We\u2019ve been seeing it all over the news, online blogs, newspapers and magazines. China\u2019s market crashing! It has been no secret that this has been going on now for quite sometime to be exact since June 12th. The market has been on a fast decline and the government has stepped in to try and help the decline from stopping but nothing has worked yet.<\/p>\n
President Xi Jinping had one main goal for China and that was to steer its market to becoming a consumer based market and moving it away from being an investment based economy. This has however not panned out well because you need consumers to do that and right now consumers are getting crushed by the falling stock market.<\/p>\n
“The net result of this volatile market is a transfer of the wealth from people on the street to the country\u2019s wealthy, including the many major shareholders, who cashed out earlier” Bank of America’s David Cui wrote recently. “We expect this will likely hurt national consumption down the road.\u201d<\/p>\n
Retail investors aggressively moved into the Shenzhen and Shanghai stock exchanges over the past year, taking out loans to pump up their investments. The government encouraged this behavior for a few reasons.<\/p>\n
The first reason being that it wanted its people who had savings to take that money and add it to the market. Secondly, the government has plans to revamp its debt laden economy and this money was supposed to help companies stay afloat until the economy picked up.<\/p>\n
“The selling activities have skyrocketed since last year,” Cui wrote in an earlier note. “Before 2014, major shareholders of A-share companies typically net sold RMB 100 billion or so worth of shares each year,” Cui added. “However, the amount almost doubled to RMB 190 billion in 2014 (with RMB 162 billion net sales occurred in the second half); in Jan-May 2015, net sales reached RMB 360 billion.” \u00a0The government has taken action to help stop the rapid decline. They have stopped companies from going public, they have stopped allowing people to cash out on major shares and they have infused the market with billions.<\/p>\n
Unfortunately none of this has worked yet, but the people of China remain hopeful that the government has a plan to rescue the market! We have yet to see what the final outcome will be.<\/p>\n","protected":false},"excerpt":{"rendered":"
The first reason being that it wanted its people who had savings to take that money and add it to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[40,58,54,17,18,34,46],"tags":[8,76,77,78,35,79,80],"acf":[],"yoast_head":"\n