Posted on 07/04/2015 5:40:57 PM PDT by BenLurkin
China froze share offers and set up a market-stabilization fund on Saturday, the Wall Street Journal said, as Beijing intensified efforts to pull stock markets out of a nose-dive that is threatening the world's second-largest economy.
Beijing's reported suspension of initial public offers (IPOs) came a few hours after extraordinary announcements by major brokers and fund managers, which collectively pledged to invest at least $19 billion of their own money into stocks.
China's government, regulators and financial institutions are now waging a concerted campaign to prop up the nation's two main share markets, amid fears that a meltdown would rock the financial system and inflict heavy losses across an economy where annual growth is already running at a 24-year low.
Almost $3 trillion in market value - more than the entire economic output of Brazil - has been wiped out since markets went into reverse last month, posing a bigger headache for many global investors than even the Greek debt crisis.
The main Shanghai Composite Index .SSEC has lost around 30 percent of its value in three weeks, a dramatic end to an equally breathtaking rally that saw it more than double in just seven months, fueled by official interest-rate cuts.
The sell-off is especially worrying because the bull market had been built on a mountain of speculative loans. Some analysts suggest total margin lending, both formal and informal, could add up to around 4 trillion yuan ($645 billion).
The stock markets are dominated by retail investors.
China's top brokerages said Saturday they would collectively buy at least 120 billion yuan ($19.3 billion)
of shares - a pledge that, according to the Wall Street Journal, would form part of Beijing's new stabilization fund.
Separately on Saturday, 25 Chinese mutual funds announced they too would put their own capital into stocks.
(Excerpt) Read more at reuters.com ...
Back when westerns were popular, whole towns were built as facades only. When I see ‘world's 2nd largest’ economy I think of it as the 2nd largest façade.
Just a few months ago, state media had been encouraging the market's giddy rise, saying China's bull market had just begun and denying that it was in a bubble. Investors big and small took that as a government signal to buy.
It's like central planning just always fails.
This all sounds like Mao’s five year plan and how much rice can actually be grown per acre.
Potemkin village.
The Chinese need a ‘ too big to fail’ program!
They can have ours!
And they can have a few thousand bureaucrats to get it going in their time of need.
The bureaucrats are very low maintenance, needing only a fish head and one bowl of rice each day.
It is not going to work.
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