Practical analysis for investment professionals
10 July 2015

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

Posted In: Weekend Reads

“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

Investing

Emerging Markets

The Soft Side of Business

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

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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

About the Author(s)
Larry Cao, CFA

Larry Cao, CFA, senior director of industry research, CFA Institute, conducts original research with a focus on the investment industry trends and investment expertise. His current research interests include multi-asset strategies and FinTech (including AI, big data, and blockchain). He has led the development of such popular publications as FinTech 2017: China, Asia and Beyond, FinTech 2018: The Asia Pacific Edition, Multi-Asset Strategies: The Future of Investment Management and AI Pioneers in Investment management. He is also a frequent speaker at industry conferences on these topics. During his time in Boston pursuing graduate studies at Harvard and as a visiting scholar at MIT, he also co-authored a research paper with Nobel laureate Franco Modigliani that was published in the Journal of Economic Literature by American Economic Association. Larry has more than 20 years of experience in the investment industry. Prior to joining CFA Institute, Larry worked at HSBC as senior manager for the Asia Pacific region. He started his career at the People’s Bank of China as a USD fixed-income portfolio manager. He also worked for US asset managers Munder Capital Management, managing US and international equity portfolios, and Morningstar/Ibbotson Associates, managing multi-asset investment programs for a global financial institution clientele. Larry has been interviewed by a wide range of business media, such as Bloomberg, CNN, the Financial Times, South China Morning Post and the Wall Street Journal.

1 thought on “Weekend Reads for Global Investors: The NYSE Stole the Break from China and Greece”

  1. Nikola Iliev says:

    Can you make this so that the links open in a new window automatically?

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