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China's Stock Market Pain Is India’s Financial Gain

35 points by tokenadult 11y ago

danmaz74 11y ago
Interesting. I could even make a bet that these foreign funds will pump Indian stocks higher and higher, at which point Indian households will start buying - it's difficult not to do it when you hear your neighbor and cousin who are making lots of easy money by doing so. In a few years the bubble will go up and up, until at some point it will begin to burst. The foreign funds that started it all will sell, with huge profits, and the Indian households will be left to deal with the mess.
- Mikeb85 11y ago
  And this is why uninformed people shouldn't put their money into stock markets.
  - Frozenlock 11y ago
    Sometimes I wonder if all those tax-free retirement accounts are just a ploy to incite people to put money in the stock market, to be milked by those knowing what's up.
lindig 11y ago
>International investors are pulling out of China, fueling record outflows through the Shanghai-Hong Kong exchange link, amid a $2.8 trillion plunge in mainland equity values since June 12. They’ve plowed $705 million into India over the same period, sparking a world-beating 7 percent gain in the benchmark S&P BSE Sensex index. $705m? I doubt that this amount would move the needle. Maybe $705B. As this is the central number in this article I'm now sceptical about the rest.
- npalli 11y ago
  No, $705m is correct. The $705B number would be gigantic. The entire stock exchange capitalization in India is about $3 Trillion. An influx of so much money could easily triple or quadruple the stock market in a flash. It is almost as big as the TARP bailout. Now, it is legitimate to ask how much impact $705m has on the stock market. I don't think it matters that much yet. If it leads to further inflows it could make a difference.
  - lindig 11y ago
    So an influx of $705M is supposed to move a $3T market by 7%? That's 705e6/3e12=.0002 or 0.02%. I still don't buy it.
Mikeb85 11y ago
Chinese indices are still up significantly for the year. I personally ploughed money back in two weeks ago, sitting up about 15%. I wouldn't worry too much, it's just a correction. As for India, I'm sure some traders moved their money there, why not, but a lot of this 'news' is simply noise, trying to decipher why traders do what they do.
- maguirre 11y ago
  What gives you so much confidence in the Chinese economy? what's the reason for such a strong conviction?
  - Mikeb85 11y ago
    The Chinese economy is still growing. Fast. The stock market was overpriced, so there was a selloff. Such things happen. Usually not with so many stocks at once, but its really not unusual. The fundamentals of the Chinese economy are still good, they still have a growing middle class, household debt is very low, and the government is still flush with cash. Edit - also retail sales are up 10% YoY. GDP up 7% YoY. A bunch of other economic indicators are also good.
- adventured 11y ago
  3/4 of all stocks had to be frozen to stop them from falling drastically. China has had to shoot the equivalent of 9% of its GDP into the stock market, manipulate the price of every megacap stock directly, and threaten to arrest people for negative sentiment. The billions they're throwing at propping the market up had to be utilized at a time when their economy is in deep trouble, they're drowning in debt, GDP growth is far less than claimed (1% electricity use expansion, weak exports, weak PMI, weak imports, weak commodity market, falling real estate market), and the central bank consumed $300 billion of its reserves in the first half of the year. Meanwhile Shanghai is up nearly 100% in a year for absolutely no reason, with the original lift-off being caused solely by margin and mania. The average PE for Shenzhen is nearly 50. ChiNext has been around 100. SME is around 60. I disagree that it's just a correction. Their market has nowhere to go but down. Their economic growth isn't going to accelerate dramatically, such that it justifies a continued market run like they've had. China's central government is trying to prop up their stock market bubble to save face. In my opinion, the only possible outcome is that the market must fall. They can try to semi-nationalize the market, waste trillions of dollars, tightly control all trading and capital - and the market will have to fall anyway.

35 points by tokenadult 11y ago

Interesting. I could even make a bet that these foreign funds will pump Indian stocks higher and higher, at which point Indian households will start buying - it's difficult not to do it when you hear your neighbor and cousin who are making lots of easy money by doing so. In a few years the bubble will go up and up, until at some point it will begin to burst. The foreign funds that started it all will sell, with huge profits, and the Indian households will be left to deal with the mess.

Mikeb85 11y ago
And this is why uninformed people shouldn't put their money into stock markets.
- Frozenlock 11y ago
  Sometimes I wonder if all those tax-free retirement accounts are just a ploy to incite people to put money in the stock market, to be milked by those knowing what's up.

lindig 11y ago

>International investors are pulling out of China, fueling record outflows through the Shanghai-Hong Kong exchange link, amid a $2.8 trillion plunge in mainland equity values since June 12. They’ve plowed $705 million into India over the same period, sparking a world-beating 7 percent gain in the benchmark S&P BSE Sensex index. $705m? I doubt that this amount would move the needle. Maybe $705B. As this is the central number in this article I'm now sceptical about the rest.

npalli 11y ago
No, $705m is correct. The $705B number would be gigantic. The entire stock exchange capitalization in India is about $3 Trillion. An influx of so much money could easily triple or quadruple the stock market in a flash. It is almost as big as the TARP bailout. Now, it is legitimate to ask how much impact $705m has on the stock market. I don't think it matters that much yet. If it leads to further inflows it could make a difference.
- lindig 11y ago
  So an influx of $705M is supposed to move a $3T market by 7%? That's 705e6/3e12=.0002 or 0.02%. I still don't buy it.

Mikeb85 11y ago

Chinese indices are still up significantly for the year. I personally ploughed money back in two weeks ago, sitting up about 15%. I wouldn't worry too much, it's just a correction. As for India, I'm sure some traders moved their money there, why not, but a lot of this 'news' is simply noise, trying to decipher why traders do what they do.

maguirre 11y ago
What gives you so much confidence in the Chinese economy? what's the reason for such a strong conviction?
- Mikeb85 11y ago
  The Chinese economy is still growing. Fast. The stock market was overpriced, so there was a selloff. Such things happen. Usually not with so many stocks at once, but its really not unusual. The fundamentals of the Chinese economy are still good, they still have a growing middle class, household debt is very low, and the government is still flush with cash. Edit - also retail sales are up 10% YoY. GDP up 7% YoY. A bunch of other economic indicators are also good.
adventured 11y ago
3/4 of all stocks had to be frozen to stop them from falling drastically. China has had to shoot the equivalent of 9% of its GDP into the stock market, manipulate the price of every megacap stock directly, and threaten to arrest people for negative sentiment. The billions they're throwing at propping the market up had to be utilized at a time when their economy is in deep trouble, they're drowning in debt, GDP growth is far less than claimed (1% electricity use expansion, weak exports, weak PMI, weak imports, weak commodity market, falling real estate market), and the central bank consumed $300 billion of its reserves in the first half of the year. Meanwhile Shanghai is up nearly 100% in a year for absolutely no reason, with the original lift-off being caused solely by margin and mania. The average PE for Shenzhen is nearly 50. ChiNext has been around 100. SME is around 60. I disagree that it's just a correction. Their market has nowhere to go but down. Their economic growth isn't going to accelerate dramatically, such that it justifies a continued market run like they've had. China's central government is trying to prop up their stock market bubble to save face. In my opinion, the only possible outcome is that the market must fall. They can try to semi-nationalize the market, waste trillions of dollars, tightly control all trading and capital - and the market will have to fall anyway.