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It's just a Casino operated by rulers. Many in China know it. But average people just can not resist the lure. This has happened in China several times. The new

by LiweiZ 11y ago

It's just a Casino operated by rulers. Many in China know it. But average people just can not resist the lure. This has happened in China several times. The new generation (perhaps those were born after 1985) is getting their own lessons and pay the tuitions this time. [edit]: to downvoters, reason for downvoting my comment? If you are not familiar with average people in China, please do your homework.

vardump 11y ago
Upvoted, because you hit the core issue. A lot of money is just betting and doing no research past staring at stock valuation chart. Sell if stock is going down, buy if it goes up. That tends to amplify random noise to a high level of volatility. Contagion risk to the rest of Chinese economy is what the people should be worried about. A lot of the bets have been done with money loaned from somewhere. This will affect the rest of the economy.
- LiweiZ 11y ago
  Many average investors just watch what's said on media and friends and take the follower strategy. Actually rulers are taking advantage of it, though it seems hard to believe at first.
- hockley 11y ago
  Is it even possible to conduct proper valuations of Chinese equities? If the equity markets have the same standards for transparency as other sectors of Chinese society, I don't see how that's possible.
stevehawk 11y ago
I've heard an anecdote like : US citizens are more likely to bet against the trend Chinese citizens are more likely to bet with the trend Is that what you mean?
- LiweiZ 11y ago
  That's not what I mean. Casino owners use it as a way to make money out of the players. This applies to the financial market in China.
Tuna-Fish 11y ago
> But average people just can not resist the lure. This is simply because there are few alternatives. The Chinese people are making more money than they need to spend, and as a lot of them do not trust the government to honor it's promises about pensions, they want to save the rest for old age. The Chinese government does not like the very positive savings rate, and tries to force it down by limiting the ways the people can save and invest money, by imposing tight capital controls and limiting domestic investment opportunities. What's left is the shadow banking system, which could collapse at any moment, domestic stocks which are terrible, real estate which has limited opportunities, and weird stuff like hoarding gold.

by LiweiZ 11y ago

vardump 11y ago

Upvoted, because you hit the core issue. A lot of money is just betting and doing no research past staring at stock valuation chart. Sell if stock is going down, buy if it goes up. That tends to amplify random noise to a high level of volatility. Contagion risk to the rest of Chinese economy is what the people should be worried about. A lot of the bets have been done with money loaned from somewhere. This will affect the rest of the economy.

LiweiZ 11y ago
Many average investors just watch what's said on media and friends and take the follower strategy. Actually rulers are taking advantage of it, though it seems hard to believe at first.
hockley 11y ago
Is it even possible to conduct proper valuations of Chinese equities? If the equity markets have the same standards for transparency as other sectors of Chinese society, I don't see how that's possible.

stevehawk 11y ago

I've heard an anecdote like : US citizens are more likely to bet against the trend Chinese citizens are more likely to bet with the trend Is that what you mean?

LiweiZ 11y ago
That's not what I mean. Casino owners use it as a way to make money out of the players. This applies to the financial market in China.

Tuna-Fish 11y ago

> But average people just can not resist the lure. This is simply because there are few alternatives. The Chinese people are making more money than they need to spend, and as a lot of them do not trust the government to honor it's promises about pensions, they want to save the rest for old age. The Chinese government does not like the very positive savings rate, and tries to force it down by limiting the ways the people can save and invest money, by imposing tight capital controls and limiting domestic investment opportunities. What's left is the shadow banking system, which could collapse at any moment, domestic stocks which are terrible, real estate which has limited opportunities, and weird stuff like hoarding gold.