china stockexchange sse

China will continue to unwind from the over-geared stocks bubble. It's all downhill from here until at least after Chinese New Year in my opinion. That said, I am not expecting another -25% quarter but it could be another 15% to go.

The Dow has another 10% to go, all hinges on the rate rise.
 
"Unwinding a rigged system would be painful since prices would fall, and the government's response to July's crash shows that it fears falling prices. "

China's Rigged IPOs
They've become a system for allocating favors, not capital

The China Securities Regulatory Commission (CSRC) allowed initial public offerings to resume this week on the country's two stock exchanges after a five-month freeze. If that sounds like good news, it's also part of a policy that puts the interests of companies above those of shareholders and prevents China's markets from maturing.

...an IPO is a lucrative favor handed out by government. "25 of the 28 companies meant to be listed before year-end have hired auditing or law firms with senior executives who sit on the Commission's screening committee."

The CSRC severely underprices IPOs to give new listings a guaranteed pop, meaning investors lucky enough to get a share allocation make an instant fortune. When they were introduced in the 1990s, IPOs were priced at 15 times earnings, though the market average was above 40 times, according to market expert Fraser Howie. Today they are unofficially capped at 23 times earnings, and new listings had an average initial gain of 681% prior to July's freeze.

Even though the existing owners are forced to accept a below-market price, the artificially inflated price-earning ratio means an IPO also brings them a big payday. For many company founders it represents a chance to cash out rather than fund growth. In other cases, managers use the new capital to speculate in real estate and lend in the shadow banking system.

...Changing the system is difficult because it would eliminate opportunities for company insiders, brokerages and the government to get rich off the dreams of small investors. It's no wonder that China's most eminent economist, Wu Jinglian, once called the country's stock markets worse than casinos, since casinos at least have rules to protect the average player.

Unwinding a rigged system would be painful since prices would fall, and the government's response to July's crash shows that it fears falling prices. But as the economy slows, the incentive grows for Beijing to reform capital markets that have failed to spur entrepreneurship.

http://www.wsj.com/articles/chinas-rigged-ipos-1449102648
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China closed trading. AUD down. ASX only down 1% at openning. What is the implication for PMs?
 
PMs in AUD have a nice tailwind behind them at the moment due to the sharp fall in AUD (No doubt resultant from the drop in China) but also the gold price in USD is up a bit and may have found a support level. Gold in AUD is up around 3% just in the last day or so.

Good time to be in PMs if you're an Aussie methinks.
 
Both my partner and I each grabbed 10oz into allocated during the weekend, was clearly a good idea!
 
Surely this situation in China is a perfect example of why market intervention doesn't work and only draws out the pain longer.

Lets get this crash over with so we can bury the dead and move forward again!
 
Surely they'll be blow-back from this crap on Australia given China is a biggest trading partner. I'm surprised the AUD has been as strong as it has through the past few weeks/months. Still believe the floor will fall out of the AUD at some point though
 
Surely they'll be blow-back from this crap on Australia given China is a biggest trading partner. I'm surprised the AUD has been as strong as it has through the past few weeks/months. Still believe the floor will fall out of the AUD at some point though
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For sure. But the AUD dropping 2.5 cents in just a couple of days is a decent start wouldn't you say!?
 
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