Seriously China? As someone who has spent the better part of 7 years working and traveling in Greater China and/or its mainland, I totally appreciate the cultural nuances and protocol of saving face during a time such as the 70th anniversary of Japan’s WWII surrender. I also realize that this is the year of the Goat, but scapegoating executives at Citic Securities, China’s largest brokerage firm, is a creative stretch of the imagination.
When we enter the Dragon and examine the underbelly of the beast, we still have a market trading at 24 times the “estimated” forward 12 months earnings, which are potentially vulnerable to downward revisions in a continuously contracting economy. Also, lest we forget, it was not that long ago that the government altered its policies to broaden the participation of stock investors, allowed the market to tap into sources of capital that were previously off-limits, and increased the percentage amount of margin debt permitted for its 90 million individual investors.
Oh well, if I didn’t know any better, I’d wager that the Iron Fist of China’s government is beginning to crumble before the Invisible Hand of the equity markets as money becomes like water and follows the flow of capital, in this case some $5 trillion (USD) in deflated value since mid-June-2015, no matter how fearful or greedy it may appear.