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Shenzhen-listed stock increases by 10% each day
- kgc 11y agoWhat's going on here?
- adventured 11y agoIt can't go up any faster due to Chinese regulations
- amolgupta 11y agoi guess its called "circuit breaker" in stock market terms.
- phdp 11y agoNo, that is a mechanism to stop trading after a certain dip in the price.
- piyushpr134 11y agocircuit breakers are there both on upside and downside. Circuit breaker is being triggered everyday at the start of the day
- encoderer 11y agoUS futures exchange has "lock limit" circuit breakers in both directions. It's not uncommon. Remember, a large share of market participants is playing from the short side. Up is down, down is up, it's all the same.
- IkmoIkmo 11y agoDo they limit demand or fix (cap) the price it can be sold for artificially? I imagine everyone would flock to buy the stock. Beyond that, why did the stock IPO at such a low rate? All that's mentioned is the price increase being limited, i.e. limiting volatility. Not a great idea but, I can see how that works. But why did the stock start out so low in the first place?
- whyaduck 11y agoThe daily increase is capped at 10%. All else being equal, in the real world, the only way to limit demand is to raise the price - eventually it will reach it's actual market value. Until then, "demand" doesn't really have much meaning - it's essentially being rationed. What I don't understand is who's selling?
- IkmoIkmo 11y agoWho's selling? Well, imagine you wanted to sell your $300k ('market value') house on the market, as you needed liquidity. But the government says its price is capped at $25k. They enforce this by only letting notaries sign off on sales at that price. Ownership of a house by law is only valid once a notary (government worker) signs off on the exchange of the deed, so nobody will buy the house without the notary's signature, as then they'd pay but not officially receive ownership. The seller who has the money, can now call the police and kick the buyer out of the house, as the buyer can't prove he owns the house as he never received the deed from a notary. So to sell, you must use a notary service, and through the notary, $25k is exchanged hands. Now obviously nobody will sell $300k value at $25k, and obviously there are lots of home owners who at any point in time want liquidity and want to sell the house for whatever reason. The most sensible thing to me is 1) not many are selling, even if 1 out of a million shares exchanges hands, whatever was the last price is the new price. So the 10% gain can happen with insignificant volume. And 2) some people are selling for $25k, while receiving $275k under the table through a different deal. It'd be discounted as you'd likely need to launder the money which has costs, but if the market price and the artificial price are far enough apart, people will do it.
- whyaduck 11y agoGiven the daily 10% increase, anyone selling would have to be desperate for cash and, simultaneously, a horrifyingly bad risk. A loan at significantly lower than 10% daily interest could probably be secured using the securities as collateral, so I don't think that's the explanation.
- logfromblammo 11y ago
- ihsw 11y agoNepotism. IPO stocks are artificially rationed to maintain a daily 10% gain in order to control liquidity and reduce volatility -- and, more to the point, the IPO price is low for the benefit of investors. In practice, only those with the best connections are able to participate in the daily trade quota rationing.
- zhoutong 11y agoIt's a hugely underpriced IPO in a bubble (Tech stocks average P/E is over 100). +/- 10% is the price limit in Chinese stock markets. So rather than having a price jump, this stock continues going up with little volume, until the "real market price" is reached. Edit: It's oversubscribed by almost 300 times. http://mobile.reuters.com/article/idUSL3N0WI22B20150316?irpc=932 http://mobile.reuters.com/article/idUSL3N0WI22B20150316?irpc...
- dak1 11y agoJust how undervalued could it be with a market cap of 13.37 billion yuan ($2.15 billion)? And it appears to have been going up 10% daily since March 27 when it launched (it's up over 1000% already). And if it was so incredibly underpriced... why was it so underpriced?
- nine_k 11y agoWho is buying it, by the way? What is the probable source of their money?
- ihsw 11y agoAnyone and everyone. Real estate investment has bottomed out, now Chinese cash is being funneled into the Shenzhen Stock Exchange. Lots of free money flowing around in China, they're sniffing in the US too. Investment in Chinese tech companies is booming at a rate that dwarfs the dot-com bubble.
- encoderer 11y agoThere is currently a margin (leverage) bubble in China. It will not end pretty.
- kleer001 11y agothe 500B-USD$ question is "When will it pop?"
- canvia 11y ago
- appliance_guide 11y agosee this article for well-written explanation: http://www.bloombergview.com/articles/2015-05-01/risky-debt-and-perfect-stocks http://www.bloombergview.com/articles/2015-05-01/risky-debt-...
- PaulHoule 11y agoLove that Sharpe ratio!
- rev_bird 11y agoHuh. TIL. http://www.investopedia.com/terms/s/sharperatio.asp http://www.investopedia.com/terms/s/sharperatio.asp
- ComputerGuru 11y agoUmmm so how does one in the USA buy a Shenzhen-listed stock? I can't exactly buy it from my fidelity.com account now, can I?
- thaumasiotes 11y agoMake good friends with someone high up in the Chinese government? What would be the point of fixing the price if you then gave all the money away?
- jcfrei 11y agoYou are probably restricted to HK exchanges.
- blue11 11y agoNo, you can't. Some Shanghai-listed stocks you can buy through the recently opened Hong Kong-Shanghai Connect. But those are mostly well established companies that are listed in Shanghai. You can read more about it here: http://www.hkex.com.hk/eng/csm/chinaConnect.asp?LangCode=en http://www.hkex.com.hk/eng/csm/chinaConnect.asp?LangCode=en
- tibbon 11y agoIt does seem that if there's no way to buy from the USA that there's a hell of a business opportunity there. I know nothing about this, but if that gap exists and anyone wants to work on the problem together... let's do this?
- branchless 11y agoI know a shoe-shine boy who said he can help. It's a sure thing.
- phyalow 11y agoI work in this space, the only way to get exposure to these is via equity swap using a QFII's capital. I.e. you must be a foreign institutional investor with an existing relationship to a QFII. Retail flow is not supported :) (although thats kind of what north bound stock connect is for).
- haosdent 11y agoChina stocks is crazying in these days
- peter303 11y agoChina stock market = casino invest only what you are not afraid to lose
- javert 11y agoUnfortunately I think that is probably the attitude of the average Chinese trader---which is exactly why it turns out that way.
- crimsonalucard 11y agoNot so different from the US stock market.
- smsm42 11y agoMostly true if you trade short-term individual stocks. If you invest long term in indexes, it's still risky but much less than casino-style risky and losing all of it, short of total economy collapse in which case it wouldn't matter where you invested, pretty much never happens.
- cymetica 11y agoIncreases by 10% everyday? On the front page of HN? Show's over. Now look for the MMs to attract buyers as they short it on the way down for buco $$$.
- rolyatyasmar 11y agoIs there any way to buy this on the open exchange?
- kifler 11y agoI'd be interested to know as well. My brokerage only lets me trade on 10 exchanges.
- calebm 11y agoThey make a great radio: http://www.amazon.com/BaoFeng-UV5R-Dual-Band-Two-Way-Radio/dp/B007H4VT7A http://www.amazon.com/BaoFeng-UV5R-Dual-Band-Two-Way-Radio/d... (cheap way to get into Ham).
- rasz_pl 11y agowrong Baofeng, and wrong 'great Baofeng radio' :), the great one is b5 http://www.brickolore.com/2013/01/baofeng-uv-b5-best-kept-secret.html http://www.brickolore.com/2013/01/baofeng-uv-b5-best-kept-se...
- marincounty 11y agoNQ mobile--I still can't figure out what this stock does, or why the SEC has not delisted them. I think when it all blows, like always-- the big boys will have gotten out, and the little investor will have lost everything. No wonder banks/investment houses are afraid of Elisabeth Warren? I feel she know what the future holds? That reminds me I need to get my cd out of .10 percent this week. Yes, I am making .001 percent on my retirement. Homelessness--here I come! I'll even mention the wonderful bank that didn't inform me of the rate change--lovely Luther Burbank. "The bank that really keeps your info quiet!"
- dzhiurgis 11y agoIt's odd that no one mentioned that they are makers of successful VR glasses: http://www.baofengmojing.cn http://www.baofengmojing.cn I am amazed how quickly VR is taking of. This must be the 10nth manufacturer using the same concept.
- memossy 11y agoThey got rid of most of the IPO pricing restrictions ages ago, now the primary driver is liquidity and margin lending, with official margined shares making up around 30% of the current free float and the Shenzhen market turning over its free float every 7 days (!). To put the margin in context, for the US market its around 3% of free float and you can margin 50-100% ChiNext is on around 50x earnings now, most stocks above 5x PB. Could go further though, brokers only 2/3rds through their margin limit...