China seems to be in a critical condition regarding the status of its economy. The trouble comes from the country’s move to borrow money to boost its stock market by purchasing more stocks. The global consumers in the stock market seem to be retracing their engagement, leaving China in a huge mess.
Chinese Borrows To Bolster Desperate Stock Market Measures
An investor and financial education advocate, Robert Kiyosaki, posted a post about China’s recent crisis on X. He said the second-largest world economy is in trouble due to its desperate measures in the stock market.
CHINA in TROUBLE. China borrowing money to buy stocks to prop up stock market. China FOOLISH. DESPERATE. The real problem is consumers of the world have stopped buying. This is not the time to buy stocks and bonds. This is the time to buy real gold, real silver and as many…
— Robert Kiyosaki (@theRealKiyosaki) March 20, 2024
According to Kiyosaki, China exhibited some risky steps by borrowing money to purchase some stocks with plans to buy and sell the stock after a given period. However, the Chinese intention to resell the stocks for profit might have proven futile against its expectations.
Now, stuck with the accumulated stocks, the country could face a great economic crisis in the future. Additionally, Kiyosaki laid some investment advice that could help investors currently. According to the financial advocate, this is not the period to invest in bonds and stocks.
He sees the overall changes in the global economy as the time to seek other investment strategies like gold, silver, and Bitcoin.
Kiyosaki stated:
This is not the time to buy stocks and bonds. This is the time to buy real gold, real silver, and as many Bitcoins as you can afford.
China Reportedly Mobilized $278 Billion To Rescue And Tighten Stock Market
A Bloomberg report in January disclosed how China planned to resuscitate its struggling stock market. According to the report, the country opted to gather a rescue package with offshore monetary support for its plans.
The Chinese authorities aimed to raise 2 trillion yuan ($278 billion) majorly from offshore accounts of Chinese state-owned entities.
Its plan was to channel the funds into buying shares onshore via Hong Kong markets. Notably, the authorities mapped out a minimum of 300 billion yuan of local funds to support the investment. Also, it will use Central Huijin Investment Ltd or China Securities Finance Corp. to complete the acquisition of the shares.
Further, China intended to tighten its financial industry, including cutting down sell-offs in its stock market. A report from BBC News revealed this development, highlighting a loss of almost $6 trillion from Chinese and Hong Kong stocks since the peak three years ago.
Among others, the measures involved limiting short-selling of stocks in the country. Short-selling allows traders to bet that a share or asset will drop in value. Then, they could borrow the asset and sell it immediately with a plan of repurchasing it once the price plummets. Such moves provide them profits through the price difference.
Unfortunately, investors in China’s stock market are now retracing due to the long-lasting slow economic growth, which has left the country in a mess.
