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June 9, 2015

In China, 'It's Easier To Make Money From Stocks Than Farmwork'

After a very modest drop last week, outstanding margin trading balances in China have resurged to record highs this week as 'correction' dip buyers rampage back into the markets, hopeful of China's inclusion in (and devastation of) the MSCI indices. 

With China's market cap now nearing $10 trillion (40% of USA's, up from just 14% last year)...

...we thought a profile of just who is buying Chinese stocks - from plastic umbrella makers up 3000% this year to ponzi schemes like Hanergy. As one middle-aged rural Chinese chap exclaimed jubilantly, "it's easier to make money from stocks than farmwork."  

So - do you really want this kind of volatility in the MSCI indices? If China corrects now it will wipe out trllions of wealth from the average Chinese person... at a time when regulators are urging professional asset managers NOT to speculate in stocks. 

Courtesy Tyler Durden, founder of ZeorHedge (EconMatters author archive here)     
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters. © EconMatters All Rights Reserved | Facebook | Twitter | Free Email | Kindle

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Item Reviewed: In China, 'It's Easier To Make Money From Stocks Than Farmwork' Rating: 5 Reviewed By: EconMatters