China's Popcorn Is Ready

Meltdown in Chinese Financial Markets

• Chinese stocks plunged rapidly out of the Wednesday open
• Selloff that has wiped out roughly $2.4 trillion in value from China’s equities.
• The selloff came despite a rare pledge by the People's Bank of China as the markets opened that it would closely watch stock movements and continue to use multiple ways to support the state-backed margin-finance entity.
• China companies rush to suspend their shares; 40% of all stocks now in halt.
• It marked the largest wave of trading halts in the history of China’s equity markets, the report said.
• Many of the companies didn’t disclose the reasons behind their trading suspensions
• A spokesman for the China Securities Regulatory Commission, Deng Ge said in a statement that “irrational selloffs” had increased, and described the current market mood as “panic sentiment.”

Shanghai Composite Index

More reading available:

Opinion: China’s government had no reason to intervene in the stock market

China stocks dive in panic selling

China markets fall sharply despite fresh help from Beijing

My comments:

Though slightly and not elaborate, I have mentioned not once but many times about China's overheated playground. If you took note, it's more or less a warning to sell and get the hell out when you still can. Investors' confidence in China will be shaken again. This would definitely impact the Chinese Yuan and offshore Chinese bond yields will rise. The selloff will also probably spillover to global markets but until now it is difficult to see how big that impact is. 

Weekly Market Highlights June (2)

-> The 140% surge in Chinese shares over 12 months. Another bubble that may be close to ending? The easy gains are probably over and a period of correction would be healthy. 

Weekly Market Highlights June (4)
-> Chinese shares have had another sharp pull back with the Shanghai composite having had a 13% fall from its June 12 high. After rising 140% over 12 months and around 50% year to date such volatility is to be expected as it has risen a bit too far too fast.

Aboi's Portfolio Review For June 2015
Aboi's Portfolio Review For July 2015
-> Aberdeen Islamic World Equity Fund (Equity Global)
- Maintain BUY.
- Fund has no exposure to China's overheated stock market and slowing economy. 
-> CIMB Principal PRS Asia Pacific Ex Japan Equity Fund (Equity Asia)- Maintain BUY.
- Fund holding exposure to China's overheated stock market is minimal ~10%.

In short I still hold to my beliefs that unless China reforms its regulatory & financial markets as well as making them more open to foreign institutional investors (liberisation), it will continue to behave like a gambling den. I will avoid China.