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Where else is your average Chinese person going to trade stocks, especially given the government's capital controls?
by khuey 11y ago
Where else is your average Chinese person going to trade stocks, especially given the government's capital controls?
- danbruc 11y agoDon't trade stocks. If this is no option for whatever reasons it would still be a problem contained in China if all the outside investors stayed away.
- jfoutz 11y agoI think you're underestimating how pervasive the stock market is in doing stuff. Say, foxconn wants to build a new factory. they put up stock as collateral for a loan to pay for it. Stock crashes. They have to sell existing assets to cover the loan. Even if they retain control by selling to a trusted partner, the asset shift is painful. If you can imagine foxconn getting into that trouble, it's very easy to imagine them not being able to manufacture IPhones or Galaxys for a few months while they negotiate contracts with the new asset owners. Any idea what that would do to Apple stock? And, you know, your 401k? This is an extreme example, but captures the spirit. when suppliers go out of business, or even run into trouble, all the companies that depend on them slow down, have to renegotiate new contracts, possibly miss deadlines. It can be ugly.