Chinese equities plunged the most in six years, led by brokerages, after regulatory efforts to rein in record margin lending sparked concern that speculative traders will pull back from the world’s best-performing stock market. The Shanghai Composite Index sank 7.7 percent to 3,116.35 at the close, its steepest drop since June 2008. ...
... “China is trying to rein in over-bullishness in the stock market as moves have been exaggerated,” Pauline Dan, Hong Kong-based head of Greater China equities at Pictet Asset Management Ltd., said by phone. “Investors will have to wait and see until this volatility settles. They don’t have a fundamental reason to stay long since government policy is driving the market.”
The amount of shares purchased on margin has surged more than tenfold in the past two years to a record 1.1 trillion yuan ($179 billion), or about 3.5 percent of the nation’s market capitalization. ... China is scheduled to release data tomorrow that’s forecast to show the economy grew in the fourth quarter at the slowest quarterly pace since 2009.UH-OH.
THE HUGE SPECULATIVE BUBBLE IN CHINA MIGHT BE OVER.
AND IT MIGHT TAKE DOWN A FEW OTHER ECONOMIES...
STAY TUNED...
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