Business

Stock market Olympic lock down

Posted by Jeremy Goldkorn, July 28, 2008 8:44 PM

They got the good shit
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Last week, Patti Waldmeir and Jamil Anderlini of The Financial Times reported:

Pre-Olympic warnings to China’s fund managers
Fund managers in China have been warned to watch what they say about the country’s stock market, in the latest manifestation of a pre-Olympic Chinese government crackdown on everything from Beijing weather to suspected terrorists.

In a bluntly worded notice distributed to fund managers, including foreign-Chinese joint ventures, China’s securities watchdog warned fund employees not to say anything publicly that could harm the stability of the market.

The China Securities Regulatory Commission, which issued the notice, did not make overt reference to the Olympics, but the message was not lost on local fund managers, who linked the notice to a broader effort to avoid market turmoil in the pre-Olympic period...

...“Fund company executives, fund managers and other important staff should be very careful about their speeches and blog content, which may cause market fluctuations,” the notice says, adding that companies should be cautious about holding public forums “which may cause market fluctuations”.

While it's good to see that the stock exchange regulators think that blogs are important, it would be even better to the see the Olympic clampdown on irresponsible behavior in the markets extended beyond the end of August, and to include other types of irresponsible behavior such as insider trading, manipulation of stock prices, egregious conflicts of interest etc. etc.

For more on shady stock market dealings, see two recent articles by Gady Epstein at Forbes:

Market maker

Lin Rongshi isn’t up to his old tricks in Chinese stocks. But, as he describes, plenty of others still are. Fair warning to the bulls.

Shanghaied

How do you say "irrational exuberance" in Chinese?

Two years ago investors had no use for Jilin Aodong Medicine Industry Group or the Liaoning Cheng Da Co., two of the many clunker state-owned companies with publicly traded shares. The shares change hands on the Shenzhen and Shanghai exchanges, respectively.

Since then the stated core businesses of both companies have stagnated and China's securities regulator has implicated Jilin Aodong in an insider trading investigation. In a normal market that would scare buyers away.

China's markets are anything but normal. Both Jilin Aodong and Liaoning Cheng Da shares have risen 750% in the last year, and their stock charts look like copies of each other despite the fact that one is a drugmaker and the other is ostensibly in the fabrics trade.

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There are currently 5 Comments for Stock market Olympic lock down.

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Comments on Stock market Olympic lock down

Today's China is very much like the US in the late 19th century and early 20th century, corrupt, chaotic, and filthy, and also roaring. Good for the US, it moved from one equilibrium (a bad one) to a nicer one. How would China go?

Posted by: on the other hand | July 29, 2008 3:35 AM

"Today's China is very much like the US in the late 19th century and early 20th century, corrupt, chaotic, and filthy, and also roaring. Good for the US, it moved from one equilibrium (a bad one) to a nicer one. How would China go?"---on the other hand

So the Chinese are driving Model T's, inventing lightbulbs, and don't yet have the NFL? That sucks.

Did the U.S. during the last part of the 19th/early part of the 20th century have recyclers that were kicked out of town because they were earning pennies for their starving families back on the farm by reversing the carelessness of snobby city folks?

Posted by: SGT. SLAUGHTER | July 29, 2008 2:11 PM

@SGT. SLAUGHTER

Interesting you're a slaughter. So you must be familiar with the novel "the jungle", which depicts the corruption of the American society during the early 20th century (in the novel, meatpacking industry).

Of course two countries at two centuries apart are different in many aspects. But Jeremy's post and the Forbes articles are about business corruption. You can't deny the US a century ago and even during the roaring 20s was much more corrupt than it is today, can you? And you can't deny that the American society before the progressive movement was much more corrupt and chaotic than it is today, can you?

So much with slaughtering.

Posted by: on the other hand | July 29, 2008 4:06 PM

"You can't deny"---On the other hand

Where did I deny anything? And no I didn't read that dumb book because as a redneck I ain't fer that there larnin' and such. Besides its probably not about the Pittsburgh Steelers and therefore I don't care.

Stop your assumptions. If you reread what I said in my previous post I really said nothing.

How about this?:
You and your disertation 1, SGT. SLAUGHTER 0.

Posted by: SGT. SLAUGHTER | July 29, 2008 6:49 PM

It would seem to me that, (I must preempt by stating that I am not a financial expert by a long shot), the key issue relating to the CRSC 'advice' to fund-managers, is much the same as the advice given to the press, (local and foreign), and to citizens of the PRC. Which is not to disclose any information, that could stoke volatility in what would appear to be a some what particularly precarious market, and potentially volatile socio-economic climate. It would also seem to me that this current economic climate is unparalleled to anything in all of history.

(Merely an educated guess)

Posted by: James | July 31, 2008 12:05 PM