Last week’s dead cat bounce in Chinese stocks – after Beijing did everything but launch a multi-trillion fiscal stimmy bazooka (something it will do, later if not sooner) – is a distant memory, and as Asian markets open for trading in the news week, Chinese markets are cratering with the Shanghai Composite plunging as much as 3.1% to a fresh five-year low..
… while the broader CSI 1,000 Index is also in free-fall and also on pace to re-test the 2018 lows with as many as 990 of the 1000 companies of the index in the red.
Putting the latest collapse in context, China’s market capitalization has sunk by just over $1 trillion in the space of 13 trading days, dragging the total value of the nation’s equities under $8 trillion on Friday, from just above $9 trillion on Jan. 16, as the authorities’ hand-wringing about equity declines simply concentrated investors’ minds on the apparent lack of any solutions for the downturn.
There were several catalysts for the plunge, first and foremost appears to be Trump confirmation that he would impose a tariff on Chinese goods of more than 60% if elected, signaling an increasingly hawkish tone against the top supplier of goods to the US.
Speaking in an interview on Fox News’ Sunday Morning Futures, Trump was asked about a Washington Post report that he was considering a flat 60% tariff on Chinese goods imports; Trump’s response: “no, I would say maybe it’s going to be more than that.” The Bezos Post report on Jan. 27 sparked currency hedges by traders bracing for any market turbulence that policies under a second Trump presidency could set off.
Trump, who currently has a solid lead over Biden and is emerging as the favorite to win the Nov 2024 election, rejected criticism that the moves would start a trade war, saying that he “did great with China with everything” during his presidency.
The US imposed multiple rounds of tariffs on Chinese goods during the Trump administration, “amounting to an $80 billion tax increase on $380 billion worth of imports,” according to the Tax Foundation, a Washington-based research group. China retaliated with tariffs on US goods imports.
While Trump was likely in his conventional hyperbolic mode, Chinese investors did not see it that way, and Chinese stocks plunged to fresh multi year lows, after the latest disappointment from Beijing which again pledged to stabilize markets after shares sank to a five-year low in chaotic trading on Friday, without offering any specifics on just how it plans to end the relentless selloff that’s erased more than $6 trillion of value and dented confidence in the world’s second-largest economy.
The China Securities Regulatory Commission vowed on Sunday to prevent abnormal fluctuations, saying it would guide more medium- and long-term funds into the market and crack down on illegal activities including malicious short selling and insider trading. The brief statement followed a sudden plunge of as much as 3.4% in the benchmark CSI 300 Index on Friday — and an outpouring of frustration on social media from individual investors just days before families across the country gather to celebrate the Lunar New Year.
“The statement sought to stabilize investor sentiment, but didn’t touch on fundamental problems including a lack of confidence and huge economic uncertainty,” said Shen Meng, director at investment bank Chanson & Co. “Those issues are the causes of abnormal market fluctuation.”
While authorities have taken piecemeal steps to support the economy and markets in recent months and have discussed a potential stock stabilization fund, they’ve yet to announce any major moves to stop the selloff. Weak economic data, simmering geopolitical tensions with the US, a worsening property crisis and an opaque crackdown on the financial sector have all weighed on investor sentiment.
As reported last week, China’s CSI 300 tumbled 6.3% in January, a record sixth straight month of losses. Shares then rallied briefly toward the end of the month after Bloomberg reported that authorities were seeking to mobilize about 2 trillion yuan ($278 billion) for a stabilization fund, but the market has since renewed its decline, reaching the lowest level since January 2019 as once again the Beijing trial baloon was just that, and nothing more. .
Meanwhile, the hail mary media bullshit and lies continued, and over the weekend, 21st Century Business Herald daily newspaper reported that authorities should set up a stabilization fund as soon as possible to boost market confidence, with an aim to get its size to 10 trillion yuan or more. Next up it will be 100 trillion in promises, then 1 quadrillion, only by then the SHCOMP will hit 0.
Meanwhile, in a sign of how exasperated some investors have become, thousands flocked to a social media account of the US embassy in Beijing to vent their frustrations over the economy and slumping share prices.
In the comment section of the embassy’s Weibo post on giraffe protection on Friday evening, some 53,000 users added remarks by Saturday evening, winning over 300,000 likes. China’s internet users often struggle to find a venue to air grievances about the economy or government performance, with official accounts of Chinese state agencies or media usually either disabling the comment function or only showing selected feedback.
In the end, the outcome is a clear one: either Beijing will watch powerless as 1 billion furious Chinamen start rioting in the streets as both the real estate and capital markets crater – and only then, after countless are dead, will it inject trillions into the economy, or someone in Beijing will come to their senses and do so before there is bloodshed… Not that that’s a viable solution of course: at best, that’s kicking the can by a few years, but in the grand scheme of things, can kicking is all the world has left. And now all eyes are now on China and every day that Beijing is just more talk and no action brings us closer to the world’s biggest and most violent social revolt seen in history.
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Muh orange man bad!
Again!
Damn him.
FFS.
Really?
Cue up Imagine Dragons’
“Demons”
Astounding how many allow a mental irritation into the kitchen of their head to rattle around pots and pans, disturbing their peaceful slumber & beauty rest.
Net: choosing ugly.
Not a good look. Frightening.
“Hello, darkness!
My old friend.
I’ve come to talk with you.
Again.
Because, a vision. (focus)
softly creeping
left its seeds (growth potential)
while I was sleeping (off guard)
And the vision (what I see)
that was planted (sowed by whom),
in my brain,
still remains.”
Shhh.
Restless.
Alone.
Streets of cobblestone. (bumpy way)
Beneath a halo 😇
of a street lamp (light above)
Turn, from cold & damp (uncomfy)
When, my eyes!
…by the flash of a neon
(fake, man-made) light.
that split the night (dark)
Sooo many insights, Paul.
So many.
Disturbed the peaceful quiet.
Their version is hauntingly effective at tapping the emotions.
RE-MEM-BER WHAT COLOR “SPACE” IS FOLKS???…BLACK!!!
In space, no one can read your comments.
Not sure anyone her reads Kennyboy’s comments even with light. Well you can’t take them as serious anyway. Ranting in caps is easily avoided. I have read exactly two of his hysterical comments and that is already two to many.
We don’t produce anything ourselves, everything comes from China. So this would just make everything even more expensive.
REMEMBER “WHO” GAVE THE CHINESE “COMMUNISM”…DOES THE NAME “ROTTENFELLER’S” RING A BELL (ROCKEFELLER)???
The desire to have everything cheap is how we got here.
“Five year low”. Plummeting 3-5%. Typical financial article with no context. So I looked it up the Shanghai Composite Index. It’s about 2,700. Had been ~ 3,500 throughout 2021. So it’s down about 20%. Big whoop.
Best news I have read today.
Chinese stocks fell 3%.
No way did it have anything to do with the middle east immolating itself using western supplied munitions.
Betcha those stocks woukd rebound if the Sino bomb makers could sell a few big bada booms in the region.
While Trump was likely in his conventional hyperbolic mode
i.e, while Trump had more bullshit running out his mouth. Maybe the Chicom will stop making cell phones. Yea! Then Americans can stop being glued to them AND no more controversy one is tracked constantly via the cell.
A 3.1% drop is “to crater” 😂 🤣
ZH is really turning into a complete clownshow
It might have been the Evergrande collapse. If you enlarge a chart enough, any downturn looks huge.
Here we go! “TARIFFS”…the OTHER UniParty excuse for War. Two week party followed by two decades of hangover.
Good luck with THAT, MAGA!
We need more globalism (a.k.a. “free trade”) while imposing more anti-competitive regulation domestically. How else will we nudge the majority into accepting UBI?
That “chip” in your car. Forget it. You are stuck with a fucking car that won’t start.
Only if you’re not smart enough to circumvent that circuit…a problem I personally do NOT have.
See, it’s shit exactly like THIS that was my motivation for pursuing a couple of degrees in electronics back turn of the century. I saw it coming. ALL of it.
It STILL ain’t rocket surgery to me.
“Trump, who currently has a solid lead over Biden and is emerging as the favorite to win the Nov 2024 election,…”
– The article
FFS; it’s a foregone conclusion: D0m1ny0n’s got this.
Not as long as hackable voting machines exist, mail in ballots exist, lock downs and drop boxes are used and the current Administration, “the protectors of democracy”, can declare martial law! There is always that arrest the opposition guy an throw him in prison option too.
The chinese will do anything to survive, that is why there are so many of them.
Biden (I mean the ones who control him) just made a huge mistake.
The chinese are much smarter than americans in case you have not noticed.
They do not keep their word or act sentimentally or in good faith.
They do what is in their own best interest always, to survive.
They will come up with a brilliant plan in retaliation that no one will see coming.
It will destroy the US economy.
It will end the power of all the Western powers.
It will be brutal and a punishment for the insulting way they have been treated by the West.
Biden is the idiot, run by a bunch of subhuman, maniacal, homicidal, psychopaths, who only think they are smart.
The Chinese will beat them at their own game.
Didn’t the sanctions against Russia do the same, when will the West learn?
All the money they sent to Ukraine went to some Ukrainian bureaucrats so they could buy the yachts the west confiscated from the Russians.
China has many more friends than the US and Israel have.
They have BRICS, and those bricks will take down the US and the entire West, and that is what the synagogue of Satan wants to happen to the West, so called ‘best friend’ of Israel.
Champions of the divide and conquer strategy.
The Chabad Lubavitch mafia and the Rothschilds & fellow central bankers also run China and Russia and they want both sides to divide against each other and mutually destroy one another for them: the East against the West, in the next move of their divide and conquer game plan.
In the end the instigators will hang themselves, or be hanged.