocks to become share-holder tomorrow with all you have and you'll rub them.
a) Eastman is a miserable cunt.
b) I censure Shanghaiist for their painfully slow load times. It's making the site unusable.
BTW, I would classify many things as here as panic, like panic-buying gupiao (up until this summer), panic running you over with a car, panic Olympics crackdown w/ or w/o Visa, lulz * 8 + 40 + infinty, panic dog culling, panic overreacting to insignificant blog posting, panic when I say Eastman is a cunt. Panic everything. She's right.
To sueannetay
I have no intereste to spark a West-vs-the rest argument since it is business and actually I only disagreed with your “currently panic-selling” of Chinese.
If you had a Chinese trading software, you'd see clearly SSE index dropped from 6124 last October to lowest 1802 today, a 70% but gradually and evenly and amazingly with only two days of "panic-selling" of very high hand-change. I traded in quite some markets, but never saw such thing which I call as mature and which you called as "inexperienced". It's not necessary to experience all 18 years of CHinese boure to know trading. Do you need to live 230 years to know American history?
But let's forget it since nobody can really wins. But thanks for all your posts and especially the link to SCMP which I missed, stupidly.
I hate to condescend and respond to anything eastman writes, except for the fact this is so glaringly stupid.
What makes you think that Chinese people have 18 years of experience trading stocks? I am quite certain that you do not have such a long experience, and if you considered how many people were actually trading stocks 18 years ago, how many from that era are still trading stocks, and how many new-comers have entered the market recently, then perhaps you might consider the Chinese to be "inexperienced" on average, which is the case. That is to make no mention of how trading has changed with electronic trading becoming the norm, and thus, the experience of 18 years ago isn't even totally applicable to the situation today.
It is just wrong and misleading to claim that Chinese have 18 years of experience trading stocks, and therefore, suggest that they are not "inexperienced," as if the cumulative experience of the (very few) traders who have participated for the whole 18 years somehow applied to everyone else. That's like claiming a PhD because you know people who went to university. Cumulatively, eastman has 347 years of schooling, so that must make him qualified for anything!
To Buck Rogerz
I am grateful you read some of my posts and pick out “the glaringly stupid” one to respond.
By saying “Chinese people have 18 years of experience trading stocks", I couldnt mean all Chinese traders had that long experience. But can we stop calling American pilots as the most expereinced ones, only because not all of them had the honour to experience the bombing by US in last 50 years, such as Vietnam, El Salvador, Nicuragua, Grenada, Lybia, Panama, Cuba, Iraq, Bosnia, Sudan, Yugoslavia, China Embassy, and Afghanistan? Now you must know who is the most "glaringly stupid" one.
I have only 3 years trading expereince in China but I know when to buy and when to sell. So stop nagging like a sisi and remember why you come to China like Phelps. So buy stocks today and make a kill in 3 days. I cannot write you more, since I have EL JEFE’s azz to take care of. LOL!
To EL JEFE,
If you still remember the big gate you inched out thru which you called as cunt, how can I forget the green shit thrown out of your tiny month when you made your first and loud cry, some 16 years ago, sweetie?
It seems you need to be screwed repeately. lol!
@eastman
Do you understand that your response makes no sense?
To Buck Rogerz
Yes yes I know. My response made no sense since I forgot to mention Japan as one of the dozen bombed countries. Sorry no time for you. Bye.
With all of Leastman's bragging about his stock trading abilities, we have yet to hear about any of the killings he has made on the market or the new cars and women he has bought.
Let's hear some stories from our favorite shit youth.
I don't even really want to comment b/c this thread is revolting, but has anyone else had problems with the south china morning post link?
I have a subscription to the SCMP and the link is showing up as a 404 error. Nor can I find the article when I search for it. It's just my opinion but I always thought of the SCMP as a fairly reliable source for news, but if the aforementioned article has been taken down, then that's something to write about.
Without that link this post seems no more worthy of attention than these ridiculous comments.
To nanheyangrouchuan
Read carefully the following and you'll be so piissed off not to have made your $10 pocket money into $11 and feel to be even worse than a "shit youth" who is actually older than your molesting dad.
=====================================
China's Stocks Surge, Led by Banks, on Government Support Plan
Sept. 19 (Bloomberg) -- China's benchmark stock index rallied the most since the gauge was created in April 2005 after the government said will buy shares in three of the largest state-owned banks and scrapped the tax on equity purchases to halt a slide that erased $2.64 trillion of market value.
Industrial & Commercial Bank of China Ltd., Bank of China Ltd. and China Construction Bank Corp. jumped by the 10 percent limit after the official Xinhua News Agency said the state-owned controlling shareholder will increase its stakes in them. ....
@nanheyangrouchuan
I do not think it fair to call Eastman as bragging. He is clearly no bloviate as the China's stock surged 9.5 percent today - its biggest one-day gain ever, proving the info he offered last night astonishing reliable. No doubt he is a good trader.
Observing his cynical posts from aside for quite some time, I feel Eastman a smart character in real life, at least smarter than many here. His wit, though vicious, and a wide choices of badmouthing must win him many pals around, and surely lot of hostility as well.