China Stock Market Rescue Fever Spreads to Taiwan, South Korea and Indonesia

When the Chinese government launched their stock market rescue program, I predicted that this will be copied by the others:

Yet pretty soon, China’s latest anti bear market paradigm may be embraced by political agents of other nations.

Bullseye! Here comes the Asian stock market rescue boom. 

From Bloomberg:

China isn’t the only country resorting to extraordinary measures to shore up its tumbling stock market.

Taiwan on Sunday slapped a ban on short-selling of borrowed stocks at prices lower than the previous day’s close, while South Korea’s finance ministry said it will act “pre-emptively” after the nation’s largest exchange-traded fund suffered the biggest weekly withdrawal since its inception 15 years ago. China itself said over the weekend it will allow pension funds to invest in stocks for the first time, while penalizing major shareholders at publicly traded companies for violating rules that limit stake sales.

Benchmark stock gauges in Taiwan, Hong Kong and Indonesia entered bear markets last week after sliding at least 20 percent from recent peaks as China’s surprise devaluation of the yuan and prospects for the first U.S. interest-rate increase since 2006 triggered concern competitive devaluations will hurt economic growth and fund outflows will accelerate.

In South Korea, financial authorities were ordered to hold meetings to monitor the markets and implement measures when necessary, the country’s Financial Services Commission said.

More on Taiwan’s ban on short selling

Taiwan’s financial watchdog imposed the ban on short-selling of borrowed stocks and depository receipts, the Financial Supervisory Commission announced. The measure will take effect on Monday, it said.

While the rule doesn’t apply to brokerages and futures brokers who are shorting for hedging purposes, the regulator is working to encourage the financial industry to hold shares of listed companies, it said on its website. Taiwan’s benchmark index fell 5.2 percent last week.

Indonesian lackeys to support stocks even as the currency dives

In Indonesia, the nation’s largest fund manager is taking the slump that’s driven stocks into a bear market as the cue to start buying again.

BPJS Ketenagakerjaan, which manages around 193 trillion rupiah ($13.8 billion), will enter the equities market along with other state-owned institutional investors, Elvyn Masassya, its president director, said in a text message on Sunday. Shares are “relatively cheap,” he said, without naming any.

Poor depositors. Their moneys will be sacrificed at the alter of politics.

Well, might as well ask the Indonesian central bank to hyperinflate as this will surely cause a stock market boom.

Additional actions by the Chinese government: more crackdown on selling and the punishment of pensioners:

China securities regulator said late Friday it will penalize major shareholders at publicly traded companies, such as Southwest Securities Co. and Guoxing Rongda Real Estate Co., for violating rules that limit stake sales.

The China Securities Regulatory Commission’s investigation focuses on whether shareholders sold their stakes beyond what rules allow, if they sold them during a moratorium period and whether they made timely disclosures, Zhang Xiaojun, a spokesman for the regulator in Beijing, told reporters. The benchmark Shanghai Composite Index plunged 4.3 percent on Friday, coming within one point of wiping out an 18 percent rebound since the July 8 low.

The State Council, or cabinet, on Sunday announced it will allow pension funds to invest in new products, including the stock markets, while restricting the maximum proportion of investments in equities to 30 percent of total net assets. Pension funds had net assets of 3.5 trillion yuan ($547 billion) by the end of 2014, the official Xinhua News Agency reported.

As I have repeatedly said here, stocks markets have transformed into a political tool.

 

Yet more calls for state support is a sign of desperation and PANIC