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In China, ‘It’s Absolutely Insane’
Chinese equity investors are an excitable lot, God bless 'em. And international investors were woefully (albeit understandably) under-exposed to local equities. That's a combustible setup in the presence of stimulus.
On Monday, just ahead of the Golden Week break, the Shanghai Composite Index scored a superlative gain, where that means the benchmark rallied a delirious 8%. And no, that's not a typo.
It was the best one-day gain since 2008, and it was even more impressive -- or ridiculous, depe
“There’s no other way to be rich other than redoubling bets on stocks,”
So sports betting is unavailable? We are blessed to live in the USA where we can play zero-day options and bet not just final scores but what the next pitch or play will be.
0DTE is a human right! 😉
I have never thought Americans were all that fond of capitalism. They are generally greedy, yes, but they hate competitors, protective regulations, moderate growth, and markets in general, especially since they mostly don’t understand them. They also don’t actually understand capitalism either Really, it’s just money Americans worship and they want to be the only ones who have any.
Going back ten years on the CSI300, I see several huge gap ups like the current one, and over that period CSI300 has underperformed S&P500 by around 150%. If we say that Xi really consolidated power around 2020, more like 190%.
Europe is probably the closest thing to something in between.
European markets have underperformed.
What rewards investors is sometimes different than what is good for humans.
I guess the answer is to live in France, invest in the US, and pay taxes in China.
My plan, except pay taxes in Kuwait. They’ve got the best rate around (0% on everything). And Portugal, northern Spain, northern Italy, Maybe Prague and Budapest can be interesting for stays outside of France… I don’t want to be too blinded by my nationality… 😉
Yeah. As in almost all cases, it’s likely something in-between – a balanced combination of greed and nobleness – a happy medium, as H put it.
A huge stimulus shot in the arm. Yaaayyy! It will wear off.
I’m not so sure about human progress is always driven by avarice. I mean, I read somewhere about Nikola Tesla’s innovations and how they helped change the world. If the story is true, it’s not greed that’s driven Tesla, who’s more or less a selfless person. Just ask Westinghouse. And it’s Edison’s greed that suppressed Tesla’s progress. Maybe Elon Musk read the story and decided to name his company after Tesla, although I’d say Elon might’ve learned a thing or two from the story, made some twists to avoid meeting the same tragic end as Tesla’s. Maybe it’s extreme greed, or maybe it’s something more noble that’s driven Elon’s decisions to revolutionize space travel, lead the EV market, transform online payments, promote solar energy solutions, develop brain-computer interfaces, etc. Maybe Elon decided to play capitalism ball as to avoid being suppressed by others’ greed. And then there’s Bill Gates with his decision to make Windows free around the world (at first). I can’t say for sure if it’s extreme greed that made him do that, or he really envisioned a monopoly world where he gets to charge whatever he wants with Office when he did that. The same goes for Mark Zuckerberg’s for making Facebook free for the public. And Google. Then there’s Sam Altman with his decision to go Open AI as a non-profit (until recently).
Sure, there’s a reason it’s all happened in the US. And I’m not saying this in defense of Xi’s China. God knows I don’t like Xi’s China. I’m saying this to suggest that maybe it’s not all extreme greed that’s driven human progress, although it’s true that capitalism runs an excellent reward system for innovations. Maybe it’s something more noble. Maybe I’m too hopeful about our species.
FWIW, I think you’re too hopeful.
Self interest (not quite the same thing as greed but close) remains the surest path to get the best out of people. Which doesn’t mean people aren’t motivated by other things or cannot convinced themselves they’re more altruistic/noble/selfless than they are…
Sobering WSJ article on China’s empty housing. Article suggests (correctly I think) that there is no near-term solution for China’s housing glut. Outside of the largest growing cities, no solution in the long-term.
https://www.wsj.com/world/china/china-housing-glut-population-economy-09cffa6a
Back-of-envelope on how much wealth will disappear as 90MM homes go to zero value is . . . staggering.
Most of those are probably mere shells, with no fittings. So the value is bound to be lower than for a fully-equiped home. None-the-less, I’m sounding like a street anaylst saying “It’s a good earnings number! They lost less than expected!” The losses will still be large. Not sure how they percolate through the wider economy. Maybe via more loan defaults and, more dangerously, more levered “investmant” products stop paying out?
To John’s point: I don’t think it’s possible to get a good read on the scope of what it is the Party’s actually trying to address here. I think that between the size of the Chinese economy, the heterogeneity of the country in terms of economic development (i.e., vast disparities between locales) and this kind of generalized limbo state between smokestack growth and a consumer-driven model and between EM and DM, the whole thing is just too much. I don’t think there’s a way to address it comprehensively with policy, because I’m not even sure what it is they’re addressing and I don’t think they are either.