Chinese Stocks Suffer Second Biggest Crash In History, 1,500 Companies Halted Limit Down

Zero Hedge ^ | July 27, 2015

[Zakeet]

This was not supposed to happen.

After pledging, investing and otherwise guaranteeing the Chinese stock market to the tune of 10% of GDP, and intervening on at least 40 different occasions in the past month ever since China's stock bubble burst in late June, with the subsequent crash nearly taking the Shanghai Composite red for the year, overnight China officially lost control for the second time, when after a weak start to the Monday trading session, things turned very ugly in the last hour, when the Shanghai Composite plunged by 8.48%, closing nearly at the lows, and tumbling some 345 points for its biggest one-day drop since February 2007 and its second biggest crash in history!

[Snip]

The last thing the communist party and the PBOC wanted was another massive sell off after having not only fired the "bazooka" but come up with a different bazooka to halt "malicious sellers" virtually every day, including threats of arrest.

Nobody was spared in the selloff and of the 1,114 stocks in the Shanghai Composite, 13 closed higher on Monday.

Here, courtesy of the WSJ, are some of the more amazing numbers of today's selloff:

• The Shanghai Composite Index ended down 8.5% at 3725.56, its second-straight day of losses and worst daily percentage fall since February 27, 2007. The smaller Shenzhen Composite fell 7% to 2160.09 and the ChiNext, composed of small-cap stocks and sometimes known as China’s Nasdaq, closed 7.4% lower at 2683.45.
• More than two-thirds of the stocks in the Shanghai Composite, or about 765 companies, hit their down limit on Monday. Those limits prevented hundreds of stocks from logging sharper declines, though they can also make it harder for investors to exit positions.
• Since the Shanghai Composite peaked in June, it has lost 28% of its value. Massive intervention by authorities in Beijing engineered a rebound for the country’s stock markets earlier this month, but Monday’s selloff eroded much of that recovery.
• Although hundreds of stocks have resumed trading since the market bottomed earlier this month, 126 stocks on the Shanghai Composite are still halted.

[Snip]

The only question we have is when will people in other "developed" markets wake up to their own just as manipulated markets, and decide they too have had enough with the rigged casino.

Actually, there is another question: the last time Chinese stocks had a near-record crash, the PBOC somehow "discovered" 600 tons of gold hiding under the couch to prop up confidence. We wonder how much it will "discover" this time.

[Zakeet]

... and all the money printing ... and all the market rigging ... and all the regulating in the world can't stop this panic ... but you don't need to worry cause it will never, ever spread to the U.S. ... cause we've got brilliant and honest leaders in the government and on Wall Street!

[2001convSVT]

Like a stone dropped into a lake there will be ripples, everywhere.

[MeneMeneTekelUpharsin]

Fasten your seatbelts.

[dfwgator]

[Carry_Okie]

Since the Shanghai Composite peaked in June, it has lost 28% of its value. Massive intervention by authorities in Beijing engineered a rebound for the country’s stock markets earlier this month, but Monday’s selloff eroded much of that recovery.

28% is a correction, not a crash. From 1929-33 the Dow lost 85% of its value. That's a crash. From 1966-82, it lost 81% of its value. We don't call that a crash, but it sure as hell was nasty. From 2007-2009, it lost 46%.

That money being put into Chinese cash has to go someplace. We'll see.

[demshateGod]

Fasten your seat belts = buy ammo.

[AppyPappy]

Thank you Master Po

[JudyinCanada]

Well, I don’t know much about this stuff, but I had a feeling something was coming and moved everything out of the market into something safe for awhile....mostly because of The Harbinger.

[Kartographer]

Give it sometime. You just compared a few weeks to a several years in your examples, give China some time to race to the bottom.

[Carry_Okie]

You just compared a few weeks to a several years in your examples,

Necessarily. The point stands that we shouldn't call it a "crash" yet.

give China some time to race to the bottom.

Or stabilize. We don't know. Sure, they're crooks. Wall Street has them too. What else is new? I just want to know where the cash is going.

[grania]

I just want to know where the cash is going?

What cash? Most of the money in the stock market in a crash isn't taken out, it evaporates. And then there's what's becoming a global distrust of bankers and government officials to do the right thing for anyone but themselves.

One might submit that a lot of cash and valuables are going into mattresses or somewhere similar.

[Raycpa]

Time to buy.

[Kartographer]

Kind of like saying that a bank robbery depends on the amount of cash the robber has stuck in his bag, if its just a few seconds in and he’s only grabbed a few hundred robbery not so much, now when he gets to serval hundred, well now we are talking robbery.

[bert]

It is my understanding that the decline is a reversion to “normal”.

The stocks run up by ricksha pullers and shoe shine boy purchasing exuberance coupled with granma gambling in the market rather than her normal mah jong game produced the run up. It could not be sustained and panic selling set in

now is the time to watch and buy

[dfwgator]

Maoists are chomping at the bit to regain power in China, and start a new Cultural Revolution.

[Carry_Okie]

Most of the money in the stock market in a crash isn't taken out, it evaporates.

Duh. Still, when investors sell stocks, they end up with cash. It has to go somewhere.

One might submit that a lot of cash and valuables are going into mattresses or somewhere similar.

In what form? Silver is cheap. Where is it going? You clearly don't know.

[Obadiah]

Ditto

[grania]

When investors sell stock, only those who get out first will get what the stock is worth at its height. Wnen the value collapses, those who weren't ahead of the game get a lot less, or nothing.

Think of the Enron collapse. When it collapsed, nothing was left for the little guy or the one with a pension invested in that stock.

I'm hypothesizing. It's clear that people are putting less money in banks. So either they don't have it or it's somewhere we can't see.

FWIW, the US mint had to stop selling silver eagles a month or so ago. I don't know if they started up again. Why? They couldn't keep up with demand.

[Carry_Okie]

When investors sell stock, only those who get out first will get what the stock is worth at its height. Wnen the value collapses, those who weren't ahead of the game get a lot less, or nothing.

Um, if I sell a stock, whether I lost money or not, I still have the cash value of the sale even if it is 30% less than what I paid. That's cash that has to go somewhere.

Got it now?

[unixfox]

Time to buy.

But are you?