Join Early Retirement Today
Closed Thread
 
Thread Tools Display Modes
What the heck Happened to the Shanghai Market today.
Old 08-18-2015, 02:35 AM   #1
Thinks s/he gets paid by the post
Lakewood90712's Avatar
 
Join Date: Jul 2005
Posts: 2,223
What the heck Happened to the Shanghai Market today.

Are they going down the ski slope again ?
__________________
" A person is smart, but People are dumb, dangerous, panicky animals, and you know it " Agent "K", Men in Black
Lakewood90712 is offline  
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-18-2015, 06:02 AM   #2
Thinks s/he gets paid by the post
 
Join Date: May 2014
Posts: 1,390
My guess is that with the Chinese market being up 100% recently and then correcting back down some 30% in very fast action , there is still more downside to come. My feeling is the Chinese economy is not growing fast enough to sustain the gains the Chinese market saw . That and the fact that there needs to be better protections in place so the markets don't have these wild swings from day to day. I think the market will settle down and once they get a handle on the economy things will improve. As everyone knows : High reward brings high risk. Just my thoughts from someone watching from afar.
__________________
Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. Charlie Munger

The first rule of compounding: Never interupt it unnecessarily. Charlie Munger
UnrealizedPotential is offline  
Old 08-18-2015, 06:08 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 14,328
No one ever seems to ask why it is rising so fast, but when it falls quickly, all the questions arise.
travelover is offline  
Old 08-18-2015, 06:18 AM   #4
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,591
I wonder why the Shanghai stock market rose so quickly...
MichaelB is online now  
Old 08-18-2015, 06:28 AM   #5
Thinks s/he gets paid by the post
 
Join Date: May 2014
Posts: 1,390
Quote:
Originally Posted by MichaelB View Post
I wonder why the Shanghai stock market rose so quickly...
I would be willing to guess that investors thought the economy was going to grow 8% -10% yearly. So investors went for it driving up prices. When it became obvious the economy was not growing that fast , the selling pressure started.
__________________
Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. Charlie Munger

The first rule of compounding: Never interupt it unnecessarily. Charlie Munger
UnrealizedPotential is offline  
Old 08-18-2015, 06:40 AM   #6
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
China was the winner here. They created a high GDP, and cashed in on it. The GDP is now going back to whatever normal is, in a command economy. The GDP can easily be raised again, all they have to do is start a bunch of government projects.

The financial numbers of most of the companies coming out of China, are made up by the Chinese government, who owns the companies.

On the other hand, maybe the numbers are true, coming from the same country that makes poisonous items such as toothpaste, dog food, baby formula, Sheetrock, etc...
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline  
Old 08-18-2015, 06:51 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 35,712
Quote:
Originally Posted by travelover View Post
No one ever seems to ask why it is rising so fast, but when it falls quickly, all the questions arise.
But, but, but people are not supposed to lose money investing in stocks. Or real estate, or whatever. It's just not fair.
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)

"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
NW-Bound is offline  
Old 08-18-2015, 06:54 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 35,712
Quote:
Originally Posted by Lakewood90712 View Post
Are they going down the ski slope again ?
Whoo Wee!

__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)

"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
NW-Bound is offline  
Old 08-18-2015, 07:22 AM   #9
Gone but not forgotten
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru
Posts: 6,335
Separating the market from the overall Chinese economy is problematical.

The structure is very different from the US-European markets in both the types of investors (groups vs individuals) and the fact of central government control..

The current problems seem to stem from the liquidity squeeze, as yuan is leaving the country at a alarming rate. Preceding the current market drop. the Central Bank infused the economy with the largest amount of cash in nearly 2 years... this in an attempt to stop the outflow.

A bigger problem may be the use of leveraged trading, which amplifies the the instability.

The government also has a hand in market control, through the China Securities Finance Corporation, which has ownership in some large corporations. Changes in these stocks have an inordinate effect on the markets, as was the case yesterday.

Of course, underlying all of this, is the stop-go management of the country as a whole. Imagine, building housing where there was none before and then building the framework for manufacturing where it doesn't exist... with a long range plan of bringing the population in from the rural areas... changing the agrarian culture to a skilled labor force.... and...
Doing all of this in a time frame of a decade or two.

For all of the criticisms levied against Communist China, lack of vision is not one of them. It remains to be seen whether or not they can pull off this ambitious plan. Success rests on financial stability... the most obvious of all measures, and the main predictor of the future.

Just an opinion...
imoldernu is offline  
Old 08-18-2015, 08:22 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
samclem's Avatar
 
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
Quote:
Originally Posted by UnrealizedPotential View Post
That and the fact that there needs to be better protections in place so the markets don't have these wild swings from day to day.
The wild swings in the Chinese market sure aren't the result of lack of government intervention. Quite the opposite.
samclem is offline  
Old 08-18-2015, 08:43 AM   #11
Thinks s/he gets paid by the post
frayne's Avatar
 
Join Date: Oct 2002
Location: Chattanooga
Posts: 3,878
It got shanghaid !
__________________
Earning money is an action, saving money is a behavior, growing money takes a well diversified portfolio and the discipline to ignore market swings.
frayne is offline  
Old 08-18-2015, 12:09 PM   #12
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 2,842
If you read the story about when Apple was designing the IPhone and how it came to be that the phones were made there you will see that if a government is willing to give plants free expansions and the right to require workers to live at the plant, it is pretty hard to fight that in USA or Europe and you will grow quite rapidly as all the business comes your way.

Quote:
Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”
and how that plant came to be:
Quote:
When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.
Apple, Chinese GDP and the American electronics industry have all benefitted greatly from this mutual servant arrangement. It allows Apple and other similar companies to whimsically make changes at the last minute for almost no cost killing competition in the phone market while China has a vast resource of people to make these phones whenever needed at very low cost.

In the long term the question becomes if the debt used to build up that infrastructure is going to be manageable, especially if you get to the point where you have built up very cheap factories beyond their point of need. At 280% of GDP as of June 2015 for total debt up from 157% of GDP when the Apple explosion was ramping up - China needs very fast growth to make that debt manageable. If growth stalls the debt implodes and you have very serious deflation, this is why China's economic managers are in panic mode lowering value of Yuan and buying stocks while implementing rules stopping stock sales.

China’s Debt Bomb - WSJ
http://www.nytimes.com/2012/01/22/bu...lass.html?_r=0
__________________
But then what do I really know?

https://www.early-retirement.org/forums/f44/why-i-believe-we-are-about-to-embark-on-a-historic-bull-market-run-101268.html
Running_Man is offline  
Old 08-18-2015, 08:03 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 35,712
It's not just factories, but China has built several ghost cities that will now take some years to fill. Who financed all that? Private money or public coffer?

On the Web, there are photos of ghost English themed towns, Scandinavian, Austrian, German, Italian, a copy of Manhattan financial district, Paris, etc... Amazing. The following Dateline report in 2011 talked of 10 cities being built every year.

__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)

"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
NW-Bound is offline  
Old 08-18-2015, 08:36 PM   #14
Full time employment: Posting here.
 
Join Date: May 2014
Posts: 973
Things are different in China. There are no (long term) investors in China, all are traders. So no matter how high the stock market does fly, it will come down. Because everyone just wants to make some quick money, and has no desire to invest for the long term. Having said that, however, if you know the rules there, it could be a great place to make quick money.
flyingaway is offline  
Old 08-19-2015, 12:51 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 35,712
I found a documentary that answers my questions above, about how the booming ghost towns and real estate bubble developed in China.

The order from the Politburo is to grow the economy, and the easiest way for provincial governments to deliver on that marching order is to build. Land was taken from farmers, and sold to developers. The poor banking system and lack of investment avenues steered people's life savings into the hand of the developers, who promised 30%/yr interest on the loans. The developers could afford to pay that interest, because the apartments they built were appreciating hugely. Many of the apartments were purchased for flipping, not for living in. A small and quite spartan apartment in Beijing could go for as high as 77x the average annual income, the equivalent of $2.5M in the US with its median wage of $32K in 2005.

So, the personal savings of the Chinese population was piled up in these empty high rises that were built and sold as investments, while much of the people still live in squalor. All this building explained the demand for steel, copper, cement until the commodity prices crashed recently.

This house of cards is tumbling down, and we will not see the end of it for a while.

__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)

"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
NW-Bound is offline  
Old 08-19-2015, 09:11 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,013
Quote:
Originally Posted by NW-Bound View Post
I found a documentary that answers my questions above, about how the booming ghost towns and real estate bubble developed in China.

The order from the Politburo is to grow the economy, and the easiest way for provincial governments to deliver on that marching order is to build. Land was taken from farmers, and sold to developers. The poor banking system and lack of investment avenues steered people's life savings into the hand of the developers, who promised 30%/yr interest on the loans. The developers could afford to pay that interest, because the apartments they built were appreciating hugely. Many of the apartments were purchased for flipping, not for living in. A small and quite spartan apartment in Beijing could go for as high as 77x the average annual income, the equivalent of $2.5M in the US with its median wage of $32K in 2005.

So, the personal savings of the Chinese population was piled up in these empty high rises that were built and sold as investments, while much of the people still live in squalor. All this building explained the demand for steel, copper, cement until the commodity prices crashed recently.

This house of cards is tumbling down, and we will not see the end of it for a while.
Fascinating. Thanks!
__________________
Retired since summer 1999.
audreyh1 is online now  
Old 08-19-2015, 09:46 AM   #17
Full time employment: Posting here.
 
Join Date: May 2015
Location: Atlanta suburbs
Posts: 633
Don't worry, I checked with Chinese Yoda and the future looks good.

"The future, growth of 7% in Q3 and Q4, seen have I" - Chyoda
DEC-1982 is offline  
Old 08-19-2015, 05:15 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 35,712
Some say that eventually the empty office and shopping complexes and apartments in China will get occupied. But will they be standing much longer? The following video by a traveler shows the quality of construction quite alarming.

__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)

"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
NW-Bound is offline  
Old 08-19-2015, 05:58 PM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 14,328
Quote:
Originally Posted by NW-Bound View Post
.......The following video by a traveler shows the quality of construction quite alarming.
Cool ear rings.
travelover is offline  
Old 08-19-2015, 07:41 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 35,712
Yes, his ear lobes get lots of circulating air for cooling.

I have been looking at a few more videos on China ghost cities. Here's another one where an Australian reporter walks through a deserted modern town, but when he looks behind the main street, he discovers that some buildings are just a facade (at 4:50), like cutouts used in movie studios. How many of these Chinese cities are Potemkin Villages?

This is great! I find it as interesting as the videos on Detroit ruins that I spent quite a bit of time on last year.

__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)

"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
NW-Bound is offline  
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
shanghai container load - shopping tourisim nphx Other topics 11 12-01-2009 06:49 AM
Wonderful Thing Happened Today haha Life after FIRE 37 03-28-2009 05:54 PM
Hooters still hot in Shanghai Eagle43 Other topics 4 11-26-2005 08:22 PM
Where the Heck Are The Bears? haha FIRE and Money 14 09-22-2005 12:57 PM
Dancing in Shanghai... Lancelot Other topics 4 10-24-2004 07:19 PM

» Quick Links

 
All times are GMT -6. The time now is 09:04 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.