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Q: What do YOU think is the REAL REASON short selling is not allowed on Chinese stock markets?

In most any country, investors of stock markets can short sell shares of stock (betting that the price of a stock will drop) and make handsome profits if they are correct in their forecast.  In the world today, 14 billionaires, including 3 from China made their fortunes short selling. But this short selling tactic is illegal in China. Although I have my own thoughts as to why, I am curious to know what you folks think the real reason might be?

 

Personally, I think it is a clever ruse to trap foreign investment dollars into China and then cut off the escape route - forcing foreign shareholders to stick with a failing company until it either rebounds or go bankrupt.  What are your thoughts?

 

Also as a point of curiosity... if a picture speaks a thousand words, what does the above photo of the Shanghai stock exchange and the below photo of New York Stock Exchange suggest to you?

7 years 34 weeks ago in  Money & Banking - China

 
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Posts: 69

Governor

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Come on dude - the answer is obvious... It was deliberately set up this way BY the insiders, FOR the insiders so they can pump and dump stock without fear of loss. And guess whose system they copied?  They just tweaked it a little better to eliminate the one thing Chinese cannot deal with - R I S K.   This is th eonly country I know where mothers ask teachers to guarantee their kid will get a high SAT or TOEFL score!

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7 years 34 weeks ago

Whatever. Just throw me a bone to chew on while you rant.

 
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Is it not stealing, cheating, immoral and down right fraud?    Europe is talking of banning it, the sooner the better say I.   It's one of the things that got the world into this mess.   I don't like silly boys gambling with my money.

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7 years 34 weeks ago
 
Posts: 69

Governor

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In my opinion, ANY restrictions imposed that limit the liquidity of any stock is market manipulation. The primary reason people invest in the stock market is to have instant liquidity - a way to take their money out. By banning short-selling you would only create a obstacle for people who want to get out of a stock with a profit instead of a loss.

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7 years 34 weeks ago

Whatever. Just throw me a bone to chew on while you rant.

 
Posts: 65

Governor

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Money. They want it all in their pocket - not yours, nor mine.

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7 years 33 weeks ago

I'm retired - not retarded!

 
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I would support shorting (as I understand it, which I admit is far from 100%) so long as they 'paid' for the stocks they 'borrowed' prior to the action.

As I understand it the system is

1. They 'borrow' some stocks and offer them at  the going value hoping the rest of the stock falls.

2. When the rest of the stock falls they use the 'cash' they got from the sale of the original stocks (at 1 above) to buy back the stocks at a much reduced value than they sold them at when they 'borrowed' them, then give them back to the original owner and pocket the cash they have made.

 

Of course the original 'owner' has lost a wedge of money in the process. I would only support this if they were forced to actually buy the stocks at the time of transaction NOT at the end of the day. i.e. you should only be allowed to short your own stocks not other peoples.

 

Now, those who understand the markets better than me, feel free to tear that apart if there are any inaccuracies, because, as I said, I am pretty sure my understanding of the process is far from complete.

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7 years 33 weeks ago
 
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https://www.cnbc.com/2018/11/16/ge-once-elite-is-now-fighting-to-avoid-becoming-a-junk-bond-name.html

 

Speaking of shorts, oh how the mighty have fallen, the emperor has no clothes, smell that smoke, it's a fire sale for blackstone group.

 

hope facebook and amazon join them in the next decade.

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1 year 27 weeks ago
 
Posts: 16778

Emperor

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1 year 27 weeks ago
 
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