Skip to main content

China capital markets

I never seriously looked at the Chinese capital market.  It was of no professional interest.  We didn't even consider the Japanese market.  Our investors simply had no appetite for the sector.  

However, watching stupidity is always entertaining.  Years ago the Vietnamese Government decided that the country needed a stock market.  For years the market would open and close every day.  For years there was not a single company listed on the Vietnamese Stock market.  I'm not sure how long it lasted but it probably more than a decade.

Now when it comes to stupid there's nothing like a good dictatorship...In 2022, the Chinese government decreed that bond price, and volume were secret information.   In other words, to save the bond market, they killed the bond market.  There is no market making there is no price.  the whole thing is totally opaque.  

The Chinese stock market is a partial reflection of private enterprise.  Investing in state-owned companies is based on what the government "needs" to pay, but private companies respond to market forces.  For nearly five years now, the CCP has pushed hard against private enterprises.  Most of my ex-firm's Chinese clients were entrepreneurs and business owners.  The one I met in Vail told me that he sold his last company for the amount of cash left in the business.  He gave it away!  He saw no value in the ongoing operations of his last company (his most prestigious).  

Private companies are circling the drain, and it is reflected in their share price.  The result is that for the past 18 months, the Chinese stock market has been in free fall losing almost 30% of its value, especially if you consider that the bulk of the market are state-owned enterprises, immune to market realities.  The small private companies are dying, so the Chinese government is implementing new measures to make the market "more stable" by introducing more opacity.

Eventually, the Shanghai Stock Exchange will be entirely populated by state-owned enterprises.  The real reflection of China's brand of capitalism

Comments

Popular posts from this blog

Spray painting Taylor Swift G650 aircraft (updated)

 First, a bit of paint will not harm anyone.  These climate activities are going to learn two things in the next few days:  (1) Trespassing at an airport is a felony almost anywhere in the world.  That means criminal prosecution.   (2) removing paint from an aircraft is expensive.   So these climate activists are about to find out the reach of the British criminal system and it will not be pleasant, the UK has very strict laws about that, I would be surprised if cleaning the aircraft of all the paint will cost less than $100,000.     I am sure that when they planned (premeditation) this little show they had a very valid logic to doing this.  Tonight, they are probably realizing the depth of their troubles.   I understand that in the UK it's a minimum one-year jail sentence.    Also, good luck travelling with a criminal trespass charge against you.  I am relatively certain that the airline industry will ...

Farm; Half year performance

 People appear to be genuinely curious. 2024 has been a record first half for the farm.  The addition of high tunnels has greatly impacted our revenues.   While we expected Q1 profits to be higher, it really was the second quarter that produced the goods.  The terrible weather has greatly impacted the production of high-end vegetables. Energy costs are now very stable and have become a fixed variable especially now that our bio digesters are fully dialled in.   Replacing some of our pre-dryer equipment was covered under warranty, and the new equipment is far better at dealing with gas moisture, and much better steel!   Our diesel costs are what they are! Our biologist and ecologist devised a new planting plan for our high tunnels that greatly reduced pests, especially slugs.   We have seen a 90% decline in sluggs this year, resulting in better yields.   It seems that several plants act as natural repelants and if planted c...

Britain, France and Egypt

 The voters realize now that the Conservative Praty desire to return to 19th-century dominance has driven its hatred of the EU.  The voters realize now that departure from the EU has accelerated Britain's decline and may soon make it irrelevant.  At best it will have to kiss American arses to maintain its standing.  For this, the conservatives were punished.  The decline of Britain was inevitable, competition from Frankfurt and Germany in Finance was bound to grow.  The core of Europe (aka Germany) is aging quickly Macron seems to be winning his bet, the left alliance that won the legislative elections will not remain united for long, since they disagree on about everything.   The Far right though it was about to assume power is once again relegated to the back of the bus.   It may draw its own conclusions, but not all of these are good for France.  The far-right has won nearly 1/3rd of the electorate, that is not something to be ig...