Now that my new book has been published, I am beginning to catch up on my very long list of outstanding research projects. In addition, I am also finding more time to read timely articles, a few of which I would like to pass along to Trader Edge readers. Here is a link to an interesting MarketWatch article titled "Opinion: Why Beijing cannot let its bull market die."
The author (Craig Stephen) highlights a number of extreme steps Beijing has taken recently to prop up Shanghai's free-falling equity shares:
1) Brokerages will invest 15% of their net assets in a new stock-stabilization fund, which will be used to purchase equities,
2) New issues will be suspended, which will funnel more cash into existing issues,
3) The central bank provided a liquidity pledge, and
4) Real Estate (arguably also in a bubble) will now be allowed as collateral for margin loans.
The above steps smack of fear, desperation, and direct market manipulation - not good news for the world's second largest economy.
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