The document discusses China's economic slowdown and stock market crash in 2015. It notes that China experienced decades of 10% annual growth but growth has slowed, with the Shanghai Composite falling 8.5% in a single day. Retail investors speculating in real estate and derivatives exacerbated the crash. The government took measures to stabilize the market by restricting short-selling, having brokers buy stocks, and suspending IPOs. However, China faces challenges of reducing debt levels and shifting to a consumption-based economy from an export and investment-driven model.

1. By Jaimin Parikh

2.  Introduction & Background
 Problem –What & Why?
 Proposed Solution adopted by
Government of PRC.
 Results & Learning’s.

3.  China – A Miracle Economy:
 Three Decades Of Growth Averaging around 10% Annually.
 Rising its Per Capita Income from Megre 299 $ in 1980s to
13,000 $ in 2015, GDP Becomes world’s largest in terms of
Purchasing Power Basis becomes 16Trillion $.
 What is happening suddenly to Chinese Markets? (Slowing of
Economy, Greek Crisis, Euro Zone Crisis & Slowing of American
Markets FedTapering Etc)
 Records the Second Biggest Fall in the History of Shanghai
Composite on 27th July, 2015, 8.48%. Previous Low as 8.84% In
2007.

4.  The Size of fall in terms of number value is 2.3
Trillion in single day ie roughly Equals to the Entire
GDP of Brazil.
 World watches, Monitors & Braces itself against
the Fall in Markets as keenly as PRC now plays
one of the major role in world economics.

5.  How &What ExactlyWent Wrong with Such a Strong Economy?
 Growth of Companies not correlated with the Rising Stock Prices,
markets Rise by 50% In three Quarters, Shanghai composite Peaks at
5277 Pts in mid June 2015.
 PE Ratio is 70:1 Where as in Most of the Developed Economies
Average stands at 18:1.
 Most of the investors are Retail Investors Roughly making up the 80%
of Total, These were the investors who were Blind Folded by Bull Run,
many of them left there Jobs and had become Day trader, Self
Proclaimed Stock market Analyst. Most of them had Borrowed Money
to Trade , They were playing in derivatives market thereby increasing
the Margin Risk Further.

6.  But it was not all glory for them, Bull run in market
had to come to end & it did, as the stocks began
to fall they started to sell the holdings to pay off
the Margins thereby making the market more
weaker.
 Weak Growth numbers add to the woes.

7.  While its is not just Chinese Markets which are
Affected by the Crash but the Global Markets too.
 Stock Markets across the Globe are Down by 15% on an
average, Indian markets have made a Record Fall of 1200
Points in a Single Day ie 5.8% on Black Monday.
 As the Investment moves to more secure avenues Gold
prices are up by 8% in a month.
 Devaluation of Yuan makes Dollar Strong & thereby
helping Indian Economy as it is primarily on Exports of
Goods & Services.

8.  Regulators limited short selling under threat of arrest; China
Financial Futures Exchange (CFFEX) suspends 19 accounts from
short-selling for one month.
 Large mutual funds and pension funds pledged to buy more
stocks, China's top brokerages pledged to collectively buy at least
120 billion Yuan ($19.3 billion) of shares to help steady the market,
and would not sell holdings as long as the Shanghai Composite
Index remained below 4,500.
 The government stopped initial public offerings, More than 28
companies suspended their IPOs, there will be no new IPOs in the
near term," the China Securities Regulatory Commission (CSRC)
said in a statement.

9.  The government also provided cash to brokers to buy shares,
backed by central-bank cash. Because the Chinese markets are
made up mostly of individuals and not institutional funds.
 The CSRC announces relaxation of rules on margin trading before
market open, lowering threshold for individual investors to trade
on margins and expanding brokerages' funding channels, 80
percent of investors in China are individuals, state-run media
continued to persuade its citizens to purchase more stocks.
 China Securities Regulatory Commission (CSRC) imposed a six-
month ban on stockholders owning more than 5 percent of a
company's stock from selling those stocks, resulting in a 6 percent
rise in stock markets.

10.  Around 1,300 total firms, representing 45
percent of the stock market, suspended the
trading of stocks starting on 8 July.
 Devaluation of Yuan By 5%, Hence making its
Exports More Competitive in Global markets
again, Thereby improving on the profits &
keeping its industries up & Running.
 Bringing policies & Shifting from Production
based economy to consumption based
Economy.

11.  China has been highly controlled State Economy
, External market forces seldom affect its
economy but this has led to situation of
unbalanced & unsustainable Growth.
 Chinas Experiment with its Market forces &
Financial Services with its new approaches to
low & governance seems to play out now.
 Chinas debt equals to 280% of GDP which is a
very big number and given the market
conditions it’s the big reason to worry.

12.  Its Primary focus was to be a Production centre of world is
not helping it to sustain growth levels , they have started
to be more of Consumption based economy , which will
help shield itself in future from global economic issues.
 Chinas has been exporting its over capacity through grand
infrastructure projects undertaken in many under
developed & Developing African Economies, But the
recent slowdown has seen a halt in flow of investments &
Money, thereby leaving the infra projects in half built
state, hurting the already poor economies more.

13.  Its not all bad for all, as the confidence in
Chinas economy is going down it is believed
that India is to benefit the most out of it, but
the Big question is will our Government be
able to convert it in to opportunity?

14. ThankYou