Weekend Reads for Global Investors: The NYSE Stole the Break from China and Greece

“Can we get a break?” That thought must have crossed the minds of millions of Chinese investors in recent weeks.

Several weeks ago, after the first big down day in a long time (CSI 300, the key index, dropped more than 6%, to be precise), we provided some background on the Chinese stock market’s meteoric rise over the last year. We certainly did not know where the market was heading but felt confident enough to predict higher volatility going forward. And boy, that was quite some volatility the market witnessed recently.

After a series of big down days, talk of a market and even financial system meltdown started to circulate. Rumors of major leveraged positions forced to liquidate and overseas speculators building short positions spread all over the social media channels. The Wall Street Journal provided an interesting account of what’s unique about this crash. One aspect the writer highlighted is that “the security regulator is expected to save the market.” Indeed, in those angry grunts on social media, investors showed no mercy towards the Chinese Securities Regulatory Commission (CSRC) or its chairman, Xiao Gang.

It was obvious though it would take more than the CSRC to revive this market. Multiple branches of the government finally stepped in and tried all sorts of desperate measures to prop up the market. Reuters provided a step-by-step account of the government’s actions up to this point. Many are questionable but we have to put it into perspective: desperate time requires desperate measures. Many worry though the actions will eventually stimulate the market into another artificially bullish phase.

Speaking of needing a break, voters in Greece rejected an austerity-for-bailout deal with the European Union last Sunday. The country now is on the brink of bankruptcy with banks limiting the amount of euros depositors can withdraw from their accounts each day. There is no relief in sight. The next deadline imposed by EU negotiators for Greece to agree on terms of a bailout is Sunday, 12 July.

The rest of the world seems to be watching in disbelief. The Economist commented that “The Greek Crisis Manages to Combine Elements of Tragedy with Farce.” Some investors are quietly writing Greece off: “Have Markets Priced in Greek Drama?” a Morgan Stanley strategist asked.

Ironically the break that China and Greece desperately need but could not get landed in New York City on Wednesday in the form of a trading glitch that led to a 3.5 hour shutdown of the NYSE. NYSE’s legacy (read antiquated) computer systems seemed to blame here, but fortunately it was a slow day. Traders routed their orders elsewhere so reportedly not much actual damage was done.

Below is a list of links from the paragraphs above as well as some of the other interesting reads I have come across in recent weeks. Happy reading and enjoy the weekend.

Markets

• “5 Things Peculiar About China’s Market Meltdown” (Wall Street Journal)
• “Timeline of China’s Attempt to Prevent Stock Market Meltdown” (Reuters)
• “China’s Stock Market Value Tops $10 Trillion for First Time” (Bloomberg)
• Just one of the many ramifications of the situation in Greece: “MSCI Consults on Early Exclusion of Greek Stocks” (Financial Times)
• “The Greek Crisis Manages to Combine Elements of Tragedy with Farce” (The Economist)
• “Have Markets Priced in Greek Drama?” (Morgan Stanley)
• “Greece and China Expose Limits of the ‘Whatever It Takes Model‘” (Business Standard)
• “Why It Took So Long for the NYSE to Reopen” (CNBC)
• “A Brief History of Recent Market Outages, Snafus” (MarketWatch)

Investing

• “Simple Rules: How to Thrive in a Complex World” (Farnam Street)
• “6 Million Dollar Fintech Opportunities” — the site in general is a great resource to check out. (Meb Faber Research)
• “Catching Asset Management’s Tilt toward Asia” (BCG Perspectives)
• “‘Wisdom of Crowds’ Is Surprisingly Dumb” (The Big Picture)

Emerging Markets

• “The Global Selloff in Emerging-Markets Currencies Is Intensifying” (MarketWatch)
• An eVestment report suggests that foundations have added more to emerging market debt than any other asset class since 2011: “Foundations, Endowments Buying Emerging Market Debt” (ThinkAdvisor)
• “Why Indian Markets Remained Unscathed by Greece” (Rediff.com)
• A research report by FTI Consulting indicates that 83% of the North American and European firms surveyed lost money from their projects in emerging markets: “Risks Converge on Emerging Markets” (CFO)

The Soft Side of Business

• “The Condensed Guide to Running Meetings” (Harvard Business Review)
• “CEOs Reveal the Secrets to Motivating Employees to Perform at Their Peak” (Forbes)
• “How to Get the Most Out of a Conference” (Harvard Business Review)

And Now for Some Readings Truly for the Weekend . . .

• “A New Wall Street Memoir Full of Hookers, Cocaine, and Other Cliches” (Bloomberg)
• “10 Bad Habits That Make You Look Really Unprofessional” (Inc.)
• “The 20 Most Important Travel Hacks You Should Know” (TripAdvisor)

If you liked this post, don’t forget to subscribe to the Enterprising Investor.

All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Photo credit: ©iStockphoto.com/Photoevent