It’s 2015 all over again. China is attempting to artificially prop up the stock market by using the power of both the central bank and the state-run media.
Don’t believe it? Well, you may have missed the fun and excitement of Melt Up Monday.
China Securities Journal, which is owned and operated by the government, wrote a front-page editorial that encouraged everyone to purchase stocks.
The publication told investors to get ready for the “wealth effect of the capital markets” and the likelihood of a “healthy bull market.”
Citizens were hooked.
From Earn Forex:
Investors ostensibly bought the narrative of the article, contributing to the so-called Melt Up Monday. After it was published, Shanghai stocks rallied 5.7%, the CSI 300 index of Shanghai and Shenzhen-listed shares surged 6% to a five-year high, and Hong Kong stocks advanced by nearly 4%. This comes a week after the Shanghai Composite Index gained close to 6%.
The last time Beijing did something like this in 2015. The stock market rallied, but then it crashed soon after. The problem at the time was that everyone, from grandmothers to stock clerks, bought in at the top, didn’t know what they were doing, and acquired shares in highly speculative bets.
The U.S. has the Fed, but China has the PBoC and the propaganda machine.
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