Chinese Margin Lending - I am puzzled

Discussion in 'Markets & Economies' started by Agnostic, Apr 23, 2015.

  1. Agnostic

    Agnostic Active Member Silver Stacker

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    I have just finished reading an article which claims that Chinese margin lending on their stock market is rocketing off the charts - see http://davidstockmanscontracorner.com/its-a-mania-behold-the-red-chips-and-the-big-macs/

    From many sources it seems that the world is on the edge of an economic precipice.

    But...gold and silver languish unloved.

    I know some people say wait...the collapse is just around the corner.

    But the economy stubbornly refuses to collapse.
     
    Agnostic, Apr 23, 2015
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  2. Oldsoul

    Oldsoul New Member

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    Interesting. I thought the Chinese authorities clamped down on this a while ago though...
     
    Oldsoul, Apr 23, 2015
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  3. Agnostic

    Agnostic Active Member Silver Stacker

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    Agnostic, Apr 23, 2015
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  4. BiGs

    BiGs Active Member

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    Margin lending doesn't cause economic collapse, but it greatly exacerbates the effects of a crisis when it does happen.

    2% in the US? This must be a growth chart? China is growing in every way, this kind of growth is probably typical in any growth chart on China.
     
    BiGs, Apr 28, 2015
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  5. Agnostic

    Agnostic Active Member Silver Stacker

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    No it doesn't cause a collapse, but I see it as an indicator of a market top.

    Margin lending was big in 1929.
     
    Agnostic, Apr 28, 2015
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  6. BiGs

    BiGs Active Member

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    But we are seeing a rapid gentrification of China's population. Growth in everything is apparent. They just have the extreme population, which is why the figures are coming across as extreme.
     
    BiGs, Apr 28, 2015
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  7. Agnostic

    Agnostic Active Member Silver Stacker

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    Yes but this growth in margin lending is well above population growth.

    For example, http://www.chinaeconomicreview.com/...tripled-last-year-now-equal-82-floating-stock

    Margin lending in China has more than tripled to more than RMB1.7 trillion (US$274.6 billion) in the past year, The Wall Street Journal reported, citing data from WIND Information Co. Research by Macquarie Securities Group shows margin debt equal to 8.2% of the stock available to be freely traded, easily exceeding a peak of 6% reached in the late 90's by Taiwan, now the second-highest level globally in recent memory. Trading funded by margin loans accounted for 25% of daily volume on the ChiNext market in Shenzhen where Chinese startups trade, and turnover from margin-financing accounts makes up 15% of daily trading volume in the total mainland market, according to UBS estimates.
     
    Agnostic, Apr 29, 2015
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  8. SpacePete

    SpacePete Well-Known Member Silver Stacker

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    Extremes can go both ways.
     
    SpacePete, Apr 29, 2015
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  9. BiGs

    BiGs Active Member

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    And i said nothing about population growth. Western gentrification growth. More Internet users, more capitalist awareness, more investors, more margin lending. This can be the case with a declining population. China has been in poverty for the most part of the 20th century.
     
    BiGs, May 3, 2015
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  10. Agnostic

    Agnostic Active Member Silver Stacker

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    Agnostic, Jul 8, 2015
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  11. alor

    alor Well-Known Member Silver Stacker

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    no it doesn't

    there is 10% stop on the down side, there is a no sell order, then there is buy support.

    it takes 1/3 of the time to reach the peak, but takes 3x longer to reach the bottom

    fear is a much stronger feeling than greed.


    silver was cheap a while ago, its good time to be buyer :)
     
    alor, Jul 8, 2015
    #11

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