Wednesday July 8
Li had said yesterday before the market opened that China had the confidence and ability to deal with challenges faced by its economy. But he had nothing to say about the three-week plunge that has knocked about 30% off Chinese shares since mid-June.
Bloomberg have produced a video where Alix Steel explains two charts that demonstrate why the world should be scared about China.
With so many shares suspended or halted because down by daily limit, just 11% of stocks in China (300 of 2776) are actually tradable now.
— Simon Rabinovitch (@S_Rabinovitch) July 8, 2015
Tuesday July 7
Bloomberg questions whether the latest regulatory tweaks by the Chinese government – allowing homes to be used as acceptable collateral for borrowing to buy stocks – is sowing the seeds of a third financial time bomb to match its debt and stock bubbles.
news.com.au reports on the $3.2 trillion that has been wiped from the value of Chinese shares in the past three weeks, and provides context into how it may affect Australia. A market crash in China will impact earnings on key exports iron ore and coal, further slashing government revenue, while also putting downward pressure on the Australian dollar.
CNN warns that instead of such an intense focus on Greece, investors should now be more concerned with China, referencing the plunge in the Shanghai Composite and Shenzhen Composite.
Meanwhile, Reuters reports that while China’s top two leaders President Xi Jinping and Premier Li have both been silent about the recent dive in Chinese stocks, Chinese Premier Li Keqiang has said that China has the confidence and ability to deal with the risks and challenges faced by its economy.
— Business Insider (@businessinsider) July 7, 2015
Millions are waiting to see whether new government measures will prevent a Chinese stock market crash. http://t.co/euVrL7v5dq
— Foreign Policy (@ForeignPolicy) July 6, 2015
— Business Insider (@businessinsider) July 6, 2015
Monday July 6
CNBC reports that this week is make-or-break for China’s stock markets after officials have rolled out an unprecedented series of steps over the weekend to prevent a full-blown stock market.
Business Insider reports on the measures announced on Saturday to support the Chinese market. China’s top brokerages pledged that they would collectively buy at least 120 billion yuan ($US19.3 billion) of shares to help steady the market, and would not sell holdings as long as the Shanghai Composite Index was below 4,500. The CSRC also announced that they had temporarily halted IPO listings, draining liquidity from the markets as investors sold down existing stock holdings in order to fund new share purchases. According to this tweet from noted China market watcher George Chen it may be a total ban on share sales from China’s massive social security fund.
The Financial Times have reviewed data that demonstrates China’s economy would have grown at less than 6 per cent in the first quarter of the year were it not for the collapse in global commodity prices. They reiterate that the latest evidence of a Chinese economic slowdown, coming amid sharp falls in the country’s equity markets, will add to growing doubts over whether Beijing can achieve its 7 per cent growth target for the year.
As the world focuses on today’s Greek referendum, Foreign Policy warns that a financial storm of much greater proportions is brewing in China. The Chinese stock market has lost $2.7 trillion, or a quarter of its value, since June 12 – equivalent to six times Greece’s foreign debt. Meanwhile official censors have been combing through stock-related posts on Weibo, deleting those that crossed the line.
Also highly topical today, Panos Mourdoukoutas at Forbes writes a comparative piece on the scary similarity between the Greek and Chinese economy.
Wasn't a quiet weekend in Beijing for securities officials. Raft of policies to shore up the stock market point to alarm & incompetence.
— The EIU China (@TheEIU_China) July 6, 2015
— WSJ China Real Time (@ChinaRealTime) July 6, 2015
— Reuters Business (@ReutersBiz) July 6, 2015