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PostPosted: Fri Jul 10, 2015 3:58 pm    Post subject: China Reply with quote


“Briefly put, there are few alternatives for saving in China.”

The trillions of dollars of destroyed wealth, in the stock market, likely represents China’s safety net going up in smoke.

Chinese are big savers. The “middle class” may be 300 or 400 million urban Chinese earning $6,000 to $25,000 a year, according to a link below.

Many likely send money to their dirt poor families – perhaps 1 billion people living in villages – which they depend on.

Perhaps, even the “lower middle class” was captured in the massive speculative bubble before it burst.

Now, a lot of savings is actually gone.


“…uncertainty regarding the government’s intentions (and will-power).”

From a Reuters article today:

“Beijing’s increasingly frantic attempts…finally rewarded as Chinese shares bounced around 6 percent on Thursday, but the costs of heavy-handed state intervention are likely to weigh on the market for a long time.

Beijing…”decisive” role…responded with a battery of support measures, including an interest rate cut, suspension of initial public offerings and enlisting brokerages to buy stocks, backed by cash from the central bank.

The China Securities Regulatory Commission said…on Wednesday… that holders of more than 5 percent of a company’s stock would be barred from selling for the next six months.

In the latest salvo against short sellers…police were investigating suspected “malicious” selling of shares…authorities would “punch back” with a “big fist” against illegal activities.

China’s malfunctioning stock markets remained semi-frozen, with the shares of around 1,500 listed companies worth around $2.8 trillion suspended, and many of those still trading propped up by state-directed buying.

Such intervention locks up ownership of shares, reduces liquidity and creates an overhang that could plague the market for years.”

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