By Mortz C. Ortigoza
According to renowned stock exchange expert’s BlackRock the fall of the Chinese stock market is inevitable despite Chinese President Xi Jinping government rallying the market through central bank’s rate cuts, tweaking margin-trading rules, slowing the pace of initial public offerings, and taking up share prices.
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But this would be short lived.
"The tide is going to go out, and there’s going to be a lot of people without their swimming trunks on," strategist Ewen Cameron Watt of BlackRock told Bloomberg Television, borrowing from Warren Buffett's observation about investors caught swimming naked when markets get shaky.
Some of the factors, economists see, on the plunge of the Chinese economy are anchored to its U.S $28 trillion of public and private debt and its unprecedented $363 billion of margin debt that's supporting those shares.
Demand of steel among Chinese manufacturers and building makers are collapsing because many investors shifted their shops to labour cheap Vietnam and Cambodia.
The decline from the ballyhooed double digit growth in the past decades to a single digit and declining, 7%, of China’s Gross Domestic Product undermined the fate of the Chinese workers.
With a slowing economy feared to be gobbled by an explosion of a stock bubble, are the Chinese bracing for the worst?
In case economic hardship caught with the Sinos, would the Chinese Communist Party (CCP) starts a shooting war in the South China Sea (SCS) versus the United States, Japan, Australia, and some members of the South East Asean Nations to divert the attention of its people who would rise up and probably replaced the apparatchiks at the CCP?
Nánshā or the Spratly Islands spark a patriotic cord to the Chinese whenever foreign powers claim ownership to them.
This scenario had happened with the military Junta in Argentina in April 2, 1981 when it was losing a popular support from the masses who protested in the streets the government because of the country’s devastating economic stagnation and patent human rights violations of the military brass.