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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

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