1/6
When Beijing seems determined to force up the stock market, investors usually see that as a signal to buy, and their decisions become self-reinforcing as purchases can cause markets to shoot up. We saw this most dramatically in 2007 and 2015.
bloomberg.com
When Beijing seems determined to force up the stock market, investors usually see that as a signal to buy, and their decisions become self-reinforcing as purchases can cause markets to shoot up. We saw this most dramatically in 2007 and 2015.
bloomberg.com
2/6
According to Bloomberg, "The rare pledge to 'invigorate capital markets and boost investor confidence' at the July Politburo meeting — the strongest endorsement of markets by top leaders in at least a decade — is driving bets that Beijing will take steps to...
According to Bloomberg, "The rare pledge to 'invigorate capital markets and boost investor confidence' at the July Politburo meeting — the strongest endorsement of markets by top leaders in at least a decade — is driving bets that Beijing will take steps to...
3/6
increase trading activity in the coming months. Changes being anticipated range from lower taxes and quicker settlement to measures aimed at boosting secondary-market liquidity and foreign investment."
increase trading activity in the coming months. Changes being anticipated range from lower taxes and quicker settlement to measures aimed at boosting secondary-market liquidity and foreign investment."
4/6
The problem is that this is mostly speculative buying – investors rush into the market not because of fundamental improvements in the business outlook but rather because of credible signaling by the regulators – and speculative buying eventually leads to speculative selling.
The problem is that this is mostly speculative buying – investors rush into the market not because of fundamental improvements in the business outlook but rather because of credible signaling by the regulators – and speculative buying eventually leads to speculative selling.
5/6
My guess is that Chinese stock markets will probably do well over the rest of this year as Beijing makes it increasingly clear that it will do whatever it takes to cause prices to rise, but after the terrible experience of 2016, investors will also be quick to sell.
My guess is that Chinese stock markets will probably do well over the rest of this year as Beijing makes it increasingly clear that it will do whatever it takes to cause prices to rise, but after the terrible experience of 2016, investors will also be quick to sell.
6/6
In spite of self-interested claims by large funds, Chinese markets are driven mainly by speculative investing, not by fundamentals and, ironically, regular government signaling and intervention is part of the reason.
carnegieendowment.org
In spite of self-interested claims by large funds, Chinese markets are driven mainly by speculative investing, not by fundamentals and, ironically, regular government signaling and intervention is part of the reason.
carnegieendowment.org
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