estates are 100% insider market these days after I invested a little
bit of my money in the US stock market. While the globe is suffering
from economic setback these days, the Chinese house price is
continuing its rocketing process and shot up another couple of miles
in the sky. Prohibition of shorting stocks, from my point of view, is
one of the major reason that Chinese house price keeps its ridiculous
price.
The math is simple. In the United States people can short stocks whose
prospective trend is pessimistic. This gives outsiders an opportunity
to speak their mind inside of the market. For example, when the
majority of people think of the house price as too high, they can
short sell the stocks of the real estate companies. The companies,
with their stock prices down and debt holders asserting pressure on
the management, thus have to lower their prices in order to gain cash
to pay the debt back.
However, the Chinese administrators (I'm not pointing to either
government or any regulators, since I'm not quite familiar with the
administration structure) do not allow shorting of the stocks in the
Chinese stock market, saying that this will "prevent irregular market
movement and preserve the stability of social order". This Mao era
ideology thus prevented the outsiders from interfering with the real
estate market, simply because those who hold possession of houses or
real estate stocks are the ones who hold optimistic view about the
market's future.
With the dissidents deprived of their possibility to speak their mind
within the market, they are exiled to the Internet to express their
opinion. However, tightened censorship and governmental interference
on the media is further stiffening the voice from ordinary people.
It's really sad for me to think of my friends working hard for their
life to pay a pigeon hole in Shanghai. They have to pray for a good
health and stable family income for the whole lifetime. That's sad,
really sad.
