On Monday the 25th of August 2015, the Chinese stock market crashed for the second time this year, sending shockwaves around the world; and global markets, into freefall. On this day, which has come to be known in trading circles as Black Monday, nearly £74 billion was wiped off the UK’s FTSE 100 Index, with similar losses felt across both the US and Europe.
According to experts, this was the biggest stockmarket crash since the global recession in 2007, and for many, a troubling sign that all is not well with the world’s biggest economy – one that has so far managed to buck worldwide trends and post double digit growth rates for the last decade or so.
So what was going on?
For a while now, economists and financial journalists have been saying that China’s growth rates were unsustainable, mainly because they were artificially created through state intervention. As a result, this market rectification was far from unexpected in financial circles. Writing in the Guardian newspaper, Rob Donaldson, head of M&A and private equity at Baker Tilly Corporate Financehe said:
Over the last few years, tens of millions of individual investors in China – who vastly outweigh institutional investors (80/20 versus the other way around in the developed markets) – have been encouraged by the State apparatus to plough their money into shares. This has pushed prices up far beyond their fundamental value and what we are now seeing is a painful, but perhaps necessary, return of common sense.
What is perhaps more surprising is the degree of knock-on effects to share prices on the FTSE and across European markets, but we should perhaps be wary of undue panic. Fundamentally, the Chinese economy was always going to slow…
Other analysts are less optimistic, with some even predicting that we could be headed for a 1929 style crash or third wave of economic volatility as China’s growth rate begins to slow.
So who is right? Will China plunge the world into another recession, or is it just a temporary blip – an adjustment that needed to happen sooner or later – in order for China to come into line with international trends?
Given all this uncertainty, I thought it might be interesting to have a look at the astrology of the crash to see if it offered us any useful insights into China’s prospects and the possible implications of this crash for the rest of the world. Astrology has long been used to predict trends in the stock market. Financial astrologers such as Christeen Skinner have built very successful practices from offering their astrology-based advice to clients looking for ways to hedge their financial bets. Let’s see if it can offer an insights into the wider implications of Black Monday…
Black Monday – A mundane astrology analysis
View enlarged PDF: Black Monday Event Chart
Above is an event chart for Black Monday, set for midday in Shanghai, where China’s main stock exchange is based. Although you could argue that the downward slide actually began on Sunday the 23rd, it was only on Black Monday that the real crash, which affected worldwide markets, happened.
This chart is interesting for a number of reasons.
Firstly, it has a rather ominous Scorpio Ascendant, which hints at dark undercurrents and shadows lurking just out of sight.
Saturn, the planet of loss, limitations and difficulties, is also rising. Saturn rules fear and its presence here seems symbolic of the 50% spike in the ‘fear index’ – a measure of investor confidence – that occurred on Black Monday (Saturn also happens to rule the colour black, so even the title given to this particular day appears to echo this planet!)
Secondly, the chart ruler, Pluto, is located in the 2nd house of money (which corresponds to the economy and wealth of a country in mundane astrology), making the chart radical (our focus in this reading is very much on economic affairs) and hinting at the possibility of hidden dangers tied up in this situation. Its position in Capricorn, which governs rules and institutions, seems to point to these hidden dangers being somehow connected to the Chinese economic system behind the scenes.
And indeed, finance journalists such as Robert Peston have been warning us about the hidden extent of China’s rising debt problem, caused largely by what have come to be known as China’s ‘shadow banks’ – an apt name, given the involvement of Pluto here. Writing in 2014 ahead of his BBC documentary on the subject, entitled ‘How China Fooled the World’, Peston made this rather chilling statement:
Anyone living in the rich West does not need a lecture on the perils of a financial system that creates too much credit too quickly. And in China’s case, as was dangerously true in ours, a good deal of the debt is hidden, in specially created, opaque and largely financial institutions which we’ve come to call “shadow” banks.
There are no exceptions to the lessons of financial history: lending at that rate leads to debtors unable to meet their obligations, and to large losses for creditors; the question is not whether this will happen but when, and on what scale.
Many economists worry that a debt bubble in this sector could lead to another worldwide recession, or what some are referring to as the ‘third wave’ of the global credit crunch that began in 2007.
In a recent article in the Economist entitled ‘Shadow Banking in China: Battling the Darkness’ (how apt, considering Pluto’s involvement!), one analyst wrote:
China’s economy is slowing. It has grown by 7.6% for the past two years, the slowest rate since 1990. Several trust products have defaulted, although investors in most of them have got their money back one way or another. Over $400 billion-worth of trust products are due to mature this year—and borrowers will want to roll over many of those loans. Many observers worry that investors will lose faith in trusts, prompting a run, which may, in turn, blight certain industries and other parts of the financial system. No country, pessimists point out, has seen credit in all its forms grow as quickly as China has of late without suffering a financial crisis.
So, was Black Monday a result of China’s shadow banking chickens coming home to roost?
Certainly, it may be no small coincidence, that just weeks before Black Monday, on the 15th of August, a number of shadow banks, notably trust companies, made an appeal to the Chinese government for a bailout via an open letter. This came a week after the Chinese government devalued the Yuan and on the same day that stock markets in Europe, the US and Australia began to post losses as investor confidence in the Chinese economy began to wane. As an astrologer, it would therefore seem to me that Pluto in Capricorn in the second house represents the Chinese financial system, which has been severely affected by growing investor fears (Saturn) and a loss of confidence in the market.
So, are these fears justified, or is there a certain amount of panic and hysteria going on?
This is where the Moon comes in. As ruler of the 9th house of foreign relations, it certainly seems to represent foreign investor sentiment and their reaction to the situation. Placed in Sagittarius, a combination that can often result in exaggerated emotion and a tendency to over-react, we could well be looking at a case of market jitters and panic selling caused by spooked overseas investors trading in foreign markets.
However, the Moon is also located in the first house, which seems to implicate China itself in contributing to and a participant of, the mass hysteria. And, indeed, in the months leading up to Black Monday, the Chinese government gave off signs of panic as it moved to intervene and stabilise the market via a number of measures, including its suspension of the trade on new stocks in early July, followed by a currency devaluation on August the 10th to shore up exports, as well as a number of interest rate cuts.
In fact, one writer described the Chinese government’s reaction to the crash as ‘pushing the panic button’, an apt turn of phrase, given this Sagittarius Moon, whilst more recently, another pundit described China’s continued policy of interest rate cuts (they recently announced the sixth since November 2014) as a sign that China is “getting more and more desperate” and that “things are really bad there.”
But are these fears justified?
If we look at the aspects of Pluto and the Moon, we get the idea that any losses would hit the domestic market in China far harder than any overseas investors, and that China’s moves may have been in a bid to protect the many so-called ‘Mom and Pop’ investors who have been encouraged to buy shares in the Chinese stock market by the government. The square between the Moon and Chiron in the 4th house (which rules the common people, land and property) suggests that this is a major vulnerability in the system right now, along with the construction and property industries, areas where China has invested heavily in recent years via massive infrastructure projects designed to stimulate growth.
Furthermore, the ruler of the second house is lucky Jupiter, which in this chart is located in the 10th house close to the Sun, which in and of itself, looks fairly positive. The word ‘faith’ also keeps cropping up in relation to investor confidence, and as ruler of the 2nd house located in the most public position in the chart – the 10th house – the condition of Jupiter would, astrologically speaking, provide a good barometer of whether or not faith is likely to be restored in the Chinese market. What confirms this relationship is Jupiter’s conjunction to the Part of Faith – from an astrological point of view, this seems pretty equivocal.
On the face of it, Jupiter’s strong angular position on the Midheaven, conjunct the Sun certainly makes it look likely that faith/confidence in the market is likely to be restored. The question is how, and here, it may be significant that both the Sun and Jupiter are newly-ingressed into thrifty and efficient Virgo, a world away from the excesses of flash and flamboyant Leo, which is where Jupiter and the Sun were both located in June 2015 when the Chinese stock market reached an all time high. This suggests that a public change in economic tack by the Chinese government (MC), perhaps via a clear political plan to restructure the shadow banking industry (after all, Pluto in Capricorn in the 2nd is calling for far-reaching reform), together with some rule changes, careful governance and a more modest but realistic projected growth plan, could well be the secret to restoring market faith. A point to note here is that Jupiter is in detriment in Virgo – as the planet of excess and leadership, Jupiter probably doesn’t do well being modest, servile or thrifty – all qualities associated with Virgo, so it may be an uncomfortable process for China to have to tighten its belt, be answerable to the rest of the world and perhaps cut back a bit on all those lavish building projects? Nevertheless, needs must and all that!
On the positive side, the trine between the Moon and Venus in the 9th house suggests that the government knows that, in order to restore confidence in the market, it needs to be seen to be calm, confident and on top of the situation. Putting on a bit of a show and strengthening diplomatic ties are both classic PR tactics, and it is probably therefore no surprise that not long after Back Monday, the Chinese president made a state visit to the UK – one of the world’s most important financial centres and a key trading partner for China. This show of strength was further emphasized by the fact that president Xi Jinping was invited to stay at Buckingham Palace, and indeed, the Queen seemed to be pulling out all the stops to make the Chinese leader feel welcomed and important (Venus in Leo in the 9th and the Sun conjunct MC & Regulus anyone?).
In his speech to members of the British parliament, the Chinese supreme leader, also made a point of saying that the fates of the the UK and China were “increasingly interdependent”. Fate is in an interesting choice of word…and on this note, it is interesting that in the Black Monday chart, Saturn is sextile to Mercury and the North Node in Libra (the nodes being very much associated with the workings of fate, and Libra being the sign of peace and harmonious diplomatic relations), making the speech highly significant, almost as if the Chinese themselves had consulted their astrologers and made a similar observation… Of course, the North Node also happens to be in the 11th house of parliaments/democracy/collective rule, so this aspect may also have some political implications for the Chinese government, with its poor track record with regards to matters such as democracy and human rights issues. Perhaps the one silver lining to come out of Black Monday, then, will be increasingly close relationships between China and the West, and in turn, a liberalisation of its political system?
On another level, the impending sextile between Mercury, ruler of the 10th and 11th houses (=government, leadership political rulers) and Saturn, ruler of the 3rd house of self expression, PR, press, announcements etc, also seems to point to a return of political stability and an end to any fears regarding the economy via messages/signals of reassurance.
Indeed, perhaps because of China’s unusual economic set-up, some economists think that the global fallout from a Chinese economic slowdown will not be as bad as some fear:
…the risks of financial contagion from China’s stock market crash to the rest of the world are limited, because most losers will be Chinese companies and Chinese individuals. That’s unlike the crash of 2007, when the whole world had bought into the US sub-prime boom.
Some have even given several reasons to be optimistic, citing things like cheaper imports, and a reduced risk of interest rate rises in the UK and the US. On this front, there have already been some winners and losers, as the UK steel industry can attest to.
As if to reinforce the largely positive message that seems to be arising from this chart, Pluto happens to be making a sextile to Neptune, ruler of the 4th and 5th houses. To me, this points to Black Monday being more of a wake-up call to the Chinese government that it may be time to restructure their economy so that it protects domestic interests (4th house, Neptune in 4th) and bring future growth forecasts more into line with those of the rest of the world (Jupiter in Virgo in 10th = modest, more realistic). By moving to protect the domestic economy and being more realistic about growth prospects, they are less likely to face an internal political rebellion. And with protests continuing to break out on the streets and squares of Beijing, this seems like a very smart move on their part indeed.
A last word must go to the trine between the Moon and Uranus in the 5th house of speculation and gambling. This points to some kind of surprise move on the part of the Chinese designed to restore confidence. The 5th house rules children and the birth rate, as well as sport, entertainment and gambling or speculation – could we expect a surprise announcement freeing up speculative banking regulations or a loosening up of China’s one child policy? Demographically and economically, it would make sense. As one reporter put it: low fertility rates, a rapidly ageing population and a shrinking labour force will inevitably put immense strains on the economy in the decades ahead, so a further relaxation of this policy beyond its 2013 announcement doesn’t seem that crazy. Who knows?! Let’s wait and see what happens…
Suffice it to say, Uranus is an unpredictable planet, so anything is possible and if the astrology is correct, then the world needn’t panic just yet. Perhaps the message to take away is that China may not shake the world in quite the way we expect!