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In chronological order.
(1) Ruchir Sharma, China’s Stock Plunge Is Scarier Than Greece; There are four basic signs of a bubble, and the Chinese stock market is on the extreme end of all four. Wall Street Journal, July 8, 2015 (op-ed).
http://www.wsj.com/articles/chin ... n-greece-1436309780
Quote:
"The first major sign that all wasn’t going according to script came on June 15. Chinese had awakened expecting big gains because it was President Xi Jinping’s birthday, but the Shanghai market fell more than 2%. * * * In most countries, no one thinks there is a link between a leader’s birthday and the market. That such a theory prevails in China reflects the widespread belief that Beijing’s authoritarian government can produce any economic outcome it wants.
"There are four basic signs of a bubble: prices disconnected from underlying economic fundamentals, high levels of debt for stock purchases, overtrading by retail investors, and exorbitant valuations. The Chinese stock market is at the extreme end on all four metrics, which is rare.
"Two thirds of new [stock] investors [in China] lack a high school diploma.
"The signs of overtrading are hard to exaggerate. The total value of China’s stock market is still less than half that of the US market, but the trading volume on many recent days has exceeded that of the rest of the world’s markets combined. Turnover is 10 times the level seen at the peak of the previous China bubble in 2007, and virtually the entire market inventory is changing hands every month. Such frantic activity has pushed up valuations for companies large and small, with the broad CSI 500 index trading at 50 times last year’s earnings and the Nasdaq-style board Chinext valued at 110 times last year’s earnings.
"Since the June 12 peak, nearly $3 trillion in value has been erased, as Beijing takes increasingly desperate measures to arrest the price collapse.
"The continuing crisis is viewed, locally and globally, as a test of China’s control over the economy. The 'Beijing put'—a perception that Chinese economy and markets are backstopped by the government—is under threat.
Note:
(a) CSI Cross-Straits 500 Index 中证500指数
https://en.wikipedia.org/wiki/CSI_Cross-Straits_500_Index
("operated by China Securities Index [Co, Ltd 中证指数有限公司] which includes 500 companies listed in the People's Republic of China, Hong Kong, and Taiwan. The new index covers 75 percent of the combined market capitalization of stock markets in the three regions and 53 percent of the combined trading volume"/ 2010- )
(b) ChiNext (a NASDAQ-style board of the Shenzhen Stock Exchange; 2009- ) Wikipedia
(c) For "China put," see put option
https://en.wikipedia.org/wiki/Put_option
("Put options are most commonly used in the stock market to protect against the decline of the price of a stock below a specified price. If the price of the stock declines below the specified price of the put option, the owner/buyer of the put has the right, but not the obligation, to sell the asset at the specified price, while the seller of the put has the obligation to purchase the asset at the strike price if the owner uses the right to do so")
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发表于 7-9-2015 15:47:39
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