Daily Pulse: $1 Trillion Wiped from Asian Markets, China's Vigilante Investors, Chipotle's Hiring Frenzy
Isabelle Roughol
Building news organisations where people love to work｜Journalist & media executive｜Public historian
We told you not to look at your 401(k). More than $1 trillion was wiped from Asian markets. Chinese stocks had their biggest one-day drop since 2007, with the Shanghai Composite Index ending the day down 8.5%, erasing all gains from the year. Hong Kong was down 5%, Tokyo -4.5%, Hong Kong nearly 6%, Taiwan 5%...
Japan’s Topix entered correction (that means down more than 10% from its most recent high.) Taiwan dropped the most since 1990 and Hong Kong the fastest since 1987, just to give you a sense of how unprecedented this market freefall is. European markets were down around 3% in early trading. US futures were indicating down 350 points three hours before the open.
More than $1 trillion is also how much the Beijing government is estimated to have spent trying to shore up the stock market. The money seems to evaporate as fast as it is injected, but that hasn’t stopped Beijing looking for cash reserves to halt the slide. Today it allowed for the first time local government pension funds to invest in stock. (If I was one of those pensioners, I’d be pounding the pavement right about now…)
The “cure” might be worth than the disease: with interventions and manipulated data clouding everyone’s vision of China’s economy, no one knows where the bottom is. We may well keep digging far past it… Or as Quartz’s brilliant subhead goes: ˉ\_(ツ)_/ˉ
While mainland China is leading the way down, it’s worth noting the one-year trend there is still very much in the green, so fast had the market grown earlier this year. It’s in the rest of Asia-Pacific that investors are really hurting: -16% this year on Hong Kong’s Hangseng, -21% on Taiwan’s Taiex, -11% on Sydney’s ASX200…
It's back to January 1st for global stock markets. Back to 1999 for commodities. It’s also worth noting that corrections are a “normal” part of the cycle (as normal as the financial sector gets) and that US markets had gone an unusually long time without one. Still hurts to watch, so like we said, don’t look.
“Is this year starting to feel like it belongs in the 1990s, or what?”
- Bloomberg View columnist Justin Fox
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Messing with Chinese investors may not be a good idea. Two hundred of them organized online and showed up at a hotel to put the head of a metals exchange under citizen’s arrest and deliver him to the police.
Shan Jiulang, founder of Fanya Metals Exchange, advertised an investment in rare earth metals with a high return rate and the ability to take one’s money out anytime. Instead, assets have been frozen since April following a “liquidity problem” and investors suspect a Ponzi scheme.
At the police station, Shan Jiulang was made to agree to new terms with investor representatives and was released without charges. Whether he’ll be able to meet them is anyone’s guess.
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Toyota hurt even more than the rest of Japanese stock. It took its biggest financial hit since the 2011 tsunami, down 6.7% Monday. The automaker announced it’s keeping its largest Chinese production line – in Tianjin where deadly explosions occurred two weeks ago – shut down through at least Wednesday. More than 5,000 vehicles awaiting delivery were destroyed in the blast.
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Chipotle is going on a hiring binge. The Mexican fast-food chain hopes to hire 4,000 people in a career day on Sept 9, The Wall Street Journal reports. That would increase the company’s headcount by 7% in a single day! Chipotle plans to open all 1,900 restaurants 3 hours early to conduct interviews.
The event is an aggressive step in a talent war for hourly workers that has seen Walmart and Target increasing wages and Starbucks reimbursing tuition. Chipotle itself has added sick days and education benefits, and advertises six-figure salaries for its top employees.
Employment and wages in restaurants have being growing faster than the private-sector average as, economic recovery and low gas prices helping, consumers regain a bit of discretionary income for eating out.
“The economy has been thawing, more restaurants are opening, and there are fewer job applicants than there were several years ago.”
- Monty Moran, Chipotle co-CEO, to the WSJ
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Cover art: An investor watches a share prices board in Tokyo on August 24, 2015. Japan's share prices dropped 623.34 points at the Tokyo Stock Exchange, swept lower in a global equities rout as worries about China's economy deepen. (YOSHIKAZU TSUNO/AFP/Getty Images)
Managing Director at LONSIN Capital LTD.
9 年Communism and capitalism don't mix, they are opposing forces. In China, the entire financial system including its stock market is underpinned by a communist system and government (mandated so by its constitution). The "governors" are steeped in communist theories which determine their relationship with a realatively nascent yet potentially powerful capitalist system, one that enticed not only Chinese savings but also savings from all over the world. The market finally decided to call this bluff, it is now looking for answers and trying to determine what compatibility there is between Chinese version of communism and capitalism.
Business Development & Sales Specialist
9 年"We told you not to look at your 401(k). Wow!!! That kind of advice ruins people's lives. "It’s also worth noting that corrections are a “normal” part of the cycle (as normal as the financial sector gets) and that US markets had gone an unusually long time without one. Still hurts to watch, so like we said, don’t look." Ironic isn't it. Millions of main street investors trust their life savings with trusted investment advisors who are/should be aware that corrections are, as you stated, "a normal part of the cycle", and yet nobody that I know was called in the last two-three months by their trusted advisor (who has spent most of the last 60 days on the golf course) advising that they throw caution to the wind. Not one. Remember, when you lose 50% of your investment portfolio you need 100% return to get back your loss. Historically, a realistic ROR on equities that pace the DJIA will yield 8% (LTA) This is net of management fees so if one is paying 1% for prudent advice, they need a 9% gross ROE. But let's go with 8%. An 8% ROR will double your money in 9 years. The problem is that the "normal" cycle is ... 7 years. How long is 'long term'? The mess in China will not disappear due to a slight drop in rates today (dumb) nor will it be fixed with the next devaluation of the Yuan. The mess in the US along with the absence of accuracy or truth in any of the data being spewed out to the unsuspecting, emerging markets devaluing currencies and crippling debt within the same, personal and public debt at dizzying levels ... the FED!? ... who honestly feels that the imminent financial tsunami is behind us? Again, let me ask this. "How long... is long term?" For Wall Street - the hoods who preach Buy Hold Prosper - long term is if they're still long a position they bought at the open, as they're heading out for their 10 am tee time. With all due respect ... there is absolutely nothing 'normal' about the global economy, the unfettered gorging of the banksters, the denial of true data, the entertainment value of our financial news and the belief that those old asset and risk management models still hold true. BTW... I advised all of my close friends to liquidate all equities two weeks ago. I would not offer an explanations and suggested that they speak with their (paid) advisor for details. Almost all 'pulled the plug' and few were tempted by their advisors sage advice to stay in the market ... but decided against it. (remember, advisors get paid $0.00 to hold cash) "Still hurts to watch, so like we said, don’t look." This is very dangerous advice and it is just stupid to bury your head in the sand and "don't look". Glad you're not my advisor.
Technology Analyst and GTM Strategist
9 年Its hard to trust a country when books are not "OPEN"! This whole China thing is a fishy tale....
Agile Project Managing Engineer (SAED/RF/EME) open to new opportunities.
9 年Is this the sign of a global recession coming, again?