Skip to comments.Goldman: Government-directed traders bought up billions in Chinese stocks last quarter
Posted on 09/10/2018 11:14:09 PM PDT by Zhang Fei
As the mainland Chinese stock market dropped in the second quarter, groups with government ties bought shares, according to a Goldman Sachs analysis.
The "national team" of entities related to or influenced by the state was formed in 2015 to help support stocks during that summer's market turmoil. The Shanghai composite crashed more than 40 percent that year, and has struggled to recover since. The index's losses accelerated in June, when it fell 20 percent from a recent high, or into a bear market. Beijing's efforts to reduce the economy's reliance on debt has led to tighter financial conditions, while rising U.S.-China trade tensions have added to pressure on growth. In all, the Shanghai composite lost 10 percent in the second quarter.
During that time, the national team bought an estimated net 116 billion yuan or nearly $17 billion worth of local stocks known as A shares, Goldman Sachs' Chief China Equity Strategist Kinger Lau said in a Friday report.
The second-quarter purchases account for about 0.2 percent of market capitalization and follow sales of 71 billion yuan in the first quarter, Lau said. Overall, his team estimated the national team holds 1.5 trillion yuan worth of A shares, or about 2.9 percent of the listed market capitalization.
(Excerpt) Read more at cnbc.com ...
Another poorly written article. Who bought? Us or them?
In China the lines are often blurry between government and “business”. Just ask the Clintons.
Have the people revolt & overthrow the Communist Government!
are they propping up the market or buying shares a deep discounts?
I would argue the latter.
The percentages of the stock market are too small to be significant.
However, the profit that these buyers will realize when the market turns around will be significant.
This is a 2008 warren buffett moment chinese style—the sort of thing that only people with deep pockets and long time horizons can do. But they profit handsomely.
The real question is which stocks did the government buyers purchase? Did they buy stocks with big American exposure? Or did they buy stocks with relatively little American exposure.
If they bought stocks with relatively little American exposure —then you know that they were looking for deeply discounted stocks that would in a couple years reap huge profits for the government.
If they bought stocks with large american exposure —then you know they were just propping up the market.
I have been impressed with by how clever the bureaucrats in bejjing have been. so I would guess that the answer would be the former. That they bought stocks with relatively little American exposure.
Very poorly written. The national team- is this the same as groups with government ties?
It appears that an analyst from Goldman Sachs has observed investors, who may or may not be affiliated with the government, buying Chinese equities.
The Chinese economy is a fiction. Massive debt, controlled markets, and a two-tier society where the urban dwellers live a western lifestyle at the same time there are over 800 Billion people living in rural areas farming, mining, fishing, etc, where there are no safety standards and no environmental regulations. The ChiComs know their economy survives only by their domination of the Western markets, and that a trade war with the USA would destroy them.
Big deal...so China has its own Plunge protection team.
We have a cadre of paid ChiCom posters on Free Republic that support globalism, “free trade” and Chinese ‘benign’ economic hegemony. They are all over the place.
Another precedent is Benard Baruch who bought when the market was down
I assume, because the article is not really clear, that the government-directed traders is referring to Chinese government-directed traders, not U.S. government-directed traders. Mainly because I wouldn’t think the U.S. government has such an entity at its disposal. Of course I could be wrong. 8>)
“The real question is which stocks did the government buyers purchase?”
The article indicates that they focused on banks, energy and insurance.
In my opinion, as soon as the “National Team” was formed to support the Chinese stock markets, insiders would naturally start looking for how to use it for their personal profit. After a few years, I would anticipate that it has been thoroughly corrupted, and has found ways to rationalize their support primarily for the companies owned by the families of the top Party members.
So far, the numbers indicate that the “National Team” has shifted into market support mode (net buyers), but not to a very high degree.
If/when President Trump drops the next (and much larger) round of tariffs on Chinese imports (which are ready to go), we will probably see them having to start to shoveling their limited money in earnest to prop up their markets.
The insiders are in fact Chicaps
[The article indicates that they focused on banks, energy and insurance.]
banks, energy and insurance= no exposure to the USA
means these stocks are way over sold.
[banks, energy and insurance= no exposure to the USA
means these stocks are way over sold.]
Not directly related, but an interesting Zero Hedge article:
that zerohedge article was illuminating.
your point may have something to do with why china has invited US central bankers to Beijing on short notice
Interestingly there is a parallel to the 1956 suez crises. the british buckled quickly under US financial pressure at a time when they had a large current account deficit because they were afraid of the consequences of a falling british pound. They needed a billion dollars in US loans to prop up the pound. Ike said no withdrawal. no loans.
all that said the atmospherics suggest that while China’s money people may be getting uncomfortable. The boss Xi is not. He has a calling.
[all that said the atmospherics suggest that while Chinas money people may be getting uncomfortable. The boss Xi is not. He has a calling.]
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