Headline from a Hong Kong newspaper last week
While many eyes have been on the shenanigans in Greece over the last couple of weeks, over in China, all hell was breaking loose on the stock market, resulting in the Chinese government taking some severe (and rather unorthodox/questionable) action to prevent an almighty crash, one that could have mirrored the 1929 Wall Street Crash in terms of financial devastation.
Fifty per cent of stocks were suspended from trading (over 1400 companies), while company bosses and major investors were banned from selling up for the next six months.
The share rout wiped nearly a third off the value of the market since mid June, but had been preceded by a year-long rally generating dizzying gains.
As the newspaper headline in the above picture states, on 8th July 2015, HK$1.4 trillion was wiped from the Shanghai Composite Index.
That’s equivalent to over £116,000,000,000.00. In one day…yikes!
No wonder people were panicking! With the Hong Kong Hang Seng Index also plummeting at the same time, I witnessed first hand family and friends wondering if they too should bail or hold, as they saw their portfolios fall off the edge of a cliff. Seems like many people buy shares on margin (borrow to invest), including one woman who (according to the newspaper) had re-mortgaged her apartment three times and was now desperate to sell her property as she had lost nearly all of her money in the stock market crash….
The market has since recovered slightly and I’ve learned that one of my sisters was brave enough to buy when everyone was selling and she has made a tidy sum with the subsequent upturn, enough to pay for her next couple of holidays overseas! She was obviously following Warren Buffet’s wise words of “Be fearful when others are greedy and greedy when others are fearful“, although she may have had some prompting from her husband who’s an ex-trader!
Anyway, Ermine talks about it in more detail here and mentions how the ups and downs of the Chinese stock market could affect people who are invested in Emerging Markets, where there could be some exposure to China.
I don’t believe people outside of China can invest directly on the Shanghai Composite Index, but who would be brave enough?
A bit about my Holiday
I had a great couple of weeks in Hong Kong, spending quality time with my family and catching up with friends. The weather was very hot and humid, a welcome change from good ole British weather, although I gather there was a bit of a heatwave while I was away. Managed to squeeze in a couple of boat (junk) trips, a day out on the beach, two cinema trips, a free-style drawing event and lots of meals out – it was fab.
My family are all ok, despite the cost of living being extremely high over there and continuing to rise. All working members of the family have very high disposable incomes so they’re actually all doing more than ok.
In fact, with what was happening with the Chinese/Hong Kong stock markets, two of my sisters decided that they were better off with their spare money in property, so just like that, after a quick bit of researching (Zoopla and Google Maps), they put deposits down on properties in the UK. Nice to have cash spare and sitting in the bank like that, haha! They live very different lives from me!
The local English language newspaper (South China Morning Post) was full of adverts for Zone 1 London properties for sale – these apparently get snapped up rather quickly as they are often cheaper than prime properties in Hong Kong, so make great investments (although my sisters didn’t go for properties in London this time, they’ve opted for Manchester).
Holiday Spending
I didn’t spend too much on this trip and purchased only a pair of sandals and trainers, some small items for the kitchen, as well as a couple of gifts for colleagues. I got some cast-off clothes from my sisters (it’s great us all being around the same size!) and my soon-to-be-early-retired aunt gave me some surplus gym/casual wear. Who needs to shop!?
I did spot one item while in a supermarket at such a ridiculous price that I just had to share here:
This is a gift box of Japanese grapes, sold in a high end supermarket (probably HK’s equivalent of Waitrose).
Yes, the price is HK$758 – that’s £63 for a punnet of grapes, about £3 per grape! Apparently the grapes were “rare, organic and specially harvested” – blah blah waffle! There was only one punnet left on the shelf, so I’m guessing they’re quite popular despite the ridiculous price…oh how the daft rich people live, lol!
Anyway, just a couple of snaps below from my trip, plus a kind of ‘where’s Wally?’ kind of photo at the bottom (snapped by the professional photographer at the free-style drawing event I mentioned earlier) – yes, I am in the crowd, mingling and trying to blend in with all the young folk, haha!
Those who have met me previously may spot me quite easily though!
Hey Weenie,
Great to hear and see a bit about your trip. Really glad you hada great time.
That China market madness really was crazy, but I have always been very sceptical of China, so have never invested directly, preferring pacific and Japan as separate investments. I just find the whole set up completely unsustainable in a communist country. Sooner or later, something's gotta give…
Cheers
Hi weenie,
Hope your family don't have too bad a time of it in the long run – it sounds as if they're very savvy and know how to look after themselves though 🙂
Your find in the supermarket was pretty astounding – totally ridiculous. How does the price of living compare in general?
Hi M
Same here – I'd never invest directly, there is something unsustainable about it all, something not quite right!
Hi Cerridwen
Yes, I think my family should be fine, they're not daft but they were sweating over the red numbers!
Yes, those grapes were ridiculous! There was also a honeydew melon at £40 but my photo came out blurred so I didn't put it in my post!
Hong Kong is now the 9th most expensive place to live in – property of course is astronomical, groceries and utilities, all high now. Public transport however is still incredibly cheap, although the locals have been complaining the fees have gone up but I thought it was really cheap, especially taxi fares! You can get good bargain on clothes too, if you avoid the designer stores!
Hi Tawcan
Yes, the people are crazy to gamble their money like that and the Chinese government crazy for interfering in the way they have!
I'm probably biased but HK is a great place to visit! However, at some point in my life, I should head west, ie USA/Canada for my holidays! 🙂
Sorry Tawcan, for some reason, your comment got deleted!
Tawcan wrote: "The China market madness is crazy, that's what you get when people are borrowing to invest. Not good. HK seems pretty neat, would love to go there one of these days."
Wow, what a different world it seems out there! Would love to visit HK one day.
That grapes price is shocking, I have no idea why people would ever pay that!
Glad you had a fun trip, I did have a hard time keeping up with how many sisters you have though… haha 🙂
I've been a (very) casual observer on the Chinese thing, since you posted this, I saw on the news the other night it dropped 8% in one day! Woah!
Hey TFS, whilst there are parts of Hong Kong that are very different, you could walk down one of the streets in the Soho area (yes, there is such an area – https://en.wikipedia.org/wiki/SoHo,_Hong_Kong) at night and you would think you were walking down a side street in London, as it will be full of bankers, traders, and other business folks letting their hair down, except they'd all be ex-pats and the weather will be very hot and humid! I may be biased, but it's definitely a place to visit at least once in your lifetime! The grapes – unbelievable!
The Chinese Rollercoaster continues – down 8% in one day and then up 3%. I can't imagine what it would be like if I had most of my money invested on the stock exchange there!
Thanks and haha – it's easy to get confused about my sisters.
I have four of them!