Think the china stock market turmoil is over? Think again.

If you've been living under the rock for the past few weeks, this article summarises what happened to the Chinese stock market.

What?
From July 2014 to June 2015, the Shanghai Composite Index rocketed from 2050 to 5020 (close to 150% increase)

Why?
Not because of the underlying Chinese economy, definitely not. The economy registered the lowest growth (link). Instead, the Chinese government relaxed the margin trading regulation (buying stocks using borrowed money). 

This resulted in hordes of your inexperience investors with and without financial knowledge buying stocks. That meant that people are merely buy stocks because someone told them to do so. They've no idea what they're doing.

That screams BUBBLE.

Scramble to "save" the market and curb social unrest
Then, in Mid June 2015, the Chinese stock market started to crash on margin trading calls and the government decided to intervene.

1. Interest rate cut
2. Government bought stocks to prop up prices.
3. About half of the companies suspended their shares from trading
4. No more IPOs for the time being
5. Fund managers ordered to buy their own fund
6. Substantial shareholders (>5%) cannot sell their shares for at least 6 months

Creating a bigger bubble
I think there might be a few more actions which I've missed out. But, in my own words, this is what the government is doing:

1. It removes the free market notion.
2. It manipulates the market.
3. They're merely kicking the can down the road.

A bubble has to burst eventually. The Chinese government needs to recognise that. The recent two days of rebound in SSE may only be a dead cat bounce.

I don't like to spread fear. But I know, rationally, that once those retail investors deleverage and sell their shares, its only a matter of time when SSE falls back to the 2000 range. 

They think they can fight the market. I don't think so.