China: Shanghai Shares Tumble 6.75% (stimulus money running out)

NYT ^ | 09/01/09 | MARK McDONALD

[TigerLikesRooster]

Shanghai Shares Tumble 6.75%

By MARK McDONALD

HONG KONG — The Shanghai composite index plunged 6.75 percent on Monday to close out August with a drop of 21.8 percent, the worst performance for the month among the world’s major exchanges.

Monday’s fall, coupled with a drop of nearly 3 percent last Friday, has made for “a huge, huge decline,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets in Hong Kong.

The overall index was down 192.94 points on Monday to finish at 2,667.75, the lowest closing figure in more than three months. Shares on the Shanghai exchange had rocketed more than 90 percent this year until they began to fall back about three weeks ago.

“It has brought the index into bear market territory,” Mr. Kowalczyk said. “There’s mounting concern over liquidity in the market. This is a big development.”

Chinese banks, acting at the government’s behest, unleashed a flood of lending this spring and early summer as part of its efforts to stimulate the economy. Some of those funds were channeled into equity markets, at least temporarily, leading some analysts to warn of an asset bubble.

[TigerLikesRooster]

Ping!

[PugetSoundSoldier]

Meanwhile, the hundreds of billions of stimulus the Obama Administration has paid out languishes in bank reserves and planning budgets, and the DJIA has stayed essentially flat all year long...

I’d take a 90% rise with a 10% fall-back over the current flat-line the Obama Administration seems intent on maintaining!

[GonzoGOP]

Chinese banks, acting at the government’s behest, unleashed a flood of lending this spring and early summer as part of its efforts to stimulate the economy. Some of those funds were channeled into equity markets, at least temporarily, leading some analysts to warn of an asset bubble.

Wow where else have i seen something like that? /sarc

[Ghost of Philip Marlowe]

Interesting. I’ve been reading that the ChiCom economy is mainly smoke-and-mirrors — lots of construction and 50-story buildings that are completely empty.

I don’t know this to be true other than from what I’ve read.

But if it is true, the global recession/depression is going to much longer and much more intense than what the “experts” are expecting (no surprise there).

But if this is true, then it does set the stage for the new ruling party in Japan (who claims to be China-friendly) to team up with the ChiComs to create an Asian version of the EU.

Could Orwell have been so correct in his prophetic writings that global nations are essentially along the three regions of Oceania, Eurasia, and Eastasia?

[NY.SS-Bar9]

An acquaintance, well connected to the Chinese community, says it is much worse. There is a large population of young males that migrate to cities like Shanghai for work. They are now unemployed squatters in those “empty” 50-story luxury buildings.

The problem comes when the government “finds” something for them to do - like invade a neighbor.

[nicola_tesla]

the DJIA has stayed essentially flat all year long...,/i> Huh ? Where have you been since March ?

[sickoflibs]

US market next??

[Ghost of Philip Marlowe]

The young, male population in China is definitely a ticking time-bomb.

Gertz in “The China Threat” points out that when growing nations reach a certain percentage of males to females (more males than females) the governments don’t have much choice but to send those “extra” males off to war. If they don’t, they remain single and often become problems internally.

[GOPJ]

Thanks for the ping. These cards are in our future too...

[PugetSoundSoldier]

January 1, 2009: DJIA at 9,000. Now it’s at 9,500. Not a big change...

[M. Espinola]

Time to buy protective put options on major, international, stock indexes -- for the next phase in the 'crash-in-stages', possible prior to the end of Autumn.

[nicola_tesla]

Really ? 50% in 5 months not much ?

Maybe you need to try a casino instead. I’m sure that’d be much more exciting and produce a bigger swing in your account balance in a smaller amount of time.

[PugetSoundSoldier]

OK, did you not read the excerpt of the article at the top, or are you just being argumentative? From the start of the year the SSI is up 90%. In fact, you’ll find that the Hang Seng and the DAX and the FTSE are all up 60% or more since the start of the year.

The DJIA is up 5% since the start of the year.

Now, if you want to limit only to the last 5 months, great. But that’s NOT what the article says, and not what I was responding to. But apparently you want to argue, so go ahead... I’m out of this thread, the point has been made. The SSI is up 90% since the start of the year, the DJIA is up 5%.