Quote:
Originally Posted by Manic!
People will pull there money and put it into safer investments like houses in Vancouver.
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Pull their money? China's stock market is heavily manipulated with mostly independent investors who pour real money into it (as they are not allowed to short the stock/options...etc, only institutional players can)
Very few understand the concept of "investing in stock" or something as basic as stop-loss. If anything, they see it as a big casino. So the mentality is either to continue to hold or buy in more to average out hoping to reverse the loss some time later.
If Chinese stock market continues its downward trend, I'll say selling foreign asset seems more likely albeit not logically. This is further supported by the fact that China is suffering an incredible amount of capital outflow. Should the shit hit the fans, currency control is one of the first measures that would be taken.
TBH, the China domination is coming to an end. They have way too much bubble assets (both foreign and domestic) that're only maintained by state muscle. I'm not saying China is going broke overnight, but be it crash or soft-landing... they are coming down.
The more correct and important question is, should China go soft on its purchasing power, what's to maintain GVR's RE market?