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Thread: SERIOUS financial Chinese chaos.

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    SERIOUS financial Chinese chaos.

    Article this morning out of Australia...who rely heavily on Exports to China..as do many other countries.

    China has been fudging GDP figures for some time and growing a sharemarket and Property bubble almost beyond comprehension, amongst other things. I have been closely watching and noting for some time to 'keep an eye on China' and over the last 3 weeks things have become very serious.

    WHILE the world worries about Greece, there’s an even bigger problem closer to home: China.

    A stock market crash there has seen $3.2 trillion wiped from the value of Chinese shares in just three weeks, triggering an emergency response from the government and warnings of “monstrous” public disorder.

    And the effects for Australia could be serious, affecting our key commodity exports and sparking the beginning of a period of recession-like conditions.

    “State-owned newspapers have used their strongest language yet, telling people ‘not to lose their minds’ and ‘not to bury themselves in horror and anxiety’. [Our] positive measures will take time to produce results,” writes IG Markets.

    “If China does not find support today, the disorder could be monstrous.”

    In an extraordinary move, the People’s Bank of China has begun lending money to investors to buy shares in the flailing market. The Wall Street Journal reports this “liquidity assistance” will be provided to the regulator-owned China Securities Finance Corp, which will lend the money to brokerages, which will in turn lend to investors.

    The dramatic intervention marks the first time funds from the central bank have been directed anywhere other than the banks, signalling serious concern from authorities about the crisis.

    At the same time, Chinese authorities are putting a halt to any new stock listings. The market regulator announced on Friday it would limit initial public offerings — which disrupt the rest of the market — in an attempt to curb plunging share prices.

    While the exact amount of assistance hasn’t been revealed, the WSJ reports no upper limit has been set.

    All short-selling — the practice of betting that stocks will fall — has been banned, and Chinese media has rushed to reassure citizens.

    Chinese shares rose this morning in response to the measures. Dow Jones reports the Shanghai Composite was up 4 per cent after gaining as much as 7.8 per cent at the open. But all indexes were off more than a quarter from highs reached in June.

    Experts fear it could turn into a full-blown crash introducing even more uncertainty into global markets as Europe teeters on the edge of a potential eurozone exit by Greece, after Sunday’s controversial referendum.

    WHAT DOES IT MEAN FOR AUSTRALIA?

    For Australia, the market crash in China is likely to impact earnings on key exports iron ore and coal, further slashing government revenue, while also putting downward pressure on the Australian dollar.

    Jordan Eliseo, chief economist with ABC Bullion, said it was important to remember that the amount of wealth Chinese citizens have tied up in the stock market is relatively minor compared with western investors.

    Stocks only make up about 8 per cent of household wealth in China, compared with around 20 per cent in developed nations.

    “The market crash there is generating headlines, but it’s not going to have the same impact as a comparable crash would in a developed market,” he said.

    “What it means for Australia, though, is it’s very clear there are some serious imbalances in the Chinese economy, and the rate of growth they’ve enjoyed in the past is over. There’s no question our export earnings are going to take another hit.”

    Mr Eliseo predicts Australia is likely to experience “recession-like” conditions such as negative wage growth for many years to come. “I believe that’s going to be the new norm,” he said.

    WHAT ARE THEY DOING ABOUT IT?

    On Saturday, China’s 21 largest brokerage firms announced that they would invest more than $25.35 billion in the country’s stock markets to curb the declines.

    The brokers will spend at least 120 billion yuan ($25.75 billion) on so-called “blue chip” exchange traded funds, the Securities Association of China said in a statement after an emergency meeting in Beijing.

    On Friday the Shanghai Composite Index closed down 5.77 per cent to end at 3,686.92 points. Since peaking on June 12 Shanghai has dropped nearly 29 per cent, which Bloomberg News said was its biggest three-week fall since November 1992.

    The Shanghai market had swelled by 150 per cent in the last 12 months and experts had expected a sharp correction, though the rate at which it has occurred is unnerving many.

    Middle-class Chinese investors, encouraged by the government, have been pumping money into the stock market. The WSJ quoted 51-year-old Li Ping, who sold her 7 million yuan ($1.5 million) Beijing apartment to plough 4 million yuan into stocks.

    Ms Li said she thought the market would stabilise and rise again. “The fund that I have invested in is very mature and professional,” she said.

    CRACKDOWN AS PANIC TRIGGERS ‘SUICIDE’ RUMOURS

    Underscoring growing jitters amid the three-week sell-off, police in Beijing detained a man on Sunday for allegedly spreading a rumour online that a person jumped to their death in the city’s financial district due to China’s precarious stock markets.

    The 29-year-old man detained was identified by the surname Tian, and is a manager at a technology and science company in Beijing, police said in a post on their official microblog.

    Police said Tian’s alleged posting of the rumour took place Friday and called on internet users to obey laws and regulations, not to believe and spread rumours, and to cooperate with police.

    The state-run Xinhua news agency reported that Tian allegedly posted the rumours with video clips and screenshots Friday afternoon.

    The post, which is said to have gone viral, “provoked emotional responses among stock investors who suffered losses over the past weeks”, Xinhua said.

    Xinhua added that a police investigation showed that the video in question had been shot on Friday morning in the eastern Chinese province of Jiangsu where a man had jumped to his death. Local police there were investigating that case, Xinhua said.

    The original post was unavailable Sunday on China’s tightly controlled social media, where authorities are quick to delete controversial material.

    http://www.news.com.au/finance/econo...-1227430761673
    Last edited by Ross; 07-06-2015 at 04:36 PM.

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    Re: SERIOUS financial Chinese chaos.

    SHARES in big state companies soared Monday after promises of government action to halt a slide in Chinese stock prices but many others sank as jittery small investors tried to cut their losses.

    The market benchmark closed up 2.4 per cent but still was down 27 per cent from its June 12 peak. That came after a group of 21 state-owned brokerages pledged Saturday to buy stocks. On Sunday, the central bank promised more credit to finance trading.

    On Tuesday, the Shanghai stock index opened 3.21 per cent lower, wiping out short-lived gains from a day earlier.

    The Financial Review reports trading has been halted in more than 25 per cent of Chinese listed shares — 700 mainly smaller stocks — in what appeared to be the latest move by the government to stop the rout.

    But some analysts were already questioning whether current levels were sustainable following a huge run-up in Chinese shares over the past year.

    “It’s coming to a point where you’re covering one bad policy with another,” Tai Hui, Hong Kong-based chief Asia market strategist at JPMorgan Asset Management, told Bloomberg News.

    “A lot of investors are still concerned about another correction.”

    Regulators have reduced the number of planned share sales to ease fears of a glut.

    Shares of some state companies including PetroChina Ltd., Asia’s biggest oil producer, and China’s four major state-owned commercial banks rose by close to 10 per cent. Trading of almost 900 other companies — out of a total of 2,802 on exchanges in Shanghai and the southern city of Shenzhen — fell by the maximum 10 per cent daily limit permitted by regulators, according to the financial news website Hexun.com.

    Millions of novice investors piled into the market as the Shanghai index rose more than 150 per cent beginning late last year. Some made big profits but the slump has left many with shares worth less than they paid and hoping for a rebound so they can sell.

    “I hope I can bow out of the stock market after I break even,” said Liu Yun, a Beijing schoolteacher who put 80,000 yuan ($17,210) into the market since last year and now has shares worth 62,000 yuan ($13,340).

    A prolonged slump could jolt China’s financial system and set back Communist Party plans to make its state-dominated economy more market-oriented and productive.

    The reduction in the number of new public stock offerings announced Friday — to 10 in July from 28 previously planned — will hamper party plans for state companies to pay off debts with proceeds from share sales. Investor unease could hurt official efforts to encourage state companies to rely more on capital markets than on loans from state banks. Such anxiety also might set back government efforts to encourage the public to invest for retirement to ease demand for social spending in an ageing society.

    “I am down on the stock market for the coming two years,” said Yu Xing, CEO of a company in the eastern city of Nanjing that makes streaming content for websites. He said he has lost one-quarter of his 400,000 yuan ($86,040) investment since late last year.

    The decline has wiped out about 15 trillion yuan ($3.23 trillion) in market capitalisation.

    “The stock market decline will cause economic losses to investors and have some impact on social stability,” said Guo Tianyong, an economist at the Central University of Finance and Economics in Beijing. “The government measures will surely play a role in stabilising the stock market. But how effective they will be, we still need to wait and see.”

    The market boom took off after state media said last summer that stocks were undervalued, which investors took to mean Beijing would prop up prices if needed. But the market has been less responsive to the latest rounds of government intervention.

    Saturday’s statement by the Securities Association of China said brokerages will buy so long as the Shanghai Composite Index remains below 4,500 points. It closed at 3,775.91 on Monday.

    On Sunday, the China Securities Regulatory Commission said the central bank had agreed to provide “liquidity support” through the China Securities Finance Corp., which is owned by the commission and provides credit to brokerages to finance trading. It did not say how much credit the People’s Bank of China might provide, but the commission announced plans earlier for a dramatic expansion in the finance corporation’s capital base from 24 billion yuan ($5.16 billion) to 100 billion yuan ($25.51 billion).

    Analysts say one factor driving the downward spiral in prices is that investors who bought shares with credit from brokers — known as margin lending — are being forced to sell to repay loans.

    “There is still no sign the market will turn around, since investors’ confidence has suffered a huge blow,” said Hu Huopeng, market strategist for Founder Securities.

    “The blow to small investors is even harder, since the market dipped each time regardless of what the government did,” said Hu. “The hearts of small investors have become very fragile and they should stay away from the market until it is totally stabilised.”

    The ruling party’s flagship newspaper, People’s Daily, tried to persuade investors Monday to stay in the market in a commentary featured prominently on its second page.

    “The Chinese economy can maintain long-term, high-speed growth and provide solid fundamentals for capital market development,” the newspaper said. “We have sufficient capacity to maintain stable and healthy development of capital markets.”

    A prolonged downturn threatens to ruin interest in stocks among small investors.

    Dong Tianyu, a consultant in Shanghai, said he and his wife invested 50,000 yuan ($10,760) in stocks at the end of last year. They made a quick 50 per cent profit but that turned to a 10,000 yuan ($2,150) loss. Now, they are waiting for prices to rebound so they can sell.

    “I will sell once our shares come back to 50,000 yuan, and I will not consider investing again,” said Dong. “I am not optimistic about the stock market in the long run.”


    http://www.news.com.au/finance/marke...-1227432115075

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    Re: SERIOUS financial Chinese chaos.

    CHINESE shares fell again on Wednesday, even as Beijing summoned new measures to arrest a three-week sell-off, and the effects of the rout started to ripple into global markets.

    China’s Shanghai Composite Index tumbled 5.5 percent to 3,521.20 and Hong Kong’s Hang Seng dived 5.1 percent to 23,693.95.

    Japan’s Nikkei 225 lost 3.1 percent to 19,737.64 as the yen strengthened on safe haven buying. South Korea’s Kospi was down 1.1 percent at 2,016.21. Other regional markets were also down, including Taiwan, Singapore, Australia and the Philippines.

    On Wednesday, China’s central bank pledged “various channels” to provide liquidity to the stock market, including to China Securities Finance Corporation, which funds margin lending by brokers. The arm of the securities regulator also will increase purchases in small-cap stocks, the securities regulator said.

    In the wake of the stock market slump, at least 1,249 companies have halted trading on mainland Chinese exchanges, accounting for 43 per cent of total listings, Bloomberg News reported.

    Worries about China’s faltering demand amid the stock slide — which has wiped out roughly $US2.4 trillion in value from China’s equities — are also driving commodity markets lower, with copper hitting a six-year low on Tuesday. China is the world’s top copper consumer, accounting for about 40 per cent of global consumption. Pessimism about China, coupled with worries about a supply glut, also sent US oil prices to a near three-month low Tuesday.

    Brent, the global oil benchmark, rose 37 cents, or 0.7 per cent, to $US56.85 a barrel on ICE Futures Europe, after falling as low as $US55.10 a barrel earlier in the session.

    “Fears about the risks to financial stability and the wider economy have contributed to negative sentiment toward commodities,” analysts from Capital Economics wrote in a research report. “The impact has been felt most in industrial metals, such as copper, where China is by far the most important consumer.”

    Chris Weston, chief market strategist at IG in Melbourne, Australia said in a commentary: “Greece and China dominate once again, but throw in massive falls in bulk and base metals and you are left with a worrying mix for market participants.

    “Can the Federal Reserve divert attention away from these issues in today’s FOMC minutes? I am skeptical, even though it is actually the most important U.S. economic release. Still, for traders there are only two games in town and these remain China’s equity markets and the Greek negotiations.”

    China has put an arsenal of measures to work in recent days to stem the sell-off. Over the weekend, Beijing suspended initial public offerings and made it easier for investors to borrow to buy stocks. China’s brokers also vowed to buy shares until the Shanghai Composite hits the 4500 level.

    Still, concerns are rising that Beijing’s increasingly desperate measures to calm markets are building bigger financial risks into the country’s financial system, particularly a commitment from the People’s Bank of China to provide unlimited liquidity support to China Securities Finance Corporation, which funds margin lending by brokers.

    Chinese stocks are expected to remain in focus, even as a huge chunk of the stocks listed on the Shanghai and Shenzhen markets remain suspended. A total of 1544 companies in the Shanghai Composite and its Shenzhen counterpart are halted from trading today, representing 54.7 per cent of index constituents, according to data from FactSet.

    “The rescue plan could potentially increase the systemic risk down the road,” analysts from Société Générale wrote in a research report. “Initially most of the stock market risk was with households, but with the rescue plan, systemically important institutions are taking up more risk when the market is still under immense downward pressure. Our biggest concern is that the progress of structural reform could suffer as the result.”

    Meanwhile, eurozone leaders set a Sunday deadline for Greece to come up with a new set of more stringent measures to avoid defaulting on the European Central Bank and exiting the currency union. While the leaders raised the possibility of some short-term financing to help Athens make a July 20 payment, many of the policy overhauls and budget cuts demanded were overwhelmingly rejected by Greek voters in a referendum last weekend.

    The Nikkei 225 Stock Average declined 1.2 per cent in early trading while Australia’s S&P/ASX 200 fell 0.6 per cent. South Korea’s Kospi Composite was flat.

    Global bond markets rallied as investors sought haven assets in developed-country debt. Yields on benchmark U.S., German, and U.K. bonds hit their lowest levels in more than a month. On Tuesday, the International Monetary Fund warned of the risks of raising rates too early in the U.S., and called for the Fed to delay a raise until 2016. Concerns that the Federal Reserve would raise rates prompted a bond sell-off in June, given concerns that higher rates would lower their outstanding value.

    The euro also sank 0.5 per cent against the Japanese yen as investors sought assets perceived to be safe.

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    Re: SERIOUS financial Chinese chaos.

    The Bottom Dropping-Out: We've all discussed this for years.

    Is it now upon us?


    ---------------------------------------------------------------------------------------------------------------------------------------------------------

    08 July 2015
    CNN Money

    The New York Stock Exchange suspended trading at 11:32 a.m ET Wednesday and stayed down for nearly four hours.

    Trading finally resumed at 3:10pm ET. It's been a rough day for stocks. The Dow shed 261 points (about 1.5%), mostly because of China's stock market plunge and ongoing fears about Greece, although the NYSE "glitch" didn't help investor confidence.

    "Given the global paradigm of what's going on in the EU, Greece, China, this is the last thing that the U.S. equity markets need," said Peter Kenny, chief market strategist at the Clear Pool Group, a financial technology firm. Kenny worked on the NYSE floor for 25 years.

    What happened: In a brief announcement, the exchange said it was experiencing a "internal technical issue." The NYSE said later in a tweet that it's "not the result of a cyber breach."

    "The root cause was determined to be a configuration issue," an NYSE spokesman said Wednesday evening.

    The Department of Homeland Security told CNN that there is "no sign of malicious activity" at the NYSE or with an earlier outage experienced by United Airlines. The FBI says it reached out to NYSE and "no further law enforcement action is needed at this time."

    Other exchanges, including the Nasdaq, remained operating as usual. In other words, investors were still able to trade trade, just not on the NYSE.

    "It is the most significant outage since Nasdaq's blackout [in 2013]," says Eric Scott Hunsader, a market structure expert and CEO of data company Nanex. The 2013 "Flash Freeze" caused all Nasdaq-listed shares to stop trading for more than three hours.

    Wednesday's halt re-hatches the long debate on electronic trading. Some experts believe there are more negatives than positives, but the NYSE halt revealed one of the benefits of electronic trading.

    "This is basically the good thing about electronic trading quite frankly -- the customer doesn't have to rely on any one venue," says Ted Weisberg, president of Seaport Securities, who has been working at the NYSE for several decades.

    Other glitches: The NYSE wasn't the only one with glitches today. The Wall Street Journal's homepage stopped functioning around the same time that the NYSE went down. The Journal was able to restore its homepage by about 12:20pm.

    United Airlines' computer system also malfunctioned Wednesday morning, but it was back up by the time NYSE had its big issue.

    Earlier in the day Wednesday, about 200 NYSE stock symbols halted trading due to a technology glitch, including Macy's (M) and Kate Spade (KATE). Traders thought that problem had been solved, but then the whole system went down.

    "They've been having problems all day. They seemed to have rectified it earlier and then it happened again. Now they shut it all down," said Joe Saluzzi, co-head of trading at Themis Trading and author of Broken Markets.

    Trading is expected to resume on the New York Stock Exchange as usual on Thursday morning at 9:30 a.m.

    ---------------------------------------------------------------------------------------------------------------------------------------------------------

    And here is another piece of news, which definitely is not minor:

    ---------------------------------------------------------------------------------------------------------------------------------------------------------

    08 July 2015
    CNN Money

    Microsoft to lay off up to 7,800

    Microsoft CEO Satya Nadella is swinging the axe again at the software giant.

    Up to 7,800 people will be laid off globally, the company announced Wednesday morning. Most of the jobs are within its smartphone hardware business.

    Microsoft (MSFT, Tech30) had 118,600 employees as of March 30, with about 60,000 of those workers in the United States. The cuts represents about 7% of its staff.

    This is Nadella's second major restructuring. He announced 18,000 layoffs in Nokia's devices and services business last year, following Microsoft (MSFT, Tech30)'s acquisition of the handset maker.

    The new job cuts and restructuring will also mean a $7.6 billion writedown for the company, a one-time charge that many have been expecting.

    Steve Ballmer's purchase of Nokia was one of his most criticized deals. Analysts attacked the former Microsoft CEO for hampering the firm with an aging legacy business.

    "It is a deal that makes no sense," Ben Thompson, an independent analyst, wrote when the acquisition was first announced. "Adding on a mobile phone business that Microsoft probably should abandon is like attaching an anchor to said straitjacket and tossing the patient into the ocean."

    After Nadella took over Microsoft, he made it clear that he would have to make aggressive changes to revitalize the company. The company's focus is now on cloud services and mobile software.

    "We are moving from a strategy to grow a standalone phone business to grow and create a vibrant Windows ecosystem," Nadella said in Wednesday's announcement. "In the near-term, we'll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility."

    The latest cuts may be especially detrimental to Finland, where many of Nokia's employees work.

    Pekka Pekkala, the communications head for the country's prime minister, said on Twitter that 66% of Microsoft's Finland staff will be dismissed.

    "Finland loses 2,300 jobs...pretty much killing the city of Salo," Pekkala tweeted.

    ---------------------------------------------------------------------------------------------------------------------------------------------------------

    The governments of the world along with the mainstream media will continue trying to hide the facts with their lame excuses and stories, but it's getting more and more difficult for them to cover up as the dominoes begin falling.
    Last edited by Harley; 07-08-2015 at 10:27 PM.
    Harley

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    Re: SERIOUS financial Chinese chaos.

    A WEEK after news broke of China’s monumental stock market crash, stories of suicides and the role the country’s shady underground banking system may have played in the catastrophe have begun to emerge.

    At the urging of the Chinese government, ordinary citizens pumped their life savings into dodgy investments in this “shadow” banking system, and as the losses mount, a violent backlash has begun.

    Fan Xiaolin, an engineer in Changsha in central China, thought he was safe when he deposited his family’s savings of 800,000 yuan ($A173,000) in a private finance company he said was recommended by employees of state-owned Bank of China.

    The company, part of an informal industry of lenders and investment managers that operates outside China’s state-run banking system, collapsed six months later as economic growth slowed and businesses struggled. Today, Fan said he and about 100 other depositors in Hunan Bofeng Asset Management Ltd. protest several times each week outside state banks and government offices, demanding their money back.

    “The security people at the bank hit us,” said Fan, 50. “The police ask us to go home and wait.”

    Thousands of Chinese savers like Fan who entrusted money to an informal finance industry that operates with little government oversight are suffering painful losses as borrowers default and real estate and other ventures fail.

    Beijing allowed underground finance to flourish over the past decade to support entrepreneurs who generate jobs and wealth but get little credit from state banks. Communist leaders reaped the benefits of a thriving private sector without tackling the political challenge of giving entrepreneurs more access to an official financial system supports government companies.

    Now, as losses rise, Beijing faces political tension and pressure to help investors recover their money.

    “Many investors don’t realise the risk until something goes wrong,” said Guo Tianyong, director of the Banking Research Center at Central University of Finance and Economics in Beijing.

    The industry’s popularity reflects the Chinese public’s urgent search for an alternative to low interest paid by banks, which has driven repeated bouts of boom-and-bust speculation in real estate and other assets. It propelled the flood of money from novice investors that fuelled this year’s explosive rise of Chinese stock prices, which peaked in June and have plunged since then. Last week it was revealed $3.2 trillion had been wiped off the Chinese stockmarket in just three weeks, prompting the Chinese government to begin lending money to investors to prop up the flailing market.

    One portion of informal finance is allowed by Chinese law: small loans from individuals to entrepreneurs. For a fee, brokers put borrowers in touch with small savers. They provided trillions of yuan (hundreds of billions of dollars) that supported the growth of Chinese private business.

    The status of other activities is murkier. Some entities operating under names such as “investment guarantee fund” act like banks, raising money from depositors to lend, invest or speculate in stocks or gold. They promise two times or more the interest paid by banks.

    Regulators have tried to keep official banks separate from the underground industry, but complaints in Changsha that Bofeng was recommended by employees of Bank of China and another state-owned lender, Industrial & Commercial Bank of China Ltd, or ICBC, highlight the tangled connections between the two sides.

    “I went to deposit money in the bank and the bank manager recommended this to me,” said an ICBC customer, Sheng Weimin, a 48-year-old engineer for an aviation company. He put 100,000 yuan ($A21,600) into Bofeng in January 2014.

    Fan, the engineer, said he got similar advice at Bank of China to put money into one-year Bofeng contracts that promised 7 per cent annual interest — double the rate at state banks.

    “There was no talk about risk,” said Fan, who earns 4,000 yuan ($A860) per month. “The counter staff at Bank of China said anybody who still uses certificates of deposit is a fool.”

    Bofeng raised 400 to 500 million yuan ($A86 million to $A108 million) by selling “trust products” to several hundred investors, according to the official Xinhua News Agency. It cited local authorities as saying the company was not authorised to do so.

    Bank employees were paid a 2 per cent bonus for selling the investments, Xinhua said.

    Where that money went is unclear. Bofeng’s website says the company is an investor and asset manager. But the Web portal Sina.com reported it also traded stocks and made high-interest loans to real estate and other businesses.

    Strains on the industry worsened as growth in the world’s second-largest economy tumbled to a two-decade low of 7.4 per cent last year, barely half of 2007’s high of 14.2 per cent. It is due to decline further as communist leaders try to steer China toward self-sustaining growth based on domestic consumption, replacing a worn-out model driven by exports and investment.

    Two farmers killed themselves after losing their savings in a failed finance company in rural Xiping County in the central province of Henan, according to the Beijing Times newspaper. It said the chairman of Haochen Investment Guarantee Co. was detained while police investigate possible “illegal fundraising.”

    Such a charge can be applied to an individual who receives more than 200,000 yuan ($A43,200) of informal loans or causes losses to lenders of 100,000 yuan ($A21,600), according to a 2013 document issued by China’s supreme court. Enterprises can face charges if they receive 1 million yuan ($A216,000) or cause losses of 2.5 million yuan ($A540,000).

    Depositors in Bofeng said they heard the founder, Deng Lin, was detained by police but they have yet to receive word on its status.

    An employee of the Changsha city government propaganda office, who would give only his surname, Fang, confirmed police are investigating Bofeng but declined to give other details. He said investors would be informed once the investigation is completed.

    Asked whether Bank of China staff had sold Bofeng financial products, a spokeswoman for the bank’s Changsha branch, who would give only her surname, Zhou, said, “We have not signed a franchise agreement with Bofeng.” She repeated that when asked whether Bofeng products ever had been sold in Bank of China.

    “Bank of China is fully cooperating with the investigation and will fight to keep investors’ losses to a minimum,” Zhou said.

    A spokesman for ICBC, Wang Zhenning, declined to comment.

    Elsewhere, grifters have taken advantage of the industry’s popularity to fleece investors.

    In Shanghai, operators of a phony finance company disappeared with 100 million yuan ($A21.6 million) from mostly elderly investors who were promised annual returns of 36 per cent, according to the Shanghai Morning Post newspaper.

    Chinese lawmakers are considering legal changes to curb misconduct, according to Xinhua.

    “Underground banks, which run without financial supervision, not only threaten the economy and financial security but also encourage smuggling, money laundering and state assets embezzlement,” the agency said in a report in May.

    The pain is politically thorny for the Communist Party because those hurt often are entrepreneurs and professionals who have benefited from its market-style economic reforms and should be a pillar of support for one-party rule.

    Deng Mei, a 29-year-old employee of an electronics company in Changsha, said her family deposited money in Bofeng starting in 2011 using annual contracts bought from an ICBC branch. Last year, her family put their savings of 250,000 yuan ($A54,000) into new contracts that promised 7 to 8 per cent interest.

    The first sign of trouble was a mobile phone message Dec. 17 inviting her join a protest at an ICBC branch.

    “I took a day off, went there and found a lot of victims like me,” Deng said.

    Sheng, the aviation engineer, said some depositors wanted to sue ICBC but a lawyer told them they would lose because their contracts were signed only by Bofeng, not the bank.

    “At least there should be someone to give us an official answer to tell us when we get part of the money,” said Sheng. “I ask the bank staff and always am told, ‘It is being processed, wait.’”

    EXPERTS SPLIT ON BEIJING'S NEXT MOVE

    China’s stockmarket crisis promises long-lasting political and economic fallout, according to investors, executives, analysts and diplomats, following days of government intervention intended to prop up share prices.

    Chinese authorities stabilised the country's stock market late last week with a package of direct and indirect government action valued at more than a trillion yuan, including buying shares, funds and index products. Added to that were trading lockups on half the listed stocks, easier credit terms for investors, and police warnings against some traders from betting on share prices to fall.

    The episode will set back development of stock markets that have long been wobbly, according to people interviewed. Some predict damage to an already struggling Chinese economy and a dent in the Communist Party's credibility for stewarding it. In Beijing's defence, some said the government's unorthodox strategy prevented a cataclysmic outcome and could now force policy makers to embark on structural economic overhauls.

    Government leaders face a bigger challenge to make the economy less debt-dependent. One post-crash strategy leaders could pursue is to limit the economy's debt build-up by slowing the economy itself.

    "We need to see a slowdown in growth because the only way to keep up growth is to keep up credit growth," said Michael Pettis, a professor at Peking University.

    Without a strong stock market, analysts said Chinese businesses are likely looking at fewer funding channels to pursue job-creating projects. More than 1,000 companies like Shanghai Film Group and China Nuclear Engineering Group were in line for initial public offerings and other stock sales when regulators this month shut the window on them. Several analysts said the suspension is counterproductive because it penalises dynamic new companies and will add volatility.

    The IPO suspension affects nearly 30 companies that hoped to raise more than 9 billion yuan ($A1.97bn). It could possibly further entrench a process for picking companies eligible for IPOs that officials concede is too politicised and delay a restructuring to make it easier to list. Fewer listings also means less revenue for investment banks that handle such deals and the lawyers who craft them.

    Among the companies facing new funding challenges are those that had hoped to sell stock to pay for projects built around core political goals of China's leadership. For example, a prospectus from Urumqi-based Guanghui Energy shows it applied for approval to raise 1bn yuan on the Shanghai Stock Exchange to fund a liquefied natural-gas project in the central Asian country of Kazakhstan, a spin-off of the government's plan to spend tens of billions of dollars in a regional development program. Officials of Guanghui Energy couldn't be reached for comment.

    President Xi Jinping has staked enormous political capital promoting that program, called "one belt, one road," which is designed to extend Chinese influence into nations along the country's perimeter while tapping the country's overcapacity in industries like rail and construction.

    The market jolt has left a third of the nearly 2,800 total listings down 50 per cent since selling began, according to Wind Information, and will saddle China's banks with a dose of fresh bad loans, as well as unwanted stock that borrowers pledged as collateral, analysts said. The Shanghai Composite Index has declined 25 per cent from a 52-week high hit on June 12.

    Up to 2 per cent of the banking system's total assets are exposed to the stock market, according to UBS's Wang Tao. She said in a recent report that "we do see heightened stress in certain parts of the financial system, but systematic financial risk still looks highly unlikely."

    A bigger hit awaits Chinese brokerages, which official data suggest have supplied as much as 2.27tn yuan in loans to investors, some of which are bound to be uncollectable.

    Internationalisation of China's financial system seems sure to slow, at least in the short term, said some investors. Stock-market regulators may have a harder time attracting foreign investors who only represent a fraction of activity now, they said, as well as winning inclusion in influential benchmarks like the MSCI Emerging Markets Index.

    Young, tech-savvy Chinese professionals, who just a few weeks ago traded stocks via mobile-phone apps, now espouse a distrust already evident with older generations who have experienced previous boom-bust cycles. "Stir-frying stocks in China means not stir-frying rice," said one Shanghai man, using a colloquial for trading.

    Just before the market correction, a CLSA survey found 66 per cent of individual investors confident the government would protect the market. "All believed it was a bubble, and all thought they would get out in time," said Mr Pettis, the Peking University professor.

    Now, investors are asking whether the government's lifeline to the market was designed to protect household nest eggs or the standing of state-owned enterprises. The market's biggest stock, PetroChina, gained 12 per cent last week, while the Shanghai Composite Index rose 5.2 per cent. Despite the recent plunge, the index has climbed 20 per cent this year.

    Many investors got in late: Just days after the market correction began in June, a regularly published China Household Finance survey found 40 per cent of families sitting on profits and predicted that most would be in the red if the fall deepened, as it did.

    Even investors who sit on paper profits can't sell many stocks, after regulators permitted about half of listed companies to halt trading in their shares. Regulators now appear to be frowning on newly inaugurated financial tools meant to modernise Chinese markets, like short selling of stock-index products, or wagering that prices would fall. Police said they are checking that activity for possible criminal manipulation.

    Despite heavy downward pressure on the market, short selling has in recent days "basically gone extinct," Steve Wang, research chief at Reorient Financial Markets, said in an investor note. "The risk-reward for going against the state is not worth the effort."

  7. #6
    Administrator Ross's Avatar
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    Re: SERIOUS financial Chinese chaos.

    The People’s Bank of China knocked 1.6 per cent off the yuan late this morning, on top of its record 1.9 per cent cut yesterday.

    Yesterday’s devaluation rattled global financial markets, with the yuan suffering its biggest one-day drop in a decade. The move could help Chinese companies by making their products less expensive in global markets. U.S. stocks plummeted, partly on fears about a worsening economic slowdown in China.

    WHAT EXACTLY DID CHINA DO?

    China doesn’t let its currency trade freely in financial markets as the United States does. Instead, it links the yuan’s value to the U.S. dollar. Then it restricts trading to a band 2 per cent above or below a daily target set by the People’s Bank of China.

    Yesterday, the central bank set the target 1.9 per cent below Monday’s level — the biggest one-day change in a decade — and then set it another 1.6 per cent lower this morning. It also made a technical change to give market forces more influence in determining the yuan’s value: Its daily target will now be based on the previous day’s closing value. That change will allow the yuan to make bigger, faster moves up or down and better reflect investors’ outlook on the prospects for China and its currency, said David Dollar, senior fellow at the Brookings Institution.

    WHY DID CHINA DEVALUE ITS CURRENCY?

    The People’s Bank of China said it acted because the yuan has been rising even when market forces say it should be falling. Worried Chinese have been moving money out of the country, putting downward pressure on the yuan. Yet the yuan has remained up anyway because of its link to the dollar, which has been rising. An overvalued yuan has hurt Chinese exporters by making their products more expensive overseas. In July, Chinese exports plunged 8.3 per cent year over year.

    China’s economy already needed help. The economy is expected to grow less than 7 per cent this year, its slowest rate since 1990, and could decelerate even more next year. The stock market has been in a free fall since June.

    “This move won’t solve some of the pressing problems China faces,” Sung Won Sohn, an economist at California State University Channel Islands, cautioned in a research note. “There is too much excess capacity, especially in basic industries like steel, aluminium ... A real-estate bubble is alive and well. Chinese banks are loaded with a lot of problem loans. The gyration in the stock market won’t go away.”

    HOW WILL CHINA’S TRADING PARTNERS BE AFFECTED?

    Investors fear the worst. U.S. stocks sank yesterday, dragged down by falling shares in such big exporters as Caterpillar and General Electric. In theory, a weaker yuan could reduce exports of U.S. goods to China, already down nearly 5 per cent this year through June.

    But economists doubt that a one-day 2 per cent drop in the yuan — a move China has called a one-time event — will do much damage to exports from the United States or other countries.

    “Two per cent is no big deal,” said Mark Zandi, chief economist at Moody’s Analytics. “Ten per cent over the next few months would be a big deal.”

    American politicians, who have long charged that China keeps its currency artificially low to give its exporters an edge, denounced the devaluation.

    “Today’s news that China has yet again lowered the value of its currency is another harsh reminder that we cannot afford to sit idly by as China refuses to play by the rules,” Ohio Republican Sen. Rob Portman said in a statement.

    But economists didn’t see Beijing’s move as an effort to defy market forces and reduce the yuan to an artificially low level. Rather, they perceived an attempt by China to catch up to an economic reality that dictates a cheaper yuan. And the plan to let market forces play a bigger role in determining the yuan’s level is something the U.S. government itself has called for.

    In a statement, the U.S. Treasury Department said: “China has indicated that the changes announced today are another step in its move to a more market-determined exchange rate. We will continue to monitor how these changes are implemented and continue to press China on the pace of its reforms.”

    MIGHT THE FEDERAL RESERVE DELAY A RATE HIKE?

    Probably not. True, a cheaper yuan hurts U.S. exporters and likely depresses U.S. inflation, which is already below the annual 2 per cent rate the Fed targets. But yesterday’s move wasn’t big enough by itself to make much difference. So the Fed is likely to go ahead, possibly at its September meeting, and raise the short-term rate it controls, which has been pinned near zero since 2008. The U.S. economy grew at a steady 2.3 per cent annual from April through June, and U.S. unemployment has fallen to a seven-year low 5.3 per cent.

    If the U.S. economy continues to look healthy, wrote JP Morgan Chase economist Michael Feroli, “the yuan move will largely be a sideshow ‘‘ by September’s Fed meeting.

  8. #7
    Administrator Ross's Avatar
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    Re: SERIOUS financial Chinese chaos.

    It's happening...

    Since the 08 GFC, China was the last remaining source for global growth, propping up many of the world economies. All the while fudging GDP figures, STATE economic measures assuring the stock market remained growing and state ASSISTED pouring of cash into local infrastructure keeping jobs figures strong...

    Latest:

    China stocks suffer biggest one-day loss in eight years.
    China market plummets more than eight percent as investors disillusioned with measures taken dump shares.
    State govt has passed new legislation allowing the state Pension fund to be used as a prop up measure for the stock markets.

    Read above post:

    More than $5 trillion (USD) has been wiped off the value of global equities markets since China's shock devaluation. That's 8 trillion since it's crash 4 weeks ago across the Asian collectively.

    China's stock market has fallen by its biggest margin in eight years at the end of trading, defying the government's multibillion-dollar effort to stop a slide that has wiped out the gains of this year's price boom.

    The plunge on Monday in China's equities followed last week's losses of 11 percent, and hammered stock prices across Asia, as fears grew that a slowdown in China could send the rest of the world into a recession.

    The Shanghai Composite Index fell 8.5 percent to close at 3,209.91 points, its biggest one-day loss since an 8.8 percent decline on February 27, 2007. The index is down 38 percent from its June 12 peak.

    Analysts blame the fall on both weak onshore performance and investors moving money out of yuan-denominated assets after a surprise devaluation in the Chinese currency earlier in August.

    The further decline threatened to weigh anew on global markets after last week's Chinese losses triggered a worldwide selloff.

    Meanwhile, Hong Kong's Hang Seng index fell for the seventh straight day, dropping 5.2 percent to 21,251.57 points as Taipei stocks tumbled 583.85 points to 7,203.07 in morning trading, a drop of 7.49 percent.

    More than $5 trillion has been wiped off the value of global equities markets since China's shock devaluation.

    Many investors had expected the People's Bank of China would over the weekend cut the amount banks have to keep in reserves, which could boost stocks by increasing market liquidity and address weakness in China's vast manufacturing sector.

    No such move materialised, and the only policy support in evidence was an announcement formalising rules allowing pension funds to buy stocks, a policy initiative that had already been trailed.

    Earlier measures taken

    Beijing already carried out rounds of cuts to transaction fees and encouraged companies to buy back their own stock. Such buybacks usually result in increased valuations of outstanding shares by reducing net supply.

    Rajiv Biswas, a senior director and economist for IHS Global Insight in Singapore, told Al Jazeera that Beijing needs to do more to prop up the economy.

    "It doesn't seem that they are prepared to really put in a big package of measures, but would rather put in dribs and drabs along the way. And that is not convincing anybody that the economy is about the turn around anytime soon," he said.

    "One of the problems is that they are directing their efforts towards stabilising the stock market. But we are not seeing enough initiatives to support the real economy,” Biswas added.

    “It's the real economy that investors in the country are not confident about. All the signs are showing that the economy is cooling."

    Al Jazeera's Adrian Brown, reporting from Beijing, said that malaise on the markets could continue as investors awaited US gross domestic product or GDP figures set for release this week, and a decision on whether the US Federal Reserve would lift interest rates.

    Monday's falls followed heavy falls on Wall Street on Friday, with the Dow Jones Industrial Average posting its worst single-day session in four years and all benchmark indices losing more than three percent.

    China’s ‘Black Monday’ felt on stock markets around the world.


    BILLIONS of dollars have been wiped from financial markets in the US, Europe and Asia as fallout from China’s “Black Monday” reverberates around the world.

    The US Dow Jones index crashed more than 1000 points within minutes of opening before stabilising to trade around five per cent lower on Monday. It’s an unprecedented move for the Dow which has never lost more than 800 points in a single day.

    Stockmarkets in the UK, Germany, France, Italy and Spain also plummeted after China’s Shanghai Composite Index lost 8.5 per cent on Monday - the largest margin in eight years.

    The UK’s FTSE 100 index lost more than $85 billion in the first three hours of trading while markets in Japan, Hong Kong, Korea and Australia all closed more than more than 4 per cent down.

    The massive sell off, dubbed the “Great Fall of China” is being stoked by fears China has lost control of the situation and doesn’t have the means to fix it.

    ABN Amro chief investment officer Didier Duret told Reutersmarkets were embroiled in a “China-driven micro panic” and “volatility will persist until we see better data there or strong policy action through forceful monetary easing.”

    Global equities have seen more than $5 trillion wiped from their value since China opted to devalue its currency in a shock move on 11 August.

    Finance author Fraser Howie, who wrote Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise told The Guardian there is a “growing realisation” China’s leaders do not have a clear idea of how to handle things.

    “Not only are they not in control of it, they don’t even seem to grasp the problems at times,” he said.

    The losses have also pushed oil prices four per cent lower and caused the CBOE Volatility Index - a key measure of volatility in US share markets - to spike more than 50 for the first time since 2009, Reuters reports.

    BUBBLE TROUBLE

    IG Markets Angus Nicholson said Monday’s losses are a “disastrous result” for China which has spent “hundreds of billions of dollars propping up the market since June”.

    The Shanghai Composite Index is down 38 per cent from its peak on 12 June with many small investors suffering the heaviest losses which could derail Communist Party plans to use the market to finance reforms.

    Social media specialist Pan Chong, 25, said “it feels like the end of the world” after investing 50,000 yuan ($7900) in April, making 40 per cent and then seeing the market wipe out his gains.

    “The so-called correction will finally become a long-term bear market,” he said. “So I’m considering selling all my shares as soon as possible.”

    The chaos in China comes after the benchmark index soared more than 150 per cent starting in late 2014 after state media said shares were inexpensive, which led investors to believe Beijing would shore up prices if needed. Urged on by state media, millions of novice investors rushed into the market.

    However prices faltered, then plunged after an unrelated change in banking regulations in June led investors to question whether Beijing’s support might be weakening. The market index fell 30 per cent, prompting Beijing to intervene by barring big shareholders from selling and promising state-owned brokerages and pension funds would buy.

    Beijing’s initiatives helped to calm markets. But after the state-owned company charged with buying shares to prop up prices announced it would not intervene every day, the Shanghai index fell 11.5 per cent last week.

    Sunrise Broker's head of Asian and Japanese equities, Benjamin Collett said the losses have dragged other markets down with them.

    “How much of this is China’s fault? Probably all of it,” said Mr Collett.

    “We attribute most of the gains to the epic rally in China, and now naturally I think it’s reasonable to assume that investor sentiment is solely focused on China.”

    The declines come at a time when exports, manufacturing and other Chinese industries are weakening, leaving little economic support for higher share prices.

    The latest fall probably was triggered by poor performance at publicly traded companies, said Guo Tianyong, a professor at the Central University of Finance and Economics in Beijing.

    The government reported last week that profits at state-owned companies contracted by 2.3 per cent in July from a year ago, compared with a 0.1 per cent contraction through June.

    “We shouldn’t doubt the government’s ability to rescue the market. If they want, they could push up the stock index to 5000, but it is not necessary for the government to play an excessive role,” said Guo. “It still would be better for the market itself to play its role.”

    The surprise devaluation of the yuan on August 11 also led to jitters from investors who worry it will lead money to flow out of China, reducing credit available for trading. The central bank has responded by pumping extra money into credit markets.

    The ruling party wants to use the markets to raise money for state companies to reduce debt and modernise. The party also wants to encourage stock ownership as a way for families to save for retirement, reducing demand for social spending. But small investors whose holdings have plunged in value say they will no longer buy shares.

    Lu Zhen, 29, an employee at a financial firm, said the value of his shares rose by 250,000 yuan ($40,000) over the first half of the year. But he said since the June downturn, he has lost that and an additional 150,000 yuan ($24,000).

    “This is definitely the end of a bull market,” Lu said.
    Last edited by Ross; 08-24-2015 at 01:20 PM.

  9. #8
    Administrator Ross's Avatar
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    Re: SERIOUS financial Chinese chaos.

    USA is bankrupt and falsely propped up under Bernanke and Co with quantitative easing, printing money and other short term bandages...All other economies worth any mention are also broke and in serious DEBT.

    Personal debt is higher than that of 07 and with QE (quantitative easing) throughout Europe and zero interest rates with nowhere to move when the shite does a full collapse....will spell one VERY serious 'depression'. Forget recession, those days have past.

    Everything since 07 in all countries have been bandages with zero changes in regulatory policy. All propped up to keep wheels turning on illusionary measures.

    What the USA and others have been trying to avoid is a depression when all they have done is prolong it.

    However there is nowhere to turn now as all QE measures are exhausted and a global depression looks imminent.

    My real worry is the ongoing conflicts, corruptions and govt policies from every corner of the globe culminating towards a complete implosion leading to serious unrest and most likely a global War...that's if history repeats itself...

    While bleak, this is a very real scenario.

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  11. #9
    Administrator Harley's Avatar
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    Re: SERIOUS financial Chinese chaos.

    Quote Originally Posted by Ross View Post
    My real worry is the ongoing conflicts, corruptions and govt policies from every corner of the globe culminating towards a complete implosion leading to serious unrest and most likely a global War...that's if history repeats itself...

    While bleak, this is a very real scenario.
    Absolutely. We're on the brink now.

    There's been an escalating war of espionage taking place for several years and this financial crash is going to bust it out.

    Those explosions in China and Japan weren't just chemical explosions, like they're telling the public.
    Harley

  12. #10
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    Re: SERIOUS financial Chinese chaos.

    From a blog post by Ryan McMaken here:
    https://www.lewrockwell.com/lrc-blog...fs-china-move/

    The ‘good’ news this holiday season comes from the IMF, as the Fund decided yesterday to include the yuan in the basket of currencies which underpins its Special Drawing Rights (SDR). From October 2016, China’s currency will determine by a weight of 10.92 percent (together with the pound, dollar, euro, and yen) the value of this special IMF international reserve asset. The SDR is a hybrid currency asset, which can be traded only between national governments, central banks and the IMF. Its official role is to provide member countries with supplemental reserves (when foreign exchange reserves are depleting) to enable them to stabilize the exchange rate.
    _______________________________________________


    For China, IMF’s seal of approval on the yuan as reserve currency will most likely calm down investors with regards to the recent turmoil in Chinese financial markets, and postpone some of the otherwise inevitable consequences of their monetary policy. For the IMF, this is an important move in making its SDR more liquid (as legal tender is domestically), which would pave the way for “expanding the issuance of notes in regular intervals irrespective of a need for supplementary resources”
    Whatta brilliant, underhanded, sneaky,
    "If you can't beat'em. duct tape them to your leg"
    kinda move!


    What do I mean?
    China has wanted into the IMF for decades.
    But western banksters were both too greedy, and too scarred of China, to let them in.
    Now, these banskters are in deeper crap than China.
    And... right now would be a perfect time for China to pull something sneaky, forcing the Banks into the bankruptcy they so richly deserve.
    So, to prevent China from doing something, let them in the club, where they'll share in some of the risks.
    Fred
    Last edited by Fredkc; 12-02-2015 at 05:42 AM.
    "Life IS mystical! Its just that we're used to it." - Wolf, the movie
    "Dad, if God is everywhere then, when he's in a piece of paper, is he squished?" - My daughter, age 7

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