Chinese Margin Lending - I am puzzled

A

Agnostic

Active Member
Silver Stacker
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 said:
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.
Click to expand...

Interesting. I thought the Chinese authorities clamped down on this a while ago though...
 
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.
 
No it doesn't cause a collapse, but I see it as an indicator of a market top.

Margin lending was big in 1929.
 
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.
 
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 said:
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.
Click to expand...

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.
 
SilverPete said:
Extremes can go both ways.
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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 :)
 
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