Just today however, the market received a small dose of reality as Chinese stocks plunge the most in six years after regulators begin cracking down on margin lending.
'The Shanghai Composite Index sank 7.7 percent to 3,116.35 at the close, its steepest drop since June 2008.Citic Securities Co. (600030) and Haitong Securities Co., the nation’s two biggest listed securities firms, fell by the 10 percent daily limit after they were suspended from loaning money to new equity-trading clients and regulators said brokerages shouldn’t lend to investors with assets below 500,000 yuan. ' -Bloomberg
There is a massive supply glut of vacant property sitting in China right now and as a result, property values are beginning to decline putting Chinese real estate companies at default risk. 'Concern is mounting that increasing financial stress among builders could spill over into a broader credit crisis in China. New-home prices fell in 65 of the 70 cities monitored in December and were unchanged in four, the National Bureau of Statistics said in a statement yesterday.'