Secular Investor – Every western media outlet was reporting about how the Chinese bubble was deflating at an extremely fast speed as its stock market decreased by 30% from 5,200 points to roughly 3,500 points before rebounding towards 4,200 points. It seemed like the world was heading towards Armageddon until the Chinese government stepped in to rescue the Shanghai Stock Exchange.
It quickly instated new measures to ensure the stock market would have a ‘soft’ landing. The Chinese government announced pension funds were suddenly allowed to purchase shares which suddenly generated almost 100 billion dollars in additional support for its falling stock exchange. This first step wasn’t enough, and the Chinese government asked/forced the brokers to step in by pumping an additional few dozen billions of dollar in the market to stop the freefall. In its final move, China has instructed a $483B state-owned fund to start purchasing shares on the open market to ensure there’s a bidder for stock other people want to dump. Continue reading