Folks are fired up about the possibility that the Xi “put” will be squarely in place in Chinese markets for the foreseeable future. And by “foreseeable future” I mean literally until he keels over one day, because thanks to the Party’s decision to repeal presidential term limits, Xi is set to rule forever.
I’m not sure I would call the move a “surprise” per se given what we saw at the Party Congress, but this obviously marks a break with the tradition of collective leadership. Additionally, it raises the possibility that “mistakes” could be made later on down the line when this fucker starts to get really old, but you know, I guess we’ll cross that bridge when we come to it. This title from an October post of ours looks pretty funny now:
Well call it faith in the inherent “stability” (and that’s a fun dictator euphemism) of one-man rule or call it the market expressing confidence in the relative merits of an indefinite continuation of the current policy regime or maybe just call it Chinese investors taking their cues from Wall Street’s strong close on Friday, but whatever you call it, call it “green” not “red” (get it? “red”?).
The SHCOMP was up 1.2% rising for the third day off of the Lunar New Year break and the six straight session overall:
The Shenzhen and the ChiNext soared, with the latter getting an extra boost from a decision to delay a deadline for the government to approve a registration-based IPO system until February 29, 2020. “There will be less supply of new shares in the market, forcing investors to chase opportunities among existing stocks, especially the small companies that were recently listed for high-beta gains,” Qian Qimin, an analyst at Shenwan Hongyuan Group told Bloomberg.
Notably, Hong Kong investors poured into mainland shares, buying a net 3.39b yuan ($538m) via the northbound links. That’s the most since January 4.
Asian markets were higher pretty much across the board, but mainland Chinese markets were the standout. Mock Xi’s latest powergrab if you will (and people are already doing just that), but there’s something to be said for policy continuity in the world’s second largest economy. It doesn’t say much for democratic norms, but it probably says a lot for the extent to which China will continue down the road it’s on and not everything about that road is bad.
Incidentally, I guess Trump was right after all when he told Lou Dobbs this in an interview last year:
Now some people might call him the king of China.
Now clap for Xi – before he throws you in jail.
