Or it's because the CCP was cheerleading stocks during the boom, and there was a VAST increase in the number of trading accounts being opened in the run up to the peak. Pensioners put their life savings into the stock market because the government was cheering for it (and it's not always a bad bet to go with what the government is backing). It dropped, what, 30%?
The rules changed so that housing can be used as collateral for margin lending, so a lot of them could have lost a lot.
P/E was about 100. In some cases, earnings might be fabricated. Get a loan (requires good connections), fake revenue, IPO, use the high stock valuation as collateral for the loan (I think this is allowed in China). Get more loans. Fake more revenue. Embezzle a bit. Usually they mean well, and aren't just outright cons, but there was apparently one big one the Hong Kong Exchange (which is usually more rigorous).
Housing can be 10X income. In some places 20X income. It's partly due to the government forcing down interest rates (tightly regulated banks - so savers may have negative real interest). Banks put a loan as doubtful if the debtor has stopped trading for 6 months, so there could be a lot of debt that's not so solid. And no-one knows what GDP is, but it might not be growing as fast as the government says.
An Asian country, with a median age over 35, crony capitalism, high savings rates, possible asset bubbles, a possible stock bubble, a government that's likely to go for bailouts rather than restructuring, and everyone thought it was going to own the US in a few short years if it doesn't already ... sound familiar? Japan, 1990?
Let me explain - China will bail out banks, state-owned enterprises (typically way less efficient than the private sector in China), and local governments. That ties up capital investment - the main people able to invest will be inefficient / corrupt cronies. Not so great for future growth. They might purge a few officials / bankers, but their replacements will not be much better (and maybe just from the right faction / family).
Just to big up a blog (quite bearish, but the guy's solid - it's not Zero Hedge) - http://www.baldingsworld.com/ is pretty good. He's typically said that the stock crash isn't that relevant - there's deeper economic problems, and while a stock crash might be a catalyst it's not the major worry (since the entire market cap isn't that big). It is a political worry though - the government lost a lot of face when they cheer-led stocks, then bailed them out, and they're still not doing as well as many people hoped.
I joke that at least the government is focusing on stability and fundamentals though - they started rounding up human rights lawyers.
The rules changed so that housing can be used as collateral for margin lending, so a lot of them could have lost a lot.
P/E was about 100. In some cases, earnings might be fabricated. Get a loan (requires good connections), fake revenue, IPO, use the high stock valuation as collateral for the loan (I think this is allowed in China). Get more loans. Fake more revenue. Embezzle a bit. Usually they mean well, and aren't just outright cons, but there was apparently one big one the Hong Kong Exchange (which is usually more rigorous).
Housing can be 10X income. In some places 20X income. It's partly due to the government forcing down interest rates (tightly regulated banks - so savers may have negative real interest). Banks put a loan as doubtful if the debtor has stopped trading for 6 months, so there could be a lot of debt that's not so solid. And no-one knows what GDP is, but it might not be growing as fast as the government says.
An Asian country, with a median age over 35, crony capitalism, high savings rates, possible asset bubbles, a possible stock bubble, a government that's likely to go for bailouts rather than restructuring, and everyone thought it was going to own the US in a few short years if it doesn't already ... sound familiar? Japan, 1990?
Let me explain - China will bail out banks, state-owned enterprises (typically way less efficient than the private sector in China), and local governments. That ties up capital investment - the main people able to invest will be inefficient / corrupt cronies. Not so great for future growth. They might purge a few officials / bankers, but their replacements will not be much better (and maybe just from the right faction / family).
Just to big up a blog (quite bearish, but the guy's solid - it's not Zero Hedge) - http://www.baldingsworld.com/ is pretty good. He's typically said that the stock crash isn't that relevant - there's deeper economic problems, and while a stock crash might be a catalyst it's not the major worry (since the entire market cap isn't that big). It is a political worry though - the government lost a lot of face when they cheer-led stocks, then bailed them out, and they're still not doing as well as many people hoped.
I joke that at least the government is focusing on stability and fundamentals though - they started rounding up human rights lawyers.