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The New Shanghai Exchange ,The New Old Rotterdam,The New Gold

Internet Café Traders Versus HFT of NYMEX

These pictures and graphs sum up the situation in China- Shanghai Stock Exchange (SSE). The graphs and slides below show how the two major Chinese exchanges reached 10.2 trillion Market Cap within less than a year and the SSE Composite index exceeded Nasdaq futures index, and collapsed losing 1/4 of its value within weeks ( enlarge the weekly graph). Actually,the boom started few months ago, after the so called Hong Kong_Shanghai connect , and suddenly , over the counter trading bubbled.The trading was so massive that SSE computer software failed to display the additional zeros.In China 90% of investors are truly individuals and not finance houses ,they are the new middleclass who are eager to test "Capitalism" from an Internet cafe.These investors are now expose to the foreign investors and the High Frequency Trading Finance Houses (HFT) . Although the later controls only 5% , but these HFT traders have at their disposal highly sophisticated trading tools and the know-how. There is now an enquiry into how billions were sold ,and the market collapsed.Was it rumors that the USA will rise the rate of interest in Sept. Or HFT investors played it " too fast" ?

The crash had minor and temporary impact on the international exchanges. as these exchanges are well insolated from the SSE volatility , in spite of China being the power house of world economy. This exchange ,in the past( 2005,2007..)was subject to raids of hit and run and is highly volatile and vulnerable to speculation of large international finance house .Now, China will soon introduce new measures to curb ,over the counter trade .

The Shanghai Stock Exchange Composite Index is a capitalization-weighted index. The index tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange

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The Red Bubble


The above graph is important ,every time this index falls the price of oil falls , it is not surprising, as china is the The largest net oil importer in the world and is forecasted next week China ....