Member Since: 3/15/2013
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China Stock Market plummets; taking 10 huge actions
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China is a long way from Greece and the high-profile debt troubles of the Eurozone, but its stocks have been taking a far worse beating in recent days.
On Wednesday, the growing investor panic over Chinese stocks shook confidence in Beijing's ability to manage its slowing economy and threatened to cause problems for overseas markets, including America's.
Despite increasingly desperate measures by the Chinese government to halt the slide, shares listed on China's main stock exchange in Shanghai fell nearly 6% Wednesday, piling on losses that have plunged the market by about a third since mid-June.
But the sudden nose dive has sparked concerns about growth in the world's second-largest economy and has started to spill into other markets.
Stocks in Hong Kong fell even more Wednesday while markets slid also in Japan, South Korea, Australia and other economies with close links to China. The gloom spread to copper and other global commodity markets, which are hugely dependent on China's economy.
U.S. stocks also opened sharply lower Wednesday, despite rising hopes that Greece might be able to avert a disastrous exit from the Eurozone.
The Chinese selloff has caught world markets by surprise as they focused on the slowly unfolding drama in Greece. But Lonski said the China bear market is potentially far more consequential by dint of China’s size and the potential contagion effects on the global economy and trade.
“If China hits the skids, I think the U.S. will suffer, the equity markets will suffer,” he said.
http://www.latimes.com/world/asia/la...708-story.html |
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1. The government is essentially buying stock: The CSF is lending $42 billion (260 billion yuan) to 21 brokerage firms so they can purchase "blue chip" stocks. That's on top of what the $20 billion the brokerages vowed to buy over the weekend.
2. China is even buying small stocks: The CSF also pledge to buy more small and medium-sized stocks, although there was no specific amount given of how much would be spent.
3. New stimulus: A new $40 billion (250 billion yuan) plan announced Wednesday to foster growth in areas of the economy that need it most. China's economy has been slowing down.
4. More government spending: China will also speed up infrastructure spending that the government was already planning to do such as building roads and utilities.
5. Over half of China's stocks have stopped trading: China has allowed half of the companies on the stock exchange to halt trading in their shares.
6. Big shareholders can't sell for 6 months: Starting Wednesday, controlling shareholders and board members are prohibited from reducing share holdings via the secondary market for six months. China Securities Regulatory Commission promised it would "deal with them seriously" if anyone violated that rule.
7. No more IPOs (for now): China stopped any new stock listings over the weekend.
8. Central Bank slashed rates: China's central bank has cut rates to a record low in an effort to pump more money into the system.
9. Investors have a lot of leeway now on collateral: Investors now have more options to back their margin trades. Many investors speculated on stocks -- they would borrow money to buy stock because they thought the stock would go up and they would make enough money to pay back the loan and make a profit. Chinese investors can even pledge their homes as collateral, according to Bloomberg.
10. Devaluing the yuan: China's currency has fallen heavily in July against the dollar. There's speculation in the Asian press that it will slide even further. A weaker yuan makes Chinese exports to the U.S. and elsewhere cheaper, so it should help jumpstart growth.
So far, all the Herculean efforts have failed to calm the markets. According to Bespoke Investment Group, China's stock markets have now lost $3.25 trillion. To put that in perspective, that's more than the size of France's entire stock market and about 60% of Japan's market.
http://money.cnn.com/2015/07/08/inve...rket130pVODtop
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