atans1

Peanuts: China’s US$19bn stabilisation fund

In China, Financial competency on 07/07/2015 at 12:56 pm

Reports said that about 25% of Chinese listed firms had requested to have their shares halted from trading on Tuesday.

The U$19 billion stabilisation fund looks tiny next to the US$3 trillion worth of freely tradeable shares, and the combined average daily trading in Shanghai and Shenzhen of over US$200 billion. Only 9% of the latter.

From NYT Dealbook

CHINESE MARKET PLUNGE POSES A DOUBLE THREAT In China, a stock market rout has racked up losses that make the Greek debt crisis look puny by comparison: $2.7 trillion in value has been wiped out since the Chinese stock market peaked on June 12, which is six times Greece’s entire foreign debt, or 11 years of Greece’s economic output, Keith Bradsher and Chris Buckley write in The New York Times. The steep drop in the mainland markets not only challenges the Chinese government’s efforts to cast itself as an all-powerful entity, they write, but it also poses a risk to the global economy, which can ill afford an economic shock in China.

Harry Harding, a specialist in Chinese politics who is a visiting professor at the Hong Kong University of Science and Technology, said the stock market plunge could produce three successive ripples, involving investment losses for households, slower economic growth and a political backlash against President Xi Jinping of China and his team, Mr. Bradsher and Mr. Buckley write.

Over the weekend, Mr. Xi’s administration made it clear it would do whatever it took to stem the stock market losses. On Saturday, 21 brokerage firms said they would set up a fund worth at least $19.4 billion to buy blue-chip stocks, and both of the country’s stock exchanges suspended all new initial public offerings. Then on Sunday, the China Securities Regulatory Commission said the central bank would inject capital into the state-controlled China Securities Finance Corporation, which lends to brokerage firms, and Central Huijin Investment, a company owned by the country’s sovereign wealth fund, said it had recently bought into investment funds traded on the stock exchanges. The measures appeared to have their desired effect on Monday. The Shanghai stock market jumped 7.8 percent at the start of trading, but it quickly erased much of its gains, closing 2.4 percent higher.

Advertisements
  1. Testing,Testing, Test
    Yes, a joke but I wonder whether Mrs Lee made some of our peanuts back?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: