Government Controlled Capitalism ?
2015-07-31
The last couple of months saw history being made in the financial markets here in China. With the spectacular rise in the shares market , news made headlines all over the world. The spill over effect created the rush of new trading account signings, change in government policies concerning trading in overall. China has 2 independent stock exchanges the Shanghai SE and the Shenzhen SE. For those uninitiated , the Shanghai Stock exchange is the 5rd largest by market cap in the world. Next to NYSE, Nasdaq, London SE and Japan.. in may 2015 it was at the 3rd position.. when sentiments were high and points were closing in at 5000.. 
The current market outlook of the Shanghai SE.
What does this spell for the average Chinese and the expats here in China?
Surely its good fortune as its clear that the government is now keen on working towards supporting the local economy. A government that cares about the economy is a government that will assist the people. This might sound overly pro-government or utopian.. however, there isnt many governments out there that has done what the PRC government has done to assist the economy in the last 2 years.. or at least based on what i have observed.
The austerity drive, the expansion, the investments and chartering of new ideas (silk road) has somewhat allowed the economy to become self sustainable. Or at least for the next few years the policies implemented or being implemented will see some form of developments.
Of late there has been a mass exodus of funds from the market, triggering the massive sell offs in shares across the counters.. why ? Well of course there is many forces at play.. the herd mentality, the maturing of shares, general exit or profit taking of investors. But the massive sell offs would be triggered mostly by the investment institutions followed by the new investors. However, it is currently seen that the SSE (Shanghai) is more of a gambling market than a market with debt and security.
SSE composite index in 2014 July (mid year)
In reality.. the SSE was around 2000(refer to figure 1) points this time around last year and now its howering around 3500.. hence when you look at the overall growth chart the market has risen by at least 75%.. which itself is a miraculous improvement in such a short time. Albeit, everyone would love the index to be maintained at 5000 or exceeding it, but holding it there requires an effort as well.
Will it go down ? Will it go up ? Short term scenarios.. no one knows.. But in overall the recent drama in the Shanghai exchange has definitely benefited the economy.
My 2 cents
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