Investing

China sees red...a lot of red

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  • Jan 4th, 2016 10:22 am
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Member
Mar 28, 2013
208 posts
19 upvotes
SCARBOROUGH
I don't see investors in China pulling out their money and buying Vancouver and Toronto real estate. Back in the tech meltdown in 2000 did investors go out after taking loses and invest elsewhere?

http://www.marketwatch.com/story/chinas ... -08?page=2

“Chinese individual investors are not primarily ‘value’ investors. Sky-high valuations don’t seem to faze them. They are primarily momentum investors who buy whatever is moving and sell whatever is falling.

“According to my friends who go to casinos and watch the Chinese gamble, they tend to jump on a ‘trend’ such as red coming up on the roulette table repeatedly — never mind that the odds are only ever 50-50. Red is seen as hot and therefore the way to bet. That carries over into trading styles. …”
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May 20, 2015
247 posts
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Scarborough, ON
Don't most so-called investors are just gamblers?

You can't put all Chinese in the same boat.
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Mar 24, 2008
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Toronto
Even with this drop, the Chinese index are up 80% year over year - think about that for a moment.
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Deal Addict
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Feb 16, 2009
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Reading this thread is kinda hilarious when it's put into perspective, not to mention the Chinese stock market is heavily de-linked from the real economy. Plenty more room to drop before real panic sets in.
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Apr 21, 2004
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sqrl wrote: Reading this thread is kinda hilarious when it's put into perspective, not to mention the Chinese stock market is heavily de-linked from the real economy.
How so? There are many real estate and financial institutions that can go under but manufacturing may not be affected as much because most manufacture for global companies.

I understand there are many shill and shell companies listed but are all A shares like that?

http://www.wikinvest.com/wiki/A-Share_v ... s_in_China
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Apr 2, 2015
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Ottawa, ON
ksgill wrote: Even with this drop, the Chinese index are up 80% year over year - think about that for a moment.
True. A classic correction it is not. These are not market forces at work in the traditional sense, unless we consider a possible trillion plus on grey market and secondary margin.

When a central government forces individuals into the market when housing collapses and incents leverage, controls inputs but follows the same path of loose regulation of the US it amplifies those curves. Blowing bubbles.

Someone will talk intrinsics, valuations and PE but techs simply look and say when markets overheat they have to cool down or correct violently. At this point I think it's the latter and an opportunity.

The sky is not falling, but the greater fool is getting a short haircut... question is how many fools are on the wrong side of the trade. I don't think the Chinese know... and why this could be a dangerous redistribution of wealth for many of their people.
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Mar 24, 2008
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alanbrenton wrote: How so? There are many real estate and financial institutions that can go under but manufacturing may not be affected as much because most manufacture for global companies.
Companies don't go under because of the stock price drop, it's usually the other way around. Secondary markets don't affect a companies balance sheets.

Like I said before, the chinese markets are ~80% up year over year even with this "drop". It's just speculators losing/making money, that's all.
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Apr 21, 2004
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ksgill wrote: Companies don't go under because of the stock price drop, it's usually the other way around. Secondary markets don't affect a companies balance sheets.

Like I said before, the chinese markets are ~80% up year over year even with this "drop". It's just speculators losing/making money, that's all.
True but rumors about it going under because of the stock price can drive borrowings much higher, which can lead to a companies demise or a potential buy out but doubtful since the voting structure in China may be controlled by a different share class. Lower share price means lower secondary offering as well so less to pay down debt or a lot more dilution to common shareholders.

If the stock price was not partly a reflection of a company's financial situation, fundamental analysis wouldn't have been arisen.

100 x 2 = 200
200 x .7 = 140

It is only up 70% now, not 80%.
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Mar 24, 2008
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alanbrenton wrote: ...
100 x 2 = 200
200 x .7 = 140

It is only up 70% now, not 80%.
Only? :lol:
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Apr 21, 2004
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ksgill wrote: Only? :lol:
Why don't you look at the 10 year or ALL graph on google finance to see the entire picture and not just that one year you keep harping about.
https://www.google.ca/finance?cid=7521596

Our TSX index is much closer to its all time high than the Shanghai Composite is to its high. Of course, I'm sure there are more impropriety in their financial/accounting industries and their P/E are way off the chart.

I'm not a math teacher so you don't have to parlay anything.
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Apr 2, 2015
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Ottawa, ON
ksgill wrote: Companies don't go under because of the stock price drop, it's usually the other way around. Secondary markets don't affect a companies balance sheet.
Usually true here but when a central government makes your A share issue the primary source of financing expansion or growth... or worse operating capital or funding inputs and supply side commodities it is a rock and a hard place.

This is why their govt is going to try to save face and pull the levers to game this bubble. If investors lose confidence the largest source of financing will slow and have systemic effects in many sectors.

I agree with your view this is overblown and was bound to happen.

Just an experiment in central control and free markets gone awry. In RFD parlance it is a deal for some of us this summer ;)
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Mar 24, 2008
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alanbrenton wrote: Why don't you look at the 10 year or ALL graph on google finance to see the entire picture and not just that one year you keep harping about.
https://www.google.ca/finance?cid=7521596

Our TSX index is much closer to its all time high than the Shanghai Composite is to its high. Of course, I'm sure there are more impropriety in their financial/accounting industries and their P/E are way off the chart.

I'm not a math teacher so you don't have to parlay anything.
Sure, let's take a look at the 10 year graph. You can clearly see speculators pumping up the stock prices twice. One can only speculate that it'll drop further.

[IMG]http://s12.postimg.org/gw0pg0ob1/Untitled.png[/IMG]

No Chicken Little, the sky is not falling.

Also, do your credibility a favour and stop comparing a developed country's stock market with the Chinese Stock market. :lol:
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Apr 21, 2004
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ksgill wrote: Sure, let's take a look at the 10 year graph. You can clearly see speculators pumping up the stock prices twice and we can see how it ended:

[IMG]http://s12.postimg.org/gw0pg0ob1/Untitled.png[/IMG]

No Chicken Little, the sky is not falling.
I never said anything about the sky falling. It will still impact the global markets even if you think it's a non-event.
Deal Fanatic
Mar 24, 2008
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alanbrenton wrote: I never said anything about the sky falling. It will still impact the global markets even if you think it's a non-event.
It will only be a blip if you look at the bigger picture. I hold a broad market index (VXUS) and it has ~5% exposure to the Chinese stock market.

I hope there is a 50% drop in price so that I can buy more. ;)
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Sr. Member
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Oct 19, 2014
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Waterloo, ON
A quick scalp could be possible, with a tight stop to limit losses. I'm tempted as well, especially after being stuck in UWTI. Don't want a double-whammy though!
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Jul 19, 2003
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syedsalmanshah wrote: A quick scalp could be possible, with a tight stop to limit losses. I'm tempted as well, especially after being stuck in UWTI. Don't want a double-whammy though!
And sure enough China will be down probably another 6% tonight.
hi!

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