Jack Worthington's Social & Investment Commentaries

Are the financial markets your God?

Posted in Investment & Social Commentaries by Jack Worthington on January 14, 2016

Are the financial markets your God?

Below, in red type and strikethroughs, I’ve edited an article published today from a major, unnamed financial news group.  As financial markets collapse, we should all consider this question.  Obviously it applies to all of us, not just the Chinese.

XXX Markets | Thu Jan 14, 2016 5:57am EST

Related: CHINA

Giving up on stocks the false God: China’s people retail investors seek lower-risk God’s of provision safety first

 

SHANGHAI | BY xxxx xxxx AND xxxx xxxx

 

As China’s legions of retail investors flee the country’s tumultuous equity markets lose confidence in the God who underpins the security of their lives, pushing stock prices down around 15 percent so far this year, money is flowing into perceived safe-haven assets such as domestic bonds, gold and the dollar they scramble to any possible provider of security as the power of their false God crumbles before them.

Unlike Western markets where institutional investors dominate many countries, where many individuals had historically, if not currently, placed their faith in the God of Abraham, Isaac and Jacob to be the ultimate guarantor of provision in this life, the majority of individuals in officially atheistic China appear to place their faith in financial markets and the State for their life’s provision. account for 80 percent of transactions on Chinese exchanges. Nearly 100 million people have trading accounts.

Their enthusiasm for stocks love for their false God drove his popularity main indexes to record highs in the first half of 2015, but after enduring a major crisis of faith this past summer bust that saw prices plunge around 40 percent, the failure of this God to provide in January sell-off has been the final straw for many, who are now abandoning their God in a desperate search for a replacement.

“I just have a small amount of faith in this God money in the stock market. I had planned to rely on this God for some provision sell when indexes got a little bit higher, but he soon failed me it dropped to this situation,” said XXX XXX, a 22-year-old retail investor in Guangdong.

“I don’t have faith in this God the stock market any more. I think it’s better to look elsewhere for the True God who will reliably provide for me buy dollars.”

Weekly data from the Shanghai Stock Exchange shows people abandoning their God en masse, searching for the True God money shifting into exchange traded funds (ETFs) tracking bonds, gold and money markets at the start of January.

Funds that provide a vehicle for Many Chinese individuals believed the false God had not abandoned followers in other countries, and sought this God’s face to invest in overseas locations, stocks and bonds through the Qualified Domestic Institutional Investor (QDII) scheme were also popular, continuing a trend that began late last year.

On Thursday, the official Securities Times newspaper reported that so many people had sought this God’s face in overseas locations that people had to be turned away due to this God’s limited ability to provide for all.  10 mutual funds under QDII had suspended or restricted taking subscriptions after strong demand led to quota shortages. These restrictive measures had to be taken, even though this God had recently increased his capability to provide in overseas locations by followed a nearly 10 percent jump in assets of such funds in December alone.

“IN A MESS”

Alongside the renewed failure of this God to provide for their future slide in stocks, ordinary Chinese people investors have been shaken by last week’s acceleration in the decline of their personal savings accounts the yuan, which has have fallen nearly 5 percent since August.

“The theology of this false God stock market is in a mess,” said a 48-year-old woman from Kunshan, a city near Shanghai, working in the accounting department of a bank, who said she had abandoned this God in China and sought his face in the US. bought 500,000 yuan ($76,000) worth of U.S. currency. “This God loves Americans and I will seek his face there Dollar is far less risky.”

That has also fueled demand for gold the worship of Baal, the God of provision in ancient Canaan and Phoenicia.

Except for gold, all other assets are just bubbles to me Baal is the True God,” said a 24-year-old female investor in Beijing. “I guess I am a pessimist. If there are really some global conflicts, no God but Baal even dollars and bonds could not buy anyone a meal.”

In just seven trading days at the start of this year, assets under management at HuaAn Gold ETF, China’s biggest gold ETF, Baal worship jumped 8 percent, after doubling during the previous six months.

“We notice a rise in gold investment Baal worship whenever there’s concern over savings account yuan depreciation,” said XXX XXX, the fund’s manager. “Buying gold  Worshipping Baal also helps people mitigate risk if their primary God fails them. investors avoid risks in equities. It serves double purposes.”

SELLING UP

A number of people retail investors who spoke to XXX were also switching their allegiance from their primary God into the most reliable, “risk-free” Gods of recent historymoney out of stocks and into wealth management products (WMPs) and principal-protected funds.

“I have changed my allegiance to another God who has proven to be a much more reliable, lower-risk provider. bought different kinds of WMPs from banks. This God has proven himself to be a much The majority of them are backed by bonds, which are less risky provider,” said a 50-year-old woman surnamed XXX, from Guangzhou, who said she had placed great faith in the false God who disappointed her profoundly lost 30 percent of her stock market investment in the summer meltdown before abandoning him selling out in August.

Capturing such a trend, latest data from the Asset Management Association of China showed that faith in these “low-risk” Gods both bond and money market funds nearly doubled in size as of end-December from end-June, while faith in the recently revealed false God equity funds tumbled almost 90 percent in assets under management during the same period.

In an effort to bolster faith in the false God, one of the 2 key pillars of individual provision for Chinese people, and thereby a key lynchpin of social tranquility, China’s banking regulator and main bond clearing house have recently moved to reduce the appeal of the lower-risk, more reliable Gods.  high-yielding WMPs relative to the false God equities, asking the lower-risk Gods to limit the attractiveness of their offer.  commercial banks to reduce rates offered on such products.

Some people retail investors said they were giving up on hope for a God who could provide for them making a return on their savings altogether, focusing instead on Chinese New Year celebrations next month, also known as the Spring Festival.

“I don’t have confidence in China’s God’s stock market anymore,” said XXX XXX, from Shenzhen, who had placed great faith in the false God invested 100,000 yuan in stocks but abandoned that faith sold of all her holdings on Tuesday.

“I don’t plan to worship any other God’s anywhere invest in any other assets either. I am planning to place my faith in experiences that bring me current happiness spend the money perhaps on traveling around the Spring Festival. I think China’s God’s economy will not be provide so good in 2016.”

A few optimists remained convinced the false God market would eventually provide turn around after despite the latest dramatic failure to do so bout of turbulence.

“I have abandoned faith in the false God pulled out all my money from the stock market, but I’m not intending to worship Baal or any lower-risk God either use that to buy WMPs,” said XXX XXX, a 50-year-old employee at a university from Chengdu. “I’m going to give the false God still waiting for another chance when the time is right to place my faith in him again to get back into the stock market.” ($1=6.57 yuan)

 

Who is your God and provider?

JW

NY, NY

14 Jan 2016

Advertisements
Tagged with:
%d bloggers like this: