Chinese stock market crash July 2015

[L00b]

Anyone else following this current issue?

 

In simple terms, the bottom fell out under the Chinese stock market (30% and running ) a month ago and the Chinese government, together with the main Chinese banks, has been trying every trick in the book to prop it up since, without success.

 

For anyone with even passing knowledge of the 1929 Wall Street crash, the current Chinese situation is looking ominously similar, with an army of small investors over-extended to buy stocks, now getting caught in the traders' margin calls.

 

I'm hoping the Chinese somehow manage to turn this one around fast. Otherwise, the 2008 financial crisis and the recent Greek kerfuffle are going to look trifling in a few weeks' time

 

Useful recap article here

Edited July 28, 2015 by L00b

[tzijlstra]

Yes, incredibly worrying. The air is coming out of the Chinese economy VERY rapidly. A Chinese friend of mine lives in one of countless posh developments, over 5000 apartments. He reckons way over half are either empty or let at bargain-rates.

 

Despite this they are still building more and more and more in the area. It is like they are blind to the facts and now it is going to bite a lot of people in the backside.

[Vague_Boy]

Most economic crashes have tended to occur around September/October. Perhaps this is the build up to such a crash?

[geared]

It won't be as bad as previous crashes as so few Chinese companies are traded on the stock market, so many will not be involved.

 

The big losers are going to be the small time Chinese investors, who threw everything they got into the stock market thinking it was a sure thing.

 

Very few actually took proper advice on investing, or bothered to research what they were doing.

Most trusted word of mouth from friends, neighbours and relatives.

They threw their life savings in, caused a massive bubble and got burn when it all went belly-up.

[Timeh]

Yes, incredibly worrying. The air is coming out of the Chinese economy VERY rapidly. A Chinese friend of mine lives in one of countless posh developments, over 5000 apartments. He reckons way over half are either empty or let at bargain-rates.

 

Despite this they are still building more and more and more in the area. It is like they are blind to the facts and now it is going to bite a lot of people in the backside.

China has built entire communities, massive envelopments that are now totally empty as no one has the money to buy them.

Theres shopping malls with either a few traders in them or non at all yet still more are being built. The Chinese house of cards was obviously going to fail at some point. Guess we could be reaching that point.

[geared]

Yes, incredibly worrying. The air is coming out of the Chinese economy VERY rapidly

 

The government has been trying quite hard to slow the economy down recently tho, it's been growing at an unsustainable level for quite some time.

Especially since 2008 when everything has been funded by massive amounts of government money.

 

The government is trying to slow growth year on year, and it looks like they're doing a good job of it.

 

The problem is the media, and investors are acting like it's the end of the world, because China used to be such a 'sure thing' and now it's clear they flow of money is drying up.

[Fudbeer]

It won't be as bad as previous crashes as so few Chinese companies are traded on the stock market, so many will not be involved.

 

The big losers are going to be the small time Chinese investors, who threw everything they got into the stock market thinking it was a sure thing.

 

Very few actually took proper advice on investing, or bothered to research what they were doing.

Most trusted word of mouth from friends, neighbours and relatives.

They threw their life savings in, caused a massive bubble and got burn when it all went belly-up.

 

Exactly.

 

I believe events like this while often disastrous to individuals over exposed to that market are actually healthy for markets longer term.

 

Bubbles always burst eventually and the fact that it has happened now and has had as yet relatively little effect on us and European markets I see as a positive .

 

The results of quantative easing remain to be seen but many who predicted its failure long ago have so far been proved wrong.

 

For me it mostly comes down to earnings at the end of the day if there are quality company's delivering 4 or 5 % dividends then they will attract investors particularly when interest rates are so low.

[Cyclone]

It's already had knock on effects in global stock markets all over the world.

[tzijlstra]

It won't be as bad as previous crashes as so few Chinese companies are traded on the stock market, so many will not be involved.

 

The big losers are going to be the small time Chinese investors, who threw everything they got into the stock market thinking it was a sure thing.

 

Very few actually took proper advice on investing, or bothered to research what they were doing.

Most trusted word of mouth from friends, neighbours and relatives.

They threw their life savings in, caused a massive bubble and got burn when it all went belly-up.

 

It isn't just small-time Chinese investors that are getting burned, these days banks invest everywhere and in particular in China and the other BRIC countries. The Chinese stock-market crashing like this has effects for the global economy, not just the Chinese market.

 

The better off Chinese have been told for years to invest in property as well, so my friend's parents, who are well off for Chinese standards, own 5 different apartments and the family-home. This is their pension and it is about to become worth nothing.