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Q: For those of us who don't dabble in the stock market, will we be affected by the recent downturn?
I started thinking about the amount of money lost in the recent fall in the local stock market for purely personal reasons.
I bought an apartment that was 90% completed in a local development. I recently bumped into the now unemployed salesman in the street. He told me that all the apartments were sold. This is what got me wondering......
If they did indeed sell all the apartments, it would make sense that the developer would invest the money from the sales to make more money. The stock market would be a logical choice for a local person seeing as it had risen so much in the past year. If they did this then chances are that they lost a lot of money. As one of the last things needed to be finished in this garden are the installation of elevators, I have some concerns that they won't be completed.
Of course there is a clause in the contract that says if it is not completed within 2 years then the price paid will be refunded. But if they have no money then clearly there can be no refund and the bank will still want its money. Naturally, the admin office says that everything is on track.
There must be literally tens of thousands of people in the same boat.
Could this be one of the first flow-on effects of the stock market crisis that hits the common people or am I just too paranoid? Do you have any other thoughts or is it a storm in a teacup that will blow over for the average expat with little effect?
8 years 40 weeks ago in Money & Banking - China
I'm interested just as an observer, especially how Gov.'s handling the drop on Shanghai-ex. I don't qualify to trade stocks in China.
I don't think, it will be significant fall-out elsewhere, like it was in the West. Printing press works hard in China.
You're much better off with apartment purchase then investing in Chin-ex, IMO.
fada:
It wont be significant because no body outside of china is invested in their market. Just like japan didnt feel the last explosion, they didnt have exposure to the toxic market.
icnif77:
Goldman Sachs is bullish on Chin-ex:
http://wallstreetonparade.com/2015/07/whats-really-behind-goldman-sachs-bullish-stance-on-china-stocks/
I'm interested just as an observer, especially how Gov.'s handling the drop on Shanghai-ex. I don't qualify to trade stocks in China.
I don't think, it will be significant fall-out elsewhere, like it was in the West. Printing press works hard in China.
You're much better off with apartment purchase then investing in Chin-ex, IMO.
fada:
It wont be significant because no body outside of china is invested in their market. Just like japan didnt feel the last explosion, they didnt have exposure to the toxic market.
icnif77:
Goldman Sachs is bullish on Chin-ex:
http://wallstreetonparade.com/2015/07/whats-really-behind-goldman-sachs-bullish-stance-on-china-stocks/
Not sure what your question covers. Not that many expats buy any real estate and probably not in proportions sufficient for it to become a thing. But anyway, "real estate can only be better and better", right. That's what they (used to) say.
As for the stock market... well... don't be so negative, I'm sure all those firms are working around the clock on delivering the "upcoming big announcements" they used as an excuse back then. I'm just so fucking curious right now since I'm totally sure they got nothing but now just don't have a choice but to come up with something. So the billion dollar question (and answer to the above) is: what will be the next useless public market. Don't forget last time it was public toilets, so really the sky is the limit.
As for your apartment, you always worry. Its China, anything can happen. I would imagine that they would finish the elevators even if they did go broke. These developers always have multiple projects going on. And are semi protected from the government. Remember a huge percentage of the GDP is housing developments. They have a large interest in keeping it going.
Plus its all cost analysis. Not putting in an elevator isnt worth having thousands of families picketing and going to thegovernment. If they were gonna run with peoples money they would do it to a project that isnt already done.
I dont see the problem with the stock market going down. Just keep the shares till the value goes up.
Does it affect non investors? Yup, Parents might stop spending money on extra lessons, people might buy less manufactured goods, so everything can go into downturn mode.
It might affect you if China devalues rmb. If you re sending money back home would not be good. If you re exporting it would be good, if you're importing not so good.
Your logic is sound.
The recent stock market crash slaughtered many sheep. They got slaughtered because many bought stocks using margin accounts, deceitful and greed in nature, many use multiple margin accounts, i.e. borrowing huge amount of money using margin leverage. Some as many as 30 accounts!!!
A margin ratio of 1:5 is already considered insane by experienced, world-class financial centers such as Hong Kong. If I remember correctly their is a 1:1 only. China is 1:8, meaning only a drop of 10% is enough to get a margin call from your stockbroker, because your investment is already in the red.
These days, from what I heard numerous sheep are getting margin calls. It is the sheep who got their savings wiped out. BUT, the lenders are in trouble too. They were encouraged by CCP to lend money (to stimulate economy, for the country, blah blah blah), but propaganda BS from CCP (old foxes they are, these lenders) wouldn't do the job. Money. The way they lend out their money they charge a whooping 30% interest. Loan sharks they are. Now they are also in trouble.
The people who made money are the middleman, the facilitators of the loans.
The loan sharks include property developers, yes, so it is reasonable to expect non-completion of housing projects, not that they are rare in china, just that the number would increase.
One thing I am noticing, for major crisis like the financial storm of 2009, traditionally the prime minister (Wen at that time) came out and spoke of the severity. This time, nowhere do I hear Li says anything, not one word.
No government intervention so far. Maybe they are waiting for a further drop. You know, the tactic of giving people a cup of water in the middle of the desert so the sheep, wumaos, would be forever grateful, for just a cup. And, forget it was CCP who told them to be patriotic, support their country, how powerful china is in the world.....blah..blah..blah.... Birds of a feather flock.....
What I always thought was weird was that people back home bought the idea again that East Asia is such a responsible conservative place and it's only our free-wheeling anything-goes risk-taking western culture that causes economic issues.
When theres no reason to think that. China could just have been making up GDP numbers for the past few years. I figure what they say is always going to be the top end of what they think they can get away with saying.
I mean come on, 50 years ago tens of millions of people were starving to death because they were lying about how much grain they were growing. They didnt care about lying on that so now the stakes are SO much lower now why wouldn't they be lying? It's more like why would they tell the truth when theres no independent auditing and plenty of reasons for them to lie?
I have every personal interest in keeping China's economy growing well. But on some self defeating level I guess I kinda like the idea of them being forced to eat a slice of humble pie now and then.
