China stock market bailout
Closely watched investor Ray Dalio is right to sound the alarm on investment in China, RBC Capital Markets' Jonathan Golub said Thursday.
China’s Next Problem: Paying for Its Stock-Market Bailout--Heard on the Street - WSJ
Long time-China bull Dalio wrote to his Bridgewater Associates clients, "Our views about China have changed as a result of recent developments in the stock market.
China's main stock index recently plummeted 30 percent after running up more than percent in about a year. In response, the government imposed a series of restrictions to stem the fall, including a ban on new initial public offerings and a measure preventing large stakeholders from selling their shares.
Bridgewater said it now believes stock market losses to be significant—about 2.
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More important than the direct financial losses are the psychological impacts, Bridgewater concluded, saying, "there are now no safe places to invest and the environment looks riskier, which we would expect to encourage the holding of cash and lessen the marginal effectiveness of easing monetary policy. China no longer global growth locomotive. The chief market strategist said business investment is still driving Chinese growth, and that investment must slow because the country has far too much excess capacity.
Chinese policymakers have been attempting to engineer a transition from investment and export-led growth to a consumer-oriented economy. They've tried to do that by playing around with markets.
That doesn't make any sense," Golub said. Bridgewater Associates later clarified its stance on China in an email to CNBC, saying too much had been made of the shift in its thinking. When a classic stock market bubble supported by unsophisticated investors buying stocks on a lot of margin bursts there are negative growth effects.
When combined with the debt and economic restructurings underway, that will most likely result in slower growth, and more stimulative government policies to offset these downward pressures," Bridgewater's statement said. This is why China stock crash is a big deal.
David Zervos, chief strategist at Jefferies, agreed that Dalio is right to be nervous china stock market bailout said the China story is just getting started. However, he added, investors should expect the Chinese stock market to experience growing pains, and thus far, Chinese officials have been methodical about bringing markets to a nonmarket-based economy.
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China’s biggest broker spent more on bailing out the stock market than it earned in — Quartz
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US EU Asia Oil Bonds Gold. China crash is a 'canary in coal mine': Strategist Tom DiChristopher tdichristopher. China crash is 'canary in the coal mine'. Still optimistic on China: Give Beijing some credit for restoring stability: Get this delivered to your inbox, and more info about about our products and service. Tom DiChristopher Energy Reporter. To view this site, you need to have JavaScript enabled in your browser, and either the Flash Plugin or an HTML5-Video enabled browser.
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