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» Hatrack River Forum » Active Forums » Books, Films, Food and Culture » The Great Fall of China (Page 2)

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Author Topic: The Great Fall of China
Mucus
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The CNY devaluation is on a personal level much more exciting. The gradual increase in the CNY over the last few years means it has been getting prohibitively expensive to travel in China and when combined with the CAD dropping in value due to our stupid central bank, it was a double-punch to the wallet.

Here's hoping it continues.

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JanitorBlade
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China devalues its currency again today. Link.

It's the second greatest RMB currency movement since 1994. The greatest being yesterday's movement.

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Mucus
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Although it should also be noted in less cheerful news that the current headline news is probably:

https://www.facebook.com/PeoplesDaily/videos/985382214846929/?fref=nf
https://www.youtube.com/watch?v=a1aHADL2a24&feature=youtu.be
https://www.youtube.com/watch?v=nQwRMGa4jsU

Death toll hasn't settled down, but is likely at least in the hundreds. No word on whether its terrorism yet.

(Edit to add: Probably not)

[ August 12, 2015, 10:58 PM: Message edited by: Mucus ]

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BlackBlade
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Saw that. What a terrible tragedy. [Frown]
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Wingracer
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I saw that last link earlier and I really wonder how the person taking it survived. I hope they are ok, I mean someone must have uploaded right?
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Mucus
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Possibly live-streaming, but hopefully not and he/she uploaded it themselves.
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BlackBlade
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Mucus: I have the Shang-hai composite index at +5% since the date of my writing, but expecting it to exert downward pressure quite a bit today. It will be interesting to see if Beijing can dig in their heels and keep it level.
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Mucus
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I have it at +6.59% since the 12th. I suspect that Monday will probably prove you "right" (as far as I know, they don't trade on the weekend) though because of the correction everywhere else today.

The prediction would have been "right" already for the S&P 500 (-3%) and Dow Jones (-7%) at least.

quote:
The major averages had their biggest trade volume day of the year and posted their worst week in four years.

The Dow Jones industrial average closed at session lows, off nearly 531 points and in correction territory for the first time since 2011 as all blue chips declined. The last time the index closed more than 500 points lower was on Aug. 10, 2011. In the last five years, the index has only had four instances with closing losses of more than 400 points.
...
The Nasdaq Composite lost 3.5 percent, also closing in correction territory and joining the other major averages in negative territory for the year.

http://www.cnbc.com/2015/08/21/us-markets-global-growth.html
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BlackBlade
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I wish I could determine how much of the US equity markets move because of news out of China.
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GaalDornick
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Can you guys check your crystal balls and tell me if the US markets are going to bounce back anytime soon or will they keep sliding because this is painful
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Elison R. Salazar
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quote:
Originally posted by BlackBlade:
I wish I could determine how much of the US equity markets move because of news out of China.

No but you see, the prices are going low! Buy buy buy!

I literally heard that from someone I know who has almost a million$ in stocks, and someone I know who works as a broker for various individuals with at minimum 1.8 million$ in stocks, they see $$$$$ in China's stock market.

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SenojRetep
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Here's a chart showing the Shanghai composite vs. S&P500 over the last five years.

http://imgur.com/NsATQUN

(S&P in blue, SCOMP in orange, with the dashed line approximately where BB made his comment about the Chinese economy being in for trouble)

Personally, that chart makes me think the Chinese stock market was likely experiencing a significant bubble which was popped by the news of a slow down in exports. I imagine (but who knows!) that the S&P's steady growth over the past six years will continue from a slightly lower base, but I think the Chinese stocks will continue to drop until they're more in line with their historical averages.

Or maybe this is the start of the next global recession! Buy gold now!

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BlackBlade
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It may be a fantastic time to buy in a few days, I'm leaning towards we haven't seen the end of this. But, Tesla (And there's definitely irony in that traditional valuations make no sense for this company) was at 205 this morning. If I had cash burning a hole in my pocket, I would pounce.
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Elison R. Salazar
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https://steveblank.files.wordpress.com/2011/06/bubble-phases.jpg

It's literally this graph.

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GaalDornick
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From Nate Silver's website: http://fivethirtyeight.com/datalab/worried-about-the-stock-market-whatever-you-do-dont-sell/
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Mucus
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quote:
Originally posted by BlackBlade:
I wish I could determine how much of the US equity markets move because of news out of China.

Turns out, a lot.

This is kinda weird, if this keeps up I need to buy a whole lot of not-China. It seems odd that a market slide in a developing world market with plenty of uneducated retail investors and speculative excess is triggering a market slide in a developed world market with a lot more "sophisticated" institutional investors (or hell, not a developed world market, but like *all* of them). But hey, no looking a gift-horse in the mouth.

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SenojRetep
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You're surprised that the world's 2nd biggest economy losing 30% of its market value in a week caused a shock in other world markets? Your surprise surprises me.

Furthermore, investors are also reacting to real economic news out of China, in terms of the yuan revaluation and the slump in Chinese exports. Plus the fact that Chinese central government seems to be thrashing a bit. Even if the bubble had been priced in (which it hadn't; just last month smart people were pointing out that, despite Chinese stocks melting down, the Shanghai composite was still up 9-10% since March) there's enough other bad news to cause a reaction in world markets.

But European and US markets seem to have stabilized for now (the FTSE rose 3.5%, and Dow futures are up 600 points), even though the Chinese market was down another 7.5%.

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GaalDornick
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The futures are trading up, they said.

Today it will recover, they said.

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Mucus
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quote:
Originally posted by SenojRetep:
You're surprised that the world's 2nd biggest economy losing 30% of its market value in a week caused a shock in other world markets?

In context though, the Chinese stock market lost roughly 43% of its value in July with relatively little reaction in the US.

Now though, I see over-reaction.

For example:
quote:
After a day of wild swings, the S&P 500 lost 3.9 percent Monday. That capped a 7 percent two-day retreat, the most since December 2008, sending the index into its first correction since 2011. JPMorgan Chase & Co. today recommended buying at these levels. The Chicago Board Options Exchange Volatility Index slid 12 percent Tuesday to 36.02. The VIX surged as much as 90 percent Monday to touch the highest level since January 2009 before closing at a nearly four-year high.
China Anxiety Resurfaces to Torpedo Relief Rally in U.S. Stocks

Might this be China's version of the US 2009 financial crisis? Maybe? But is this a repeat of America's financial crisis *for America* warranting sell-offs and fear in the US as serious as 2008? It seems doubtful.

But again, totally not complaining.

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JanitorBlade
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China says it's going to ease up on shadow lending. The market bounces up 4%. Link.

What a great idea, I'm sure unregulated black markets are exactly what's needed to fix equity markets.

I think the year's GDP figures are going to be pretty terrible. Not close to 7%.

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Mucus
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"Policy rumour"
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JanitorBlade
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I know it's a rumor. But I think at this point the government is going to grow increasingly desperate propping up an inflated market.
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Elison R. Salazar
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I think sooner rather than later the politburo opinion will probably turn against this and turn to other measures.
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Mucus
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I'm not commenting on whether the rumour is true or false.

What I'm saying is that it is misleading to call it "China says ..." when you're actually linking to a article that actually says that "China" (as represented by the China Securities Regulatory Commission) had no official comment.

ex: America says that Barack Obama is getting a divorce. link

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King of Men
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quote:
Originally posted by GaalDornick:
Can you guys check your crystal balls and tell me if the US markets are going to bounce back anytime soon or will they keep sliding because this is painful

Absolutely! From my vantage point almost a month from your post, I can tell you the US markets did not bounce back. You should totally sell all your stocks and put the money in something safe.
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BlackBlade
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quote:
Originally posted by Mucus:
I'm not commenting on whether the rumour is true or false.

What I'm saying is that it is misleading to call it "China says ..." when you're actually linking to a article that actually says that "China" (as represented by the China Securities Regulatory Commission) had no official comment.

ex: America says that Barack Obama is getting a divorce. link

Fair enough. It's rumor at this point.
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JanitorBlade
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Turns out when China sneezes, everybody else catches a cold.
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JanitorBlade
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Look! An easy to read chart of impending disaster!

Link.


From Barons,

"Metals have rallied big time this year, in part because of Chinese traders’ new-found enthusiasm for commodities futures. Turnover of rebar futures in China reached 606 billion yuan last Thursday, greater than the combined 542 billion yuan transaction value of the Shanghai and Shenzhen stock exchanges."

The stock market has tanked, and so people determined to get the quick returns promised in stocks are flooding into the futures market. One problem though,

Sure the price of steel rebar is back to 2003 levels,

Link.

But that's because China has flooded the market with iron because it overproduced it by about 100 million tons. This production was following a massive real estate development/industrial growth bubble. When the growth stopped, China kept the metal production going so as to avoid job losses and a disastrous economic impact.

From Bloomberg,

"The recent broad-based rally in commodity futures was the result of two factors, including increasing belief that China will continue to rely on infrastructure and property sectors to support the growth as well as ample liquidity,” OCBC said. The risk of a correction can’t be ruled out, it warned."

You mean all that iron and steel is going to be used for infrastructural development and because people have cash to burn? Uh huh. Tell me more about how booming development was in China last year.

Chinese government numbers are garbage, and we've got more pain coming because they won't stop flooding the market with iron and steel.

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zlogdanbr
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My IT/electronics/C++ perspective:

Sometime ago a friend of mine who owns an audio processing tools small industry asked me what would be necessary to create a usb host circuit /firmware to be used with pendrives attached to one of his amps. I made some research and we end up agreeing that he could not reach the price Chinese ready to use ICs could reach.

I used to work for Ericsson and one European manager came from Germany and told my boss that we should be more committed to work in the same ways Chinese devs were, she even said "why don't you sleep at the office".

I usually buy Chinese developed products and products assembled in China so I cannot complain much, but it is difficult not avoid thinking they are making our jobs as programmers much harder because of the low prices they can supply even for product development as we also continually support the slave work in China by buying cheaper products, but the irony is that I cannot see things reversing in a near future.

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