China stock market halted again this week

CSI 300 1/7/16
Trading today in China was briefly halted when the 5% circuit breaker tripped, giving traders time to assemble more sell orders. When the markets re-opened, a new selling wave triggered the second circuit breaker at 7%, shutting markets for the day. This is the second time in a week this has happened. A rational observer would say massive selling is due a complete lack of confidence in the future of the economy.

However, regulators blamed the victims, intervened stupidly and, of course, said the problem was due to evil sellers. Because when your stock market crashes, it must be the fault of those selling stocks and nothing at all to do with a bad economy, uncertain profitability, and fictitious economic statistics emanating from the government. Nope, nope, nope. The problem is solely due to people selling stocks.

On Thursday, regulators announced new rules that will sharply limit stock sales. Major shareholders will be able to unload only 1% of their holdings in any three month period, and they must disclose their plans 15 days in advance.

Right, like big investors and corporations there will quietly wait while their holdings drop in value as they wait helpless because they are banned from selling. The probable outcome of this is there simply won’t be buy orders because no one will be able to determine what a market price is because there will be no market.

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