Global economy - Future stock market collapse..

Raees said:
http://www.theguardian.com/business...ck-market-loses-all-gains-since-start-of-year

What do we make of this...how will it impact upon the global economy in the long term?
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I think its a bubble that had to burst - ironically I can see it devaluing the chinese currency and helping exports a bit - (will be interesting to see how america reacts to that as they said they wanted to currency to be more free to float and they felt it was artificially low... now that it is being allowed more freedom it looks like it will go far lower)

For some chinese investors it will be very very bad - particularly people who were sitting on lots of real estate, I also think that some of the agriculture banks whose loan books were seen as risky will be very badly hit and will require government intervention to stop them going boom.

the fact that they have large foreign exchange reserves will help somewhat and I also think that the long term dynamics of a growing china remain... it just was never going to sustain 7% to 10% growth as it became a more established economy.

Over a 5 year period I would expect stocks to still perform well (and if you brough most stocks 5 years ago and sold today you would have still performed well by global standards)

Global economy I honestly don't expect too much damage but rather massive damage to some of the more speculative investors particularly in China... The money leaving the market will ultimately end up in assets, be that shares, bonds, commodities etc somewhere else in the world.
 
The Chinese economy is nowhere near as transparent as the major Western economies - the accounting figures aren't nearly as trustworthy. Therefore you aren't going to get as many conviction investors calling a bottom on this crash. At least with Greece you could see some kind of resolution, this is really ugly. The only bright spot is that it's very unlikely we'll see interest rate rises in America or the UK so good for people with mortgages!
 
Raees said:
http://www.theguardian.com/business...ck-market-loses-all-gains-since-start-of-year

What do we make of this...how will it impact upon the global economy in the long term?
Click to expand...
Already seen markets around the world taking some downward turns since this started. Sounds like the Chinese gov't has been preventing an earlier drop by pumping TRILLIONS into the stock market to keep it propped up. End of days or just another one of the ups and downs of the stock market? I have no idea.
 
China have pumped insane amounts of money into US real estate, causing artificial scarcity and huge rent increases in some urban areas. Will be interesting to see if this contraction will cause any ripple effects akin to the housing bubble in '08
 
adexkola said:
Don't look at your 401K/portfolio this morning.
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no worries unless you're retiring in a yr. - when it settles itself i'd buy back in. i was lucky to pull about a fifth of my 401k into cash a month ago.

this reminds me of the asian meltdown what some 16+ yrs ago. and as evra points out the chinese have been playing a dangerous game. but i think that the fed will move rates up.
 
It's calming down a bit now. S&P 500 off -2.74% now, was 5% early. Nothing like a bit of lemming-like panic-selling. Thought we'd gotten it out of the system on Friday tbh. Reckon you might see a modest bounce tomorrow.
 
Still not seeing this as anything more than an overdue correction at this stage. Anyone expecting the gains we've seen in Asian equities to not come with a kick at some point was living a dream.

There is an underlying unsustainability but I don't expect this fall to be long lived as more intervention will come.

Think I'll start drip feeding into a few select funds again unless something unexpected happens.
 
Communist country in number fudging shocker. When will people learn? Their reporting cannot be trusted because the real numbers would doom their dictatorship of the proletariat to the scrap heap of history. The Soviets did it from the beginning, banging on about how successful collective farms were while peasants starved.
 
I read an article in the financial times about a particularly spectacular mini city the Chinese built, with insanely large villas, malls etc and it went to complete waste. There has been zero interest from foreigners to move there and it has been left derelict with all sorts growing on it now... there are tales of similar huge construction projects all over the country which have wasted vast amounts of expenditure.

I genuinely think this is going to be a huge story going forwards for China especially, whether it continues to have a significant impact globally is another issue but there are serious issues in China which need to be addressed.
 
Dwazza von Moosesteiger said:
Communist country in number fudging shocker. When will people learn? Their reporting cannot be trusted because the real numbers would doom their dictatorship of the proletariat to the scrap heap of history. The Soviets did it from the beginning, banging on about how successful collective farms were while peasants starved.
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Do you want to expand on the communist rant comparing them to Stalin?

What's caused the volatility is not goverment level corruption but incompetence. They stoked the flames and then panicked when it got too hot. There's a lot of factors at play but the gold rush of retail investors using margin financing is probably one that will affect Chinese the most should this not turn quickly
 
Smores said:
Do you want to expand on the communist rant comparing them to Stalin?

What's caused the volatility is not goverment level corruption but incompetence. They stoked the flames and then panicked when it got too hot. There's a lot of factors at play but the gold rush of retail investors using margin financing is probably one that will affect Chinese the most should this not turn quickly
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Economic information released by the Chinese government, and communist governments more generally, is consistently manipulated. They report inflated growth or production figures, which drives the market higher. They don't lie as big as the Soviets or older CCP did on economic figures but they still lie.

http://www.wsj.com/articles/chinas-true-growth-is-a-mysteryeconomists-weigh-the-clues-1430071125
 
Sir Matt said:
Economic information released by the Chinese government, and communist governments more generally, is consistently manipulated. They report inflated growth or production figures, which drives the market higher. They don't lie as big as the Soviets or older CCP did on economic figures but they still lie.

http://www.wsj.com/articles/chinas-true-growth-is-a-mysteryeconomists-weigh-the-clues-1430071125
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Behind a pay wall that unfortunately. I'm well aware of the inaccuracy of the figures and the levels of local corruption which have a large effect on their accuracy but it's a big leap to compare that to the propoganda/manipulation of former communist regimes.

Not even sure the posters comparison stands as the Russian famine was targeted genocide wasn't it? Anyway that's off completely off topic
 
so funny how capitalists economies start blaming China (who are just taking care of their own people, 1.7b feckers) like if it is China's duty to watch out for the rest of the world well-being.

Here in south america, media corporations put all the blame of the world disasters and penures in the communists.

Greek crisis: communists...
china: communists...
petrol going down or up: communists...
copper $ free fall: communists...
earthquakes and tsunamis: communists...
 
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Smores said:
Behind a pay wall that unfortunately. I'm well aware of the inaccuracy of the figures and the levels of local corruption which have a large effect on their accuracy but it's a big leap to compare that to the propoganda/manipulation of former communist regimes.

Not even sure the posters comparison stands as the Russian famine was targeted genocide wasn't it? Anyway that's off completely off topic
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If you google the title, it'll open for free.
 
Smores said:
What's caused the volatility is not goverment level corruption but incompetence. They stoked the flames and then panicked when it got too hot. There's a lot of factors at play but the gold rush of retail investors using margin financing is probably one that will affect Chinese the most should this not turn quickly
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Dunno if you can blame it all on the authorities. They were kind of damned if they do, damned if they don't when it comes to freeing up the currency to market forces and opening the A shares market more widely to overseas investors to meet IMF requirements. They could potentially have clamped down on credit, particularly around margin financing, which they have done in the mortgage market in the past, but investors are herd-like.

I think some in the thread, ie the OP, are confusing global s

George Owen said:
so funny how capitalists economies start blaming China (who are just taking care of their own people, 1.7b feckers) like if it is China's duty to watch out for the rest of the world well-being.

Here in south america, media corporations put all the blame of the world disasters and penures in the communists.

Greek crisis: communists...
china: communists...
petrol going down or up: communists...
copper $ free fall: communists...
earthquakes and tsunamis: communists...


the worse part is that some people believe everything they read in the newspapers.
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The oil one is strange given Opec maintaining supply and the US becoming a net exporter on the back of shale productivity growth are probably the biggest influences on the price.
China obviously has massive sway on copper prices though.
 
china is communist? and since when have they taken care of their people? it's bit off the subject both those questions i know - but communists , not today. and like most gov'ts they could give two shits about the rank and file.

this is a correction that was going to happen. many stocks were over priced. the old world markers for a correction are gone. high oil prices used to spell doom.
 
Raees said:
http://www.theguardian.com/business...ck-market-loses-all-gains-since-start-of-year

What do we make of this...how will it impact upon the global economy in the long term?
Click to expand...

Its the beginning of a global recession imo. Its not so much about China as it is about the unwinding of the global carry trade whereby hedge funds have been using low interest/ QE conditions to borrow the low interest currency of one country, then invest it in high yield bonds of another, usually emerging market nation, which creates positive carry. This only works when the dollar is at a reasonable level. If the dollar suddenly goes into a dollar bull market as it has, then the debt associated with the emerging markets where most of the investments are being made puts too much downward pressure on those markets, which generally affects all asset classes.....stocks, bonds, currencies etc.

This has happened at a bizarre time when oil is plummeting because of another perfect storm of circumstances involving Saudi production to rout US shale, Iranian oil coming on line as a result of ending sanctions, yet more Iraqi oil coming online etc.

In a nutshell, we are likely heading towards a significant global recession.
 
Raoul said:
Its the beginning of a global recession imo. Its not so much about China as it is about the unwinding of the global carry trade whereby hedge funds have been using low interest/ QE conditions to borrow the low interest currency of one country, then invest it in high yield bonds of another, usually emerging market nation, which creates positive carry. This only works when the dollar is at a reasonable level. If the dollar suddenly goes into a dollar bull market as it has, then the debt associated with the emerging markets where most of the investments are being made puts too much downward pressure on those markets, which generally affects all asset classes.....stocks, bonds, currencies etc.

This has happened at a bizarre time when oil is plummeting because of another perfect storm of circumstances involving Saudi production to rout US shale, Iranian oil coming on line as a result of ending sanctions, yet more Iraqi oil coming online etc.

In a nutshell, we are likely heading towards a significant global recession.
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I didn't know we got out of the last one
 
adexkola said:
I didn't know we got out of the last one
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We did by way of 5 years of government market manipulation (QE), which oddly enough has created the conditions for another one.
 
Raoul said:
In a nutshell, we are likely heading towards a significant global recession.
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That is what I fear too. Shits going to hit the fan harder than it has once reality sets in regarding the true state of China's economy.
 
George Owen said:
so funny how capitalists economies start blaming China (who are just taking care of their own people, 1.7b feckers) like if it is China's duty to watch out for the rest of the world well-being.

Here in south america, media corporations put all the blame of the world disasters and penures in the communists.

Greek crisis: communists...
china: communists...
petrol going down or up: communists...
copper $ free fall: communists...
earthquakes and tsunamis: communists...


the worse part is that some people believe everything they read in the newspapers.
Click to expand...

Thankfully, I base my opinion of Communist regimes on the careful study of their history.
 
The Shanghai open is going to be very interesting, there was something of a rally in the Western markets after the terrifying gap down we saw. God I hope there are some value investors out there that have a bit of confidence in the Chinese economy.
 
evra said:
The Shanghai open is going to be very interesting, there was something of a rally in the Western markets after the terrifying gap down we saw. God I hope there are some value investors out there that have a bit of confidence in the Chinese economy.
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I think there is... But I suspect that we will see some more falls until people see the value.
Some of the ipo's have been so oversubscribed and you have seen some really high valuations that there will need to be more of a correction imo to get significant foreign investment
 
China seems to have done a massive Spain where property is concerned at least.
 
evra said:
The Shanghai open is going to be very interesting, there was something of a rally in the Western markets after the terrifying gap down we saw. God I hope there are some value investors out there that have a bit of confidence in the Chinese economy.
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just saw that the gov't started to censor the "chinese google" badiu if you tried to search about the crisis so i'd agree with you. it will be very interesting.
 
Most good traders should've anticipated this and had shorts in place to cash in.
 
Raoul said:
Its the beginning of a global recession imo. Its not so much about China as it is about the unwinding of the global carry trade whereby hedge funds have been using low interest/ QE conditions to borrow the low interest currency of one country, then invest it in high yield bonds of another, usually emerging market nation, which creates positive carry. This only works when the dollar is at a reasonable level. If the dollar suddenly goes into a dollar bull market as it has, then the debt associated with the emerging markets where most of the investments are being made puts too much downward pressure on those markets, which generally affects all asset classes.....stocks, bonds, currencies etc.

In a nutshell, we are likely heading towards a significant global recession.
Click to expand...

We definitely are heading that way. The QE programs of various developed economies have distorted the value of their currencies and have pumped too much into emerging market economies. A lot of effort has been made post the Lehman crash in '08 to create growth out of nowhere. Now when the Fed will raise rates, there will asset relocation and will lead to a major fight for cash in emerging economies.

The Eurozone has problems of it own. The Euro is overvalued and Europe is dealing with problems of disinflation.

Our Central bank governor, one of the few who predicted the last crash as far back as in 2005, thinks that we are creating a 1929 like situation of competitive devaluation. In his view, various central banks need to come to the table to discuss what is allowed and what is not, otherwise we may revist the great depression soon.
 
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