Never mind Greece, WTF is going on with China's plunging equity markets?

[TexasTowelie]

"Nothing to see here," reads the deck on Tufts Professor Daniel W. Drezner's washingtonpost.com post "The politics of China's stock market collapse," "just the meltdown of Chinese equity markets."

"So while every international affairs pundit and their mother are focused on the travails of an economy the size of Louisiana," Drezner begins his piece, "the second-largest economy is experiencing a teeny-weentsy stock market meltdown." He quotes from Fox Hu's Bloomberg report, adding dramatic emphasis for the sentence I've pulled out above:

Almost 200 stocks halted trading after the close on Monday, bringing the total number of suspensions to 745, or 26 percent of listed firms on mainland exchanges, according to data compiled by Bloomberg. Most of the halts are by companies listed in Shenzhen, which is dominated by smaller businesses.

The suspensions have locked up $1.4 trillion of shares, or 21 percent of China’s market capitalization, and are becoming increasingly popular as equity prices tumble. If not for the halts, a 28 percent plunge in the Shanghai Composite Index from its June 12 peak would probably be even deeper….

The rout in Chinese shares has erased at least $3.2 trillion in value, or twice the size of India’s entire stock market. The Shenzhen Composite Index has led declines with a 38 percent plunge since its June 12 peak, as margin traders unwound bullish bets (emphasis added).

Oops!

Well, it seems what's happened isn't quite as dramatic in real-world terms as it may appear, and doesn't really tell us anything significant about China's "real" economy, which was already known to be slowing down but shows no signs of being in significant trouble. For one thing, Chinese stock markets don't have anything like the importance of markets in the world's other major-player economies.

Chinese equity markets are pretty thin and small as a percentage of GDP compared to the developed world. Less than 20 percent of household assets were in the stock market. Financially, it would be difficult to argue that this is China’s Lehman moment.

Read more: http://downwithtyranny.blogspot.com/2015/07/never-mind-greece-wtf-is-going-on-with.html

[Munificence]

1. U.S tries

a bit of financial warfare with China.

China responds in kind by showing they can hack NYSE and several other "news" agencies and an airline.

Call me a conspiracy theorist but that is the way I see it.

[99th_Monkey]

2. I've been wondering about that too.

Given how interconnected the global markets are, to have this NYSE 3-1/2 hour "technical glitch", plus the Greece meltdown, plus this huge Chinese financial market meltdown all happening concurrently begs for someone to "connect the dots" here, and shed some light on WTF is really going on behind the curtain.

Sadly, us commoners will no doubt not find out what's really happening until it's too late, and something huge will "go down" taking even more "little people's" savings & investment with it.

[Monk06]

3. First of all modern stock markets are not equity markets. It's a numbers racket.

Pumped and dumped speculative paper backed by nothing except news releases by savvy insiders using automated trading platforms to get in and out before any cash trades hands between the buyer and the seller.

Technical traders also use tracking software to buy big at the first hint of an up trend thereby front running prices and taking retail investors money even before their old fashioned phone orders go through.

These automated trading bots also track the other exchanges which is why the NYSE tanked today. The bots saw a huge retraction in the Chinese exchanges and dumped stock in anticipation of a sell off at the opening of trading today.

Gonna be a lot of small mom and pop investors taking a bath on this one.