Note: In China, Green Means a Falling Stock

♠ Posted by Emmanuel in , at 1/07/2016 11:13:00 AM
Those stocks are green in the PRC...because they're falling. The third column shows changes on the day.
These past few days have been rough for global stock markets, but especially so in mainland China. Twice in four trading days, the Shanghai stock exchange has closed automatically after breaching the 7% daily trading limit on the down side. You keep seeing pictures like the one above of investors stupefied by boards showing stocks nearly all in green, and you may think "But aren't stocks going up across the board?" Actually, if you look at the figures, the stocks in green are down in China. Red is an auspicious color in China, and so it's used to indicate when stocks rise. Conversely, green is not necessarily the opposite as an "inauspicious" color, but it's what they use to indicate losses.

I think it would be clearer to the rest of the world if they used a different color-coding system for "down" to be some other color other than green. Then again, these boards may be programmed to show only three real variations of green, red, and a "neutral" color to show no change.

At any rate, PRC officialdom has much to answer for regarding these market movements roiling the world economy. Having goaded retail investors into stocks just as China's economy was slowing down, they now have to intervene heavily to avoid losing face. But even so, their efforts do not seem to be inspiring much confidence. That their central bank is guiding the yuan lower and lower again is a source of discomfort since it's precisely that sort of action by the PBoC which brought on last August's movements.