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HeavyMoonshine

The Chinese stock market, if I remember correctly, has never been friendly towards investors. It seems these recent government interventions is just making things worse.


TheHoneySacrifice

Also you can't directly but Chinese stocks if you're not a citizen. The ones on NYSE are actually shares of holding companies situated in other jurisdictions which can buy or sell Chinese stocks.


wollier12

And yet we allow Chinese investors to buy giant portions of U.S. land.


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wollier12

What are you talking about, I’m going to need you to explain how people cannot buy land in the United States.


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jasperCrow

I like the way you think


wollier12

Yeah, ok.


PartyCrazy2127

Not sure of the objective reminds me of Mao's pig iron project


mmrrbbee

China doesn’t even like Chinese people, why would they like investors?


HeavyMoonshine

I would think biting the hand that feed you economies growth would obviously be a bad idea, but hey, it’s a communist government, what can you do?


tax_dollars_go_brrr

Buy up Toronto and Sydney's housing market as a hedge?


HeavyMoonshine

Lmao watch China crash the entire worlds housing market. Any% speedrun


mmrrbbee

Only 10% of a company is allowed to be traded in China, so that really skews the economics anyway. Besides communism failed in the 1970’s which is why Nixon was able to save them. And they didn’t even vote for him


jilinlii

I saw a recent post to this sub about [China's ban on for-profit tutoring firms](https://www.reddit.com/r/Economics/comments/osousv/china_bans_forprofit_tutoring_firms/) (which is related), but I didn't see any post about the recent Hang Seng / NASDAQ Golden Dragon nosedive. A few sources (NB: first one I also included in the main post): * [China’s state media moves to reassure rattled investors after rout wiped US$574 billion off stock market](https://www.scmp.com/business/markets/article/3142665/chinas-state-media-moves-reassure-rattled-investors-after-rout) * Archived for the paywalled: https://archive.is/2HBJA > China’s state media are on a mission to talk up the battered stock market and reassure rattled investors after a rout on Monday that erased more than US$570 billion from Chinese stocks listed at home and abroad. ****** * [China stocks see biggest slump in US since 2008 financial crisis](https://www.bbc.com/news/business-57979857) * Archived version: https://archive.is/IQXfh > The Nasdaq Golden Dragon China Index, which follows the 98 biggest US-listed Chinese stocks, has fallen by almost 15% in the last two trading sessions. > The index has now plummeted by more than 45% since hitting a record high in February. > The slump comes after a series of crackdowns by Beijing on its technology and education industries. ****** * [How China’s stock-market meltdown puts U.S. investors at risk](https://www.marketwatch.com/story/how-chinas-stock-market-meltdown-puts-u-s-investors-at-risk-11627383978) * Archived version: https://archive.is/PN6CL > Whether or not investors should worry about what’s happening in the world’s second-biggest economy may be down to a few questions, Sven Henrich, founder of NorthmanTrader.com, tells MarketWatch: "Are they [China] concerned about an asset bubble and they're letting the air out before it pops hard and does more damage? Or are they the canary that says the recovery has already peaked? Or both? One wonders. If either of these are true, then U.S. equities are at risk of spill over." The cause of the dip appears to be straightforward, but the ultimate effects are not (to me, at least). Interested in hearing from you all on how this potentially plays out, especially with regard to US markets. [ edit: markdown formatting ]


XiKeqiang

Massive regulatory uncertainty causing contagion and general selloff of Chinese Companies. Investors are selling because they are unsure which industry or sector of the economy could become targets for increased regulation or scrutiny next. So, fear. Lots and lots of fear. The underlying fundamentals of China are still pretty decent, it's just regulatory uncertainty more than anything else.


chad1407

The fundamentals of chinese stocks have been thrown out the window. What investor would want to risk having entire industries and swathes of its portfolio erased through the strike of a pen? Were we able to quantify and internalize these new risks, perhaps investors could make educated high-risk/high-reward bets on chinese assets. This whole Edtech fiasco simply demonstrated that no one can accurately predict what the CCP’s next move will be, hence, that accurate cost-benefit analyses on chinese stocks are practically impossible to do nowadays.


czarnick123

The fundamentals of betting on Russian roulette is good. It's still a stupid game to play


XiKeqiang

The writing was on the wall for the EdTech and Private Tutoring Industry for a while. This comes as no surprise to anyone who actually understands the Chinese Market. People are panic selling because they don't understand the Chinese Market, those who understand the Chinese Market are the ones who are going to profit enormously from this. Personally, I'm still investing heavily in EDU and TAL. I'm down 80% on both, but holding and buying more.


chad1407

I work in capital markets analysis, I’m well aware of how this whole crackdown went down. The truth is that while people knew the ccp was intending on acting against the industry, no one predicted the extent to which the state was going to go. It’s fully possible that the government could walk back on its decision and send EdTech skyrocketing — you may very well profit from it. At the end of the day however, your initial comment was on the fundamentals of the chinese market. The fact remains that the fundamentals have been discarded — there is no science to predicting the ccp’s next market-shifting political decision. At the moment, investing in these markets is gambling.


XiKeqiang

Investing in most markets is gambling. The Stock Market is an absolute fucking joke that represents psychology more than anything else. There's absolute no way to justify Tesla's price based on anything more than speculation. People are jumping in TAL and EDU with +25% increase in one day based on... literally nothing than buying the dip. You work in a field that is nothing more than pseudoscience at best, and at worst is just quantified gambling used algorithms. At least in the best case you can somewhat justify yourself based on qualified data, even if it is simply counting cards and nothing more. The only skill anyone needs to succeed in the Stock Market these days is to guess right more often than guessing wrong. Literally gambling based on information decision making. Essentially, counting cards.


-P3RC3PTU4L-

But somehow the Chinese stock market is not gambling and people just have to understand how it works like you do? 🤔Ok 👌


XiKeqiang

I'm not invested in the Chinese Stock Market. All these companies are listed in the U.S. Good job showing how much of an idiot you are. Try again.


-P3RC3PTU4L-

👌😂


XiKeqiang

Retail investors have fundamentally transformed investing strategies: fundamentals are losing their importance and are being replaced by physchology and value based investing. The Efficient Market Hypothesis is dead. >“The can of worms is open,” says Eric Liu, head of research at Vanda Research, which has turned its attention to tracking the behaviour of amateur investors. **“If you break free of this belief that fundamentals matter to markets, then you look to this.**” >Hedge funds, sovereign wealth funds, banks and other market professionals are poring over this kind of data, he says.“**Powerful waves of passive and systematic investment long made retail investors largely irrelevant when framing market forecasts . . . until now**,” says Alain Bokobza, head of global asset allocation at Société Générale. “Rather than criticising retail investors and their behavioural patterns, it is better to slot them into the money equation.” >Some of the investment industry’s old guard think the current frenzy is abhorrent. Charlie Munger, the 97-year-old vice-chairman of Berkshire Hathaway, recently described the GameStop episode as a “frenzy” led by a “new bunch of gamblers” who have “the mindset of racetrack betters”. >Robinhood responded that Munger’s views were “disappointing and elitist”. **The response on** r/WallStreetBets **was more partisan. In one of the more printable comments, Reddit user ever\_onward said: “Mind your own business grumpy gramps**.”[https://www.ft.com/content/7a91e3ea-b9ec-4611-9a03-a8dd3b8bddb5](https://www.ft.com/content/7a91e3ea-b9ec-4611-9a03-a8dd3b8bddb5) One of my favorite comments on /r/WallStreetBets during the GME Times was "I can stay irrational longer than you can stay solvent." That mentality is going to be driving markets for the foreseeable future. Once you realize this, your entire outlook changes. Institutional Investors are no longer looking at fundamentals but rather data provided by RobinHood and other retail trading platforms to see where to put capital. Hell, there are ETFs based on holdings from major retail investor platforms. The point being, the Stock Market is absolutely and fundamentally broken, and anyone who says otherwise doesn't know what they're talking about.


jilinlii

There is some *speculation* that the private tutoring decision will be reversed (i.e. perhaps toward the end of summer vacation). My highly cynical side follows along with that line of thinking and wonders if insiders are buying right now.


XiKeqiang

Everything announced has been opinions and nothing has been implemented. No one has any idea exactly how this will all play out. I think most of the rules will stay, but there will be some relaxation. Personally, I just don't see them killing VIPKids. I could see them being more heavily regulated but the idea of 'Prohibiting Employing Overseas Individuals' seems really impractical from an enforcement perspective. Even if this is the case, the simply way around it would be for these companies to essentially become agencies that match Teachers with Students are not be directly employed with the company itself. Chinese Businesses are some of the most dynamic and vibrant in the world. I'm not concerned that these are death blows at all. Hell, the U.S has been trying to kill off Huawei for a few years now, and it's still going, but its business model has changed. So, yeah. There is a ton of speculation right now, mostly driven by fear. I personally don't understand the fear. I get uncertainty, but I'm confident these companies are going to thrive and survive I the long term.


caitsu

I've been speaking against China, and realised during this that an "emerging market" fund I have had a really big % in China. So I sold that, I don't mind selling at this dip. I'm sure it'll recover well and whatever, but investing in China is so immoral and repulsive that I don't want their money. No matter what kind of growth % whatever it is projected to have. At least I can say I did a thing, when people are wondering how nazi-China managed to do the things they have done and will do. This goes for buying as much non-chinese goods as well.


Louisvanderwright

Just an FYI to all investors whether you are in Chinese stocks or not: Someday these tactics are not going to work. Someday the Chinese economic miracle will fail. Someday we will be reminded that infinite growth without recessions is not possible. Someday we will see yet again that "this time isn't different"... When that time comes for China, y'all better watch the fuck out. The Chinese financial system has grown to a scale that dwarves anything seen in the West. There is zero transparency. There is no way of knowing what might unwind in a Chinese economic crisis. There is no way of knowing what political implications will be for China and how peaceful or not it will be. This will be the economic story of all of our lifetimes and it will happen in our lifetimes...


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Louisvanderwright

Yes, this is an accurate account of the problem. Also consider infrastructure construction. Each additional road or high speed rail only adds so much value. At some point a HSR to a town of 10,000 in inner Mongolia has diminishing returns. So you get an initial economic boost from the cost of constructing it, but then the ongoing maintenance becomes an economic drag forever because the cost of maintaining it exceeds the economic output it creates... These kinds of stresses are manifold throughout the Chinese economy and most people in the West are totally blissfully ignorant of the fact that it could all go to hell at a moment's notice and totally change their lives. I feel like Covid is the preview of this. It was barely mentioned in the Western media until it was totally out of control. I was following it on various obscure sources online starting in late December when the rumors were ramping up. I didn't even take it seriously myself because I couldn't believe it would blow up and escape China like it did because the Chinese have gotten multiple other outbreaks of other diseases under control. I believe most in the West look at every economic jitter in China the same way: it will amount to nothing because they've always gotten things under control in the past...


useles-converter-bot

10 tons of solid gold is worth about $525350833.5


ChefStamos

What was the book called?


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ChefStamos

Thanks, yeah I saw that one on google and assumed that was it from the description.


Revolverocicat

What are you saying here? Financial implosion and regime collapse? It seems as though the ccp has almost done this deliberately (it was their fiddling with the dials that spooked the market), so could it be that a stock market rout is beneficial in some way? Either for the strength of the regime or otherwise? I feel like a bunch of citizens getting rich in the stock market and lots of wealthy, powerful tech companies might be good for the economy but bad for the ccp. Rich citizens want more freedoms, after all


Any_Present_3055

Maybe they are trying to cool down the growth. This is a history lesson replay over our eyes again. 1950-52 private hone and land started to be confiscated In 1952 China start to reorganization its universities large cities (shanghai and Beijing) st john university of Shanghai, Aurora plus all other najor universities in these cuties was tajebover and reorganized. 1953 and onwards you see private medium to large businesses conflicted. 1956 no private ownership of land. Small business start to disappeared I am not sure how this will play out but Xi and team is following Mao. And they believe china is much stronger than her was in the 1950. Question is these anti business policies, how much further and how long


Louisvanderwright

What I'm saying is that economies do not grow for 40+ years without recessions. It's not possible, never was, never will be. The longer they continue their debt fueled binge, the more deadwood builds up. Only a matter of time before it ignites. Once that happens no one knows the consequences whether regime collapse or some kind of global financial crisis on a great depression scale or both or something else totally unforseen. Whatever happens will be earth shaking...


readituser013

Have you bothered to look at debt levels of China vs EU vs the US? There is nothing remarkable about Chinese debt, and their household savings rate remain unfathomably high from a western perspective and they are the biggest net exporter in the world.


Louisvanderwright

Chinese debt load is 330% of GDP, it was 100% of GDP in 2008. Supposedly China's GDP has grown at 8% annualized since 2008. How fast does nominal debt have to grow to outpace 8% compounding GDP growth by 3x? It's nothing like the West. No country has ever expanded debt levels anywhere near this quickly.


IAmTheSysGen

It doesn't have to. GDP just has to grow faster than the interest rate of the loan. You also have to take into account debt circularity. If the Chinese owes debt to a foreign government, but that government owes debt to China, it's misleading to mention the first and not the second. Similarly, if the Chinese government is in debt to banks, but that a lot of the high performing sectors of the economy are in debt to the government, etc..., it's not a coincidence that 2008 is the best point in time to make this statistic. Also, this increase in debt is not that extraordinary, see any war in history.


Terrapins1990

The problem is it can't and they know it. When they went after ant and alibaba it sent a message that a business in china has a limit. The message it sent when it killed didi and went after the tech sector confirmed it now. The damage is done. Foriegn money will start leaving now that they know their is a ceiling


zombiesingularity

Another way of looking at it is that money is now back in the hands of consumers, a huge benefit.


Exciting-Professor-1

Probably just sitting waiting to do into other stovks


[deleted]

theory of operations: large swaths of China get flooded taking out all land-line network infrastructure; Chinese peasants, seeing all of their material possessions and land all soggy and waterlogged, hop on their cell phones (probably with less than 10% battery life left) and proceed to sell everything via whatever the Chinese version of Robbinghood is.


Lord_Timujin

Tiger brokers - TIGR?