Well, it’s good to see the Chinese communists have the stock market under control again. Not. Yesterday the bourse ended with its second largest crash on record, down 8.5% in one day:
It’s not obvious why it happened but who can be surprised by it? Nobody has any idea what is going to happen next. The situation has no precedent with the highly successful economic managers of a communist regime having experimented with a deliberate equity bubble only to lose control of it and then its put credibility on the line trying to save it. Thus destroying its liquidity. Now it seems whenever investors get the chance they’ll flee, which strikes me as pretty rational.
David Cui at BofAML returns with more on the fallout from FTAlphaville:
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