China’s stock market bubble: A goring concern • Hacker News Board

Re: China’s stock market bubble: A goring concern

#61

Post by nichtich » Tue, Jun 02, 2015, 2:32 AM UTC

kcorbitt wrote: post #8

> Global investors are not buying into the mania: the shares of companies listed in both Hong Kong and Shanghai are now 30% more expensive in the latter. I'm quite confused by this statement -- if the shares on both exchanges are equivalent, this seems like an insanely good arbitrage opportunity. Are China's capital controls really tight enough to prevent Chinese nationals from finding a way to invest in the same sto…

It's not capital control in this case, it's the different shares. The shares you bought in HK can not be sold in SH, and vice versa. When the company does an IPO, it will assign a percentage of the shares to SH and the other to HK. It will be fixed in that way. You'd better treat them as two separate holding companies listed on SH and HK, each owning a piece of the actual company.

Re: China’s stock market bubble: A goring concern

#62

Post by xyzzy123 » Tue, Jun 02, 2015, 5:36 AM UTC

smaili wrote: post #29

> Kemian Wood Industry, which used to boast of the quality of its composite floorboards, took radical steps to deal with the downturn. It switched its focus to online gaming and changed its name. > A hotel group rebranded itself as a high-speed rail company, a fireworks maker as a peer-to-peer lender and a ceramics specialist as a clean-energy group. I've heard of pivoting, but this goes way beyond that. Doing a comp…

Most of these seem to be more or less "backdoor listings". A company that wants to list (Zeus Interactive in this case) essentially "buys" a stock symbol by merging with a defunct or flagging company (Dalian Kemian). It's easier to list this way than doing an IPO.

So it's not really a "pivot" and I feel that the article is slightly misleading on this front.

E.g. for Kemian Wood see: https://zephyr.bvdinfo.com/version-2015528/FullEditorialNews...

This is quite common in Australia, I hadn't realised it was a thing in China until now.

In Australia there are fair number of zombie listings from mining / prospecting ventures that didn't pan out. Often they're wound back to basically being a P.O box. It is very, very common for tech companies to list by doing a reverse merger with a zombie.

See: http://www.afr.com/business/banking-and-finance/investment-b... for more details.

Re: China’s stock market bubble: A goring concern

#63

Post by phyalow » Wed, Jun 03, 2015, 10:48 AM UTC

dmix wrote: post #41

> A shift to monetary easing and fiscal stimulus—and expectations of more to come—help explain why the rally began. But the longer it continues, the more it looks like irrational exuberance. The spark that started it all? This is crazy: > Credit Suisse estimates that 6-9% of China’s market capitalisation is funded by credit, nearly five times the average in the rich world.

Not to bad if you stand back and consider the entire US economy reflated only on the bullshit of the Fed!