CHINA MARKETS- REVALUED...!!!

China stocks plummet as investors stampede out of the market

CSI300 index falls 7.9%, Shanghai Composite Index loses 7.4%

Reuters  |  Shanghai  

June 26, 2015 Last Updated at 12:59 IST

China stocks on Friday posted some of their worst losses in seven years, as investors stampeded out of a market amid increasing signs the country's eight-month-long bull run is running out of fuel.

The key CSI300 index fell 7.9%, to 4,336.19, while theShanghai Composite Index lost 7.4%, to 4,192.87 points.

For the SSEC, it was the worst one-day loss since Jan 19. For the CSI300, the drop was the biggest since June 2008.

Stocks fell across the board, with nearly 2,000 of the roughly 2,800 listed companies in Shanghai and Shenzhen slumping by their 10% daily limit.

After the CSI300 fell through several technical support levels, then there is "no technical buying support left following a massive rally over the last year or so," investment advisor Rivkin said in a note.

Further falls in China stocks "will send ripples throughout Asian markets," Rivkin said.

A more than doubling of China's stock market over the past year had been underpinned by rapidly-expanding margin financing, monetary easing and hopes of economic restructuring, but analysts said two of the three legs are now shaky.

Regulators have been cracking down on illegal margin financing and urging brokerages to tighten rules. Many investors have also faced increasingly expensive margin calls in the past week as share prices have retreated.

Outstanding margin loans shrank for the third straight day on Wednesday to 2.2 trillion yuan ($354.35 billion), as investors slashed 61.5 billion yuan worth of leverage during the period, the latest data shows.

Jiang Chao, strategist at Haitong Securities, said that further monetary easing - long another pillar of investor optimism - is also in question.

"Recent bond market performance reflects institutional investors' view that the rate cut cycle is coming to an end," he said.

Morgan Stanley sees Shanghai's benchmark index falling between 2 and 30% from current levels over the next 12 months, citing heavy equity issuance, weak corporate earnings, demanding valuations and excessive levels of margin financing. 

http://www.business-standard.com/article/reuters/china-stocks-plummet-as-investors-stampede-out-of-the-market-115062600322_1.html

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CHINA MARKETS BUTCHERED...???

MY SIMPLE QUESTION IS WHO IGNITED THE FIRE IN THE RALLY TO A STUPENDOUS LEVELS OF 87 P/E RATIOs,...AND WHO RECOGNISED THE VALUATIONS MIS-MATCH & MISTAKES AND OFCOURSE FINALLY WHO LOST?

WINNING TRENDS IN STOCK MARKETS

“PEOPLE ARE NOT DISTURBED BY THINGS RATHER BY THE VIEW OF THINGS” –ALBERT ELLIS, AN AMERICAN PSYCHOLOGIST WHO DEVELOPEDRATIONAL EMOTIVE BEHAVIOUR THERAPY.

THIS PSYCHOLOGICAL APPROACH IS APT TO MANY BUSINESS HOUSE DECISIONS BUT VERY TRUE IN STOCK MARKETS AS VIEWS BECOME PALE & FEARFUL DURING THE TIMES OF DEPRESSIVE NEGATIVE ENVIRONMENTS, JUSTLIKE NIGHTMARES IN  THICK FORESTS OF ABUNDANT DESOLATION.

THE STOCK-MARKETS CLEARLY REPRESENT A FRIGHTENING CLUMSY PICTURE AT TIMES WHEN VOLITITIY AT ITS PEAK & FALL CONTINUES!!, NO MATTER HOW SEASONED SOMEBODY BUT TO OVERCOME THE NERVE WRENCHING FEAR AND FORESEE THE FUTURE BECOMES DREADFUL.

TO AVOID UNCERTAINTIES IN STOCK MARKETS ARE NOT AT ANYBODY'S COMMAND OR CAPACITY BUT EVERY PARTICIPANT'S WISH....

TO MITIGATE THE FEAR AND UNDERSTAND THE EMERGING OPPORTUNITIES IN CHAOS, THE FOLLOWING APPROACHES CAN BE ADOPTED FOR BETTER RESULTS AND TO KEEP PACE WITH THE MARKET TRENDS...!!

A) CONVERGENT PROCESS:

THIS APPROACH IS MORE WIDELY ACCEPTED AND FOLLOWED BY THE FIIs, DIIs AND ESPECIALLY FOR THAT MATTER MORE PRECISELY BY HEDGE FUNDS. THESE HIGH RISK SEASONED CUTTING EDGE SMART PEOPLE PLACE HIGH BETS WITH AN ANTICIPATION OF HIGH RETURNS. THE BLOOM AND GLOOM CO-EXIST MANY A TIMES BUT THEIR SPIRITS ARE VERY HIGH.

HERE, STOCK PURCHASE CONCENTRATION IS SO HIGH THAT HUGE MONEY PUMPED AND LARGE CHUNK ACQUIRED AT A REASONABLE PRICE. THE COMPANY FUNDAMENTALS, ECONOMIC &BUSINESS TRENDS AND OTHER IMPORTANT PARAMETERS ARE LITTLE KNOWN TO OTHER RETAIL PARTICIPANTS BUT GET SURPRISED WHY AND HOW THESE COUNTERS ARE HOLDING ON TO THE TOP. 

LAST BUT NOT LEAST, THE VERY IMPORTANT MARKET MANAGEMENT MECHANISMS ARE PUT IN PLACE TO SEE THE PRICES RISE STEADILY AND GRADUALLY TO A LIMIT AND THEN A FINAL SHOOT UP …?. UNFORTUNATELY THE GREEDY POOR TRADERS AND RETAIL INVESTORS GET TRAPPED WHEN PARTICIPATE HEAVILY AND OFCOURSE THE WELL INFORMED SEEK AN EXIT…???

B) DIVERGENT PROCESS:

MAINLY FOLLOWED BY HNIs AND SMALL FUND HOUSES. THE PHILOSOPHY IS TO PROTECT THE CAPITAL AND INCREASE PROFITS IN BABY STEPS. THESE INVESTORS NEVER KEEP ALL EGGS IN ONE BASKET BUT PREFER DIFFERENT SECTORS. THIS DIVERGENT MEANS OF MAKING MONEY CAN OFFER SOLACE THAN ANY OTHER MODEL AS THE MARKET WAGGERIES ARE WELL TAKEN CARE. 

THESE PLAYERS ARE MODERATE IN RISK TAKING APPROACH, HAVE GOOD CONFIDENCE IN MARKETS BUT FEARFUL IN APPROACH. THEY ADOPT LONG-TERM PLAY WITH AN EYE ON SHORT-TERM GAINS, PLACE THEM IN GOOD POSITION AS THEY OFTEN TAKE-OUT PROFITS AT HIGHER LEVELS AND RE-ENTER AT LOWER LEVELS. SO, SAFE AND SECURE ALL THE TIME.

C) CHANNELLED PROCESS:

THE LADDER LIKE APPROACH IS ADOPTED BY SMART INDIVIDUALS TO ENSURE SUCCESS AT EVERY MOVE  WITH A LIMITED RESOURCE/MONEY. THEY KEEP MAINTAIN A WINNING STEAK ON BOTH THE DIRECTIONAL MOVES, SAIL ALONG WITH BULLS AND BEARS AS THEIR ADAPTABILITY & LIQUIDITY AT HAND ALLOWS SUCH FACILITY. THEY KEEP INCREASE VERY CALCULATED BETS, ALSO MAKE SUCCESS, A COMMON PHENOMENA LIKE CLIMBING A LADDER.

THESE PLAYERS ARE KNOWLEDGEABLE AND QUITE SMART IN CATCHING TRENDS IN THE MARKETS AND PLACE THEIR BETS SAFELY, ALSO MAKE SOME GOOD MONEY. THE PLAYERS SUCK EACH EMERGING OPPORTUNITIES IN STOCK MOVEMENTS BUT THEIR WELL ESTABLISHED APPROACH IS NOT KNOWN IN THE MARKET CIRCLES BUT MAKE DECENT COOL MONEY.

D) ZIG-ZAG JUMPING PROCESS: 

THIS APPROACH IS MOSTLY ADOPTED BY THE DAY TRADERS AND SWING TRADERS, ENJOY BUYING AND SELLING MANY A TIMES DURING THE DAY.THESE ENTHUSIASTIC TRADING PLAYERS ARE BACK-BONE TO MARKET LIQUIDITY AND FOR STOCK-TIPS ADVISORS. THEY KEEP ENGAGED EVERY TIME AND EACH TIME THEY TAKE A CALL AS THEIR GAME IS HIGHLY VOLATILE AND NO-BODY UNDERSTANDS WHY A BUYING IS MADE AND INSTANTLY A SELLING IS INITIATED. MANY A TIMES THEY BUY AT ONE COUNTER AND ALSO SELL ANOTHER SCRIP. ULTIMATELY, THEY ENJOY PARTICIPATION RATHER THAN MAKING MONEY.

THESE SMALL TIME RATHER INSTANT PLAYERS NEVER MAKE HUGE MONEY STORED IN THE MARKETS BUT LOSE MONEY FOR SURE, BECAUSE OF BUNDLE OF CONFUSIONS!. THE MORE THEY PLAY THE MORE THEY PAY. THEY HARDLY MAINTAIN ANY ORDER/METHOD, FIND NO TIME TO STUDY, PREFER EXTERNAL DEPENDENCY, MAINTAIN ADAMANT BEHAVIOUR TO A LOSING DEALS, RELY ON IRRATIONAL MEDIA COVERAGES & LIVE IN RUMORS AND PLACE HUGE BETS, BELIEVE IN CARRY ALONG WITH THE MOB IN THE MARKETS...ETC. ALL THE MORE, TAKE VERY FRAGILE DECISIONS AND UN-MINDFULLY INVITE HIGH-RISKS, UNFORTUNATELY GO INTO DUST...UN-NOTICED!!!!

US -FED-RATE HIKE !!!

Why US interest rate hikes are a problem for emerging markets

The US Fed on Wednesday said it would watch economic parameters before raising rates, but suggested one could come as early as June

Shishir Asthana  |  Mumbai  

March 19, 2015 Last Updated at 08:36 IST

Markets have been a bit lacklustre and in a state of fear on account of two main reasons. The first is the passage of the Land Acquisition Bill by Indian Parliament and the second is what the Federal Reserve in the USA would do in terms of interest rates. Parliament’s Budget session is still on and chances are that the government will have to call for a joint session of both houses to see the bill through. However, it is the development in the US that will have an immediate impact on the markets.

Much to the relief of markets across the world, the US Fed late on Wednesday night said it would hold on for a little longer before considering raising rates, and would wait for both economic growth and inflation to stabilise. Experts suggest an interest rate might come only in June 2015. 

India is well prepared to deal with any rate hike by the US Federal Reserve IMF chief Christine Lagarde said on Monday. RBI Governor Raghuram Rajan, himself a former chief economist of IMF, had also said earlier that there would be some volatility in emerging markets once the Fed decided to raise interest rates, but India is well prepared deal with the market volatility.

The mere fact that IMF chief and the central bank governor had to mention US interest rates suggests they were trying to pacify the markets from an expected turmoil. So how big is the US interest rate impact that sends global market in a tizzy every time the Fed meets?

We walk you through the impact of a hike in interest rate in USA in the Indian markets.

What does a rising interest rate in USA symbolise?

The end of easy money. Since the start of the financial meltdown crisis triggered by the collapse of Lehman Brothers, the US Federal Reserve has resorted to various measures to pump in liquidity in the economy. Three rounds of so-called Quantitative Easing (QE) failed to bring in the required impact on the economy. Though the Fed has withdrawn the QEs, they kept the ‘easy money’ tap open by keeping interest rates near zero. Money was available for free to conduct businesses in the USA. But most of the money was channelized into equity markets and that too in riskier assets like equities. Unlike previous bull runs, the one after 2008 saw money moving into equity markets only. None of the other asset classes like commodities attracted this money. So if interest rates are increased, access to this money will be costly. Chances are that inflow of funds will reverse if interest rates are increased.

Will only equity markets bear the brunt?

Any rise in interest rate has a direct impact on the country‘s currency. Rise of interest rate in the USA will strengthen the dollar. A strong dollar attracts money from other markets causing a ripple effect. While mentioning that India is prepared from an interest rate hike in the USA, Lagarde warned that a strengthening dollar will have a significant impact on Indian financial system.

Which markets are expected to be the worst affected?

Since the time of withdrawal of QEs, to every time Fed sneezes, emerging markets catch a cold. Being at the long end of the investment stick, the first markets from where allocations are withdrawn or reduced are the emerging markets. The recent selloff in emerging markets is on account of withdrawal of money from emerging markets’ equity traded funds (ETF). India however, is one of the strongest markets and most preferred ones in the emerging market basket.

What does history tell us about US interest rate hikes?

There have been 16 cycles since World War II during which the Fed has boosted interest rates. The risks are higher when the Fed first raises rates. During the six months before or after the first rate hike, the S&P 500 experience a decline of 5% or more 13 times. In other words, markets were hit negatively more than 80% of the time. Any hike in interest rate, if it happens will signal the end of the bond bull market that dates all the way back to 1981.

How bad is it for Indian market?

FII investment in Indian equities for the current year stood at over Rs 93,000 crore. In the debt market investment stood at over Rs 150,000 crore. It is the ‘hot money’ or the money that is invested in Indian equity markets for short term purposes that are at the risk of leaving the country. But if dollar strengthens against rupee, chances are money from the debt market will also leave Indian shores. Reserve Bank of India is on the process of reducing interest rates but if USA is increasing rates, the arbitrage opportunity will diminish, that is the biggest exit door that will open up if interest rates rise. RBI will have to use its forex reserve wisely to prevent the volatility in the rupee.

https://www.blogger.com/blogger.g?blogID=6412567908117008384#editor/target=post;postID=5712009352177399234

Greece-& EURO-PROBLEMS...!!!

5 reasons Greece will be worse than the Lehman Brothers crash

Markets fear that the Greece crisis will be worse than Lehman's collapse, except this time Eurozone nations are holding the toxi debt

Shishir Asthana  |  Mumbai  

January 6, 2015 Last Updated at 17:34 IS

The year 2015 has started on a wrong note for equity markets. Oil prices continue to fall and have breached the $50 barrel mark on oversupply issues and fight for market share by the OPEC countries. But the bigger and immediate worry for markets is the crisis brewing in Greece. The country prepares for elections on January 25th 2015. Fear in the market is that the Greece crisis will be much bigger than the Lehman crisis. Unlike Lehman where bankers were holding toxic debt, this time Eurozone countries are the investors. 

Here are five reasons why Greece can be a bigger threat to the market.

1. Two years after a threat of default by Athens sent global markets world into panic mode, thethreat is once again looming on the horizon. The likely winner of the Greece’s January elections seems to be left-aligned opposition Syriza party led by Alexis Tsipras who wants to renegotiate the terms of a 2012 European bailout that rescued his country from default. The problem is that in the last two years European bankers have sold their Greek debts which have in turn been purchased by European government which now hold 90% of that country’s debt. A default by Greece will hit interest rate of the countries that hold the country’s debts.

2. Tsipras has pledged that if his party wins the election he would ‘tear’ up Greece’s memorandum with the European Union and IMF. He says [ “We will cancel austerity. Under a Syriza government Greece will exit the bailout. This is not negotiable.” He is seeking the same level of debt relief – 50% -- that Germany secured in 1953, which Greece signed up to despite the death of some 300,000 of its citizens under Nazi occupation.

3. Germany and France are opening discussing Greece’s exit from the Euro Union. Sigmar Gabriel, Germany’s economics minister and vice chancellor warned that Berlin wouldn’t be blackmailed into offering concessions on Greece’s debt or the terms of the international plan that rescued the country’s finances. This event comes at a time when Eurozone is in a precarious economic and political state, after years of little or no growth and amid a surge in anti-establishment parties that are challenging governments in many countries.

4. Eurozone is now on a triple dip recession combined with deflation and a Greece exit from the Euro zone will only make matters worse. Greece will have to print its own currency which would be pegged against the Euro. Given the current economic scenario Greece’s currency would immediately fall making its debt repayment and imports even more costly to service. Youth unemployment in Greece has already touched 62 per cent and its debt as a percentage of the GDP is 177. Dirk Schumacher, senior European economist at Goldman Sachs in Frankfurt says “A Greek exit would create a precedent and it’s very hard to say what the impact on financing costs for other peripherals would be.” The countries that are expected to be hit the most are Italy and Spain.

5. The crisis may come to a head in March when Greece is due to run out of cash  The ultimate showdown could come in July and August, when Greece must repay €6.7 billion to the ECB. A report in Bloomberg says that any country exiting the euro would throw the common currency's continued existence into doubt. Greece’s exit would spark similar demand from other smaller countries in the zone. The Bloomberg’s report is titled ‘If Greece goes, so goes the Euro’ which can be a reality.

http://www.business-standard.com/article/economy-policy/five-reasons-why-greece-will-be-worse-than-the-lehman-brothers-crash-115010600605_1.html