China

[juno323]

1 hour ago, Luca said:

So i am seeing the negative headlines to continue while over the coming years their economy stabilizes and growth continues. The investments will continue, the huge part of the still poor population in china will get lifted out of poverty with competent financial moves by the CCP (that can regulate like no other state), and china will look better and stronger 10 years down the road. There will be more people taking part in their digital economy, benefitting the smart management of Tencent that knows china inside out. Geopolitics will change too over time, the leaders of today are all 70 years+, if one is willing to own these ownership mindset largecaps like tencent for the next 15 years, even better via prosus due to buybacks and discount. I think the probability is a lot higher we will make a lot of money here than not. 

Didn’t the CCP put them into poverty in the first place?

[Luke]

20 minutes ago, juno323 said:

Didn’t the CCP put them into poverty in the first place?

Making todays members of the chinese government responsible for the deaths back then is the same as making the current german government guilty for starting WW2 and killing jews. Doesnt make any sense at all!

Edited August 15, 2023 by Luca

[juno323]

38 minutes ago, Luca said:

Making todays members of the chinese government responsible for the deaths back then is the same as making the current german government guilty for starting WW2 and killing jews. Doesnt make any sense at all!

The people are different but the governmental structure and system is similar. 

 

There’s been a clear shift in the the last few years that have undone many of the policies that were set in place that enabled China to unleash its potential starting from the 80s.

 

I want China to do well - but the new direction it’s heading is extremely concerning. 

Edited August 15, 2023 by juno323

[james22]

Betting against central planning is always a good bet, Luca.

[Luke]

1 hour ago, juno323 said:

The people are different but the governmental structure and system is similar. 

 

There’s been a clear shift in the the last few years that have undone many of the policies that were set in place that enabled China to unleash its potential starting from the 80s.

 

I want China to do well - but the new direction it’s heading is extremely concerning. 

The country did a 180 from back then, why continue to blame todays government for things almost 70 years ago. What is the new direction? Where are they heading? I dont see different goals for china compared to 5 years ago. The geopolitical mood changed and Xi has a tighter grip over the country. What fundamentally changed with China that was not obvious 3 years ago when Alibaba made ATHs?

[Spekulatius]

4 minutes ago, Luca said:

The country did a 180 from back then, why continue to blame todays government for things almost 70 years ago. What is the new direction? Where are they heading? I dont see different goals for china compared to 5 years ago. The geopolitical mood changed and Xi has a tighter grip over the country. What fundamentally changed with China that was not obvious 3 years ago when Alibaba made ATHs?

I don't think Xi plan to move China back to a control economy and to crack down on tech, because it became too powerful of a force and threatened the CCP's monopoly on power was obvious three years ago.

 

This became more and more obvious with the Ant Financial crackdown, Jack Ma's temporary disappearance and last not  least the elimination of term limits for Xi at the Party congress in fall last year.

 

It's not just perception either, the economic impact for tech and let's say Alibaba is very real - the growth rates have gone from 30%+ growth to zero and now back to ~10%.

Edited August 15, 2023 by Spekulatius

[cubsfan]

^^^ what fundamentally changed is that China unleashed the greatest biological disaster in 100 years upon the world and then covered it up.

 

So the world does not trust China and are pulling their supply chains right and left. 

[Luke]

58 minutes ago, james22 said:

Betting against central planning is always a good bet, Luca.

Then you would have had to bet against China 20 years ago and that would have led you to a 100% loss! Central planning was key to Chinas success. 

Edited August 15, 2023 by Luca

[cubsfan]

3 minutes ago, Luca said:

Then you would have had to bet against China 20 years ago and that would have led you to a 100% loss! Central planning was key to Chinas success. 

Yeah , it’s a good thing they built all those ghost cities, so people could live in concrete pipes.

[juno323]

That’s the real challenge - the lack of check and balances creates a feast or famine type situation.

 

Dependint on time period you were where the CCP was in charge, you either did really well or had your assets confiscated and were sent to the countryside.

On a side note, the returns or Chinese equities has been horrific in the last 3 decades too.

 

But at least you got to keep it..

 

[juno323]

23 minutes ago, Luca said:

The country did a 180 from back then, why continue to blame todays government for things almost 70 years ago. What is the new direction? Where are they heading? I dont see different goals for china compared to 5 years ago. The geopolitical mood changed and Xi has a tighter grip over the country. What fundamentally changed with China that was not obvious 3 years ago when Alibaba made ATHs?

I am not sure if you’ve kept up to date but a lot has changed in the last 3 years and the new direction seem a lot like the old policies which didn’t work and led them to the situation 70 years ago.

[Spekulatius]

14 minutes ago, Luca said:

Then you would have had to bet against China 20 years ago and that would have led you to a 100% loss! Central planning was key to Chinas success. 

The Chinese stock market has not performed well for quite some time. There is also a bit difference between betting against something and just leaving it alone.

 

In fact it seems like a good idea to leave all stock markets with autocratic regimes alone.

 

I do think you can make a bull case that China is a decent trade because negativity has gone too far, although that was more the case in Fall 2022 right after the CCP party congress.

Edited August 15, 2023 by Spekulatius

[Luke]

33 minutes ago, Spekulatius said:

I don't think Xi plan to move China back to a control economy and to crack down on tech, because it became too powerful of a force and threatened the CCP's monopoly on power was obvious three years ago.

That the state played a big role in the Chinese economy was obvious since so long. The tech crackdown was very valid: 

 

There were many problems with the Ant IPO:

 

1.  Ant labels itself as a Fintech Player but functioned similarly to a bank, it did not have the regulatory requirements that banks needed to have which was reason enough to stop the IPO. 

2. It was insufficiently capitalized and could have had systemic risks

3. Credit scoring had an opaque algorithm which was unverified which is another systemic risk problem.

 

On top Jack Ma did his complains about how stupid these regulations where etc what not. That guy has too big of a mouth. 

 

Crack techdown timelines: 

 

1. Antitrust probes:

 

Fines for Baba, Meituan, Didi, Baidu, JD, Tencent etc because of: 

 

Failing to disclose mergers, signing exclusive contracts,misleading marketing tactics and merger irregularities.

 

This didnt happen in the US yet, most people dont even bother because they dont think the US will do something about it but we will see. 

 

2. Data Security:

 

Didi IPO suspension etc, worrying about data being leaked to foreigners.

 

3. Disorderly capital expension, Growth at the expense of public interest: 

 

Wow! I have never even heard this in the US! Nobody cares! I posted how bad the US grades in Mathematics are for students, maybe there needs to be a crackdown on these media giants that teenagers watch endlessly. Maybe crackdown at the fast food industry in the US too! 

 

Paying a kidney to get medicine necessary for daily life? US healthcare gladly takes your money! 

 

 

-------

 

 

There were many good regulations: 

 

https://www.reuters.com/business/china-market-regulator-boosts-food-delivery-worker-protections-2021-07-26/

 

1. Improving living conditions of delivery drivers, more pay, forcing insurance and relaxation of delivery deadlines etc

 

https://www.reuters.com/technology/jdcom-cut-senior-executives-salaries-by-10-20-2022-11-22/

 

2. Senior managers cutting salaries so that employees in total have improved benefits, wow!

 

Maybe its time management in the US takes a paycut too so that the average worker might buy himself something nice too, managers salaries grew by 1460%! 

 

https://www.epi.org/publication/ceo-pay-in-2021/

 

 

Chinese President Xi Jinping last year launched a renewed drive for "common prosperity", as an effort to reduce income inequality that threatens long-term economic growth and even the legitimacy of Communist Party rule.

 

 

All of this is a net win for china. 

 

 

33 minutes ago, Spekulatius said:

This became more and more obvious with the Ant Financial crackdown, Jack Ma's temporary disappearance and last not  least the elimination of term limits for Xi at the Party congress in fall last year.

That Xi will make the third term is new but i dont think this will meaningfully change chinas trajectory. 

33 minutes ago, Spekulatius said:

It's not just perception either, the economic impact for tech and let's say Alibaba is very real - the growth rates have gone from 30%+ growth to zero and now back to ~10%.

Because there was a global pandemic, full lockdowns and then running into 5% interest rates.

[Luke]

21 minutes ago, juno323 said:

That’s the real challenge - the lack of check and balances creates a feast or famine type situation.

 

Dependint on time period you were where the CCP was in charge, you either did really well or had your assets confiscated and were sent to the countryside.

On a side note, the returns or Chinese equities has been horrific in the last 3 decades too.

 

But at least you got to keep it..

 

There was so much money made in china since their industrial revolution started, this is just not true man! 

[Luke]

30 minutes ago, cubsfan said:

Yeah , it’s a good thing they built all those ghost cities, so people could live in concrete pipes.

If you only look at china through one specific lens, people will see what they want to see. 

[Luke]

24 minutes ago, juno323 said:

I am not sure if you’ve kept up to date but a lot has changed in the last 3 years and the new direction seem a lot like the old policies which didn’t work and led them to the situation 70 years ago.

Which policies? Which specific policies? Can you please share links/data and be specific? 

[rkbabang]

21 minutes ago, Spekulatius said:

There is also a bit difference between betting against something and just leaving it alone.

 

In fact it seems like a good idea to leave all stock markets with autocratic regimes alone.

 

Exactly.  No one has to bet against China.  I haven't bet for nor against China and my portfolio has done just fine.  I will continue not to bet for nor against China.  There are plenty of ways to make money without owning companies located in communist countries.   With recent election results if I wanted to invest in a communist country I'd be far more likely to place bets in Argentina than China.

 

[Luke]

27 minutes ago, Spekulatius said:

The Chinese stock market has not performed well for quite some time. There is also a bit difference between betting against something and just leaving it alone.

 

In fact it seems like a good idea to leave all stock markets with autocratic regimes alone.

 

I do think you can make a bull case that China is a decent trade because negativity has gone too far, although that was more the case in Fall 2022 right after the CCP party congress.

 

The picture doesnt look that bad if you factor in that the multiples and valuation in china are very low at the moment. 

Edited August 15, 2023 by Luca

[cubsfan]

Feel free to look past the ghost cities & COVID coverup.

 

That will only lead you to a military takeover of Taiwan, followed by the Chinese naval control of the South China Sea- which is shared by so many Asian nations.

 

Say goodbye to those supply chains.

 

A world dependent on free trade finally sees through President Xi.

[Luke]

5 minutes ago, rkbabang said:

 

Exactly.  No one has to bet against China.  I haven't bet for nor against China and my portfolio has done just fine.  I will continue not to bet for nor against China.  There are plenty of ways to make money without owning companies located in communist countries.   With recent election results if I wanted to invest in a communist country I'd be far more likely to place bets in Argentina than China.

 

He literally said betting against is a good idea. Nobody forces you to invest into china and into the "communists" haha! 

Edited August 15, 2023 by Luca

[Luke]

2 minutes ago, cubsfan said:

Feel free to look past the ghost cities & COVID coverup.

 

That will only lead you to a military takeover of Taiwan, followed by the Chinese naval control of the South China Sea- which is shared by so many Asian nations.

 

Say goodbye to those supply chains.

 

A world dependent on free trade finally sees through President Xi.

I can and do look past it, give it a try! 

[juno323]

14 minutes ago, Luca said:

There was so much money made in china since their industrial revolution started, this is just not true man! 

That’s my point.

 

The legal system is the same and depending on the decade you are in, you had very different final outcomes in your wealth ranging from extreme wealth to confiscation or imprisonment.

 

There’s a reason why there’s such a huge industry (and penalties in place to prevent it) helping move wealth out as a “backup”.

[cubsfan]

9 minutes ago, Luca said:

I can and do look past it, give it a try! 

  
Oh believe me , I have - and I don’t need anymore scars. Happened with both China and Russia. 

[james22]

1 hour ago, Luca said:

Central planning was key to Chinas success. 

 

 

LOL

 

If that were so, why wasn't China more successful prior to the 1978 market-oriented reforms?

 

Why has China been less successful since Xi has reasserted state control?

[Luke]

And some interesting cultural crackdown happening in china too: 

 

https://thechinaproject.com/2021/05/10/iqiyi-cancels-season-finale-over-milk/

 

The talent show encouraged viewers to buy a sponsor’s milk and scan the QR code inside the bottle caps to support their favorite stars. Obsessed fans brought up milk in bulk but dumped the milk into drains. Some calculated that 270,000 bottles of dairy products were poured directly into the sewage. Since then, regulators banned “idol development programs” altogether. In August, the Cyberspace Administration of China (CAC), China’s internet watchdog, announced a ban on celebrity rankings. It followed the removal of 150,000 pieces of “harmful online content” involving fan groups, and 4,000 fan accounts, according to a Xinhua report.

 

 For stage actors, a new wave of behavioral guidelines was rolled out in February to ensure actors and actresses “love the motherland,” “abide by social morality,” and “uphold the prestige of Chinese culture,” among others. Misbehaving superstars such as the actress Zhào Wēi 赵薇 and Zhèng Shuǎng 郑爽and the singer-actor Kris Wu (Wú Yìfán 吴亦凡) have had their social media accounts shut down or investigated.

 

 The preeminent video streamer and influencer Lǐ Zǐqī 李子柒 , an emblem of Chinese bucolic and simplistic living recently appeared on CCTV after disappearing for three months to parrot the official rhetoric of the party, which includes such buzzwords as “rural revitalization,” “common prosperity” and “guiding youths…away from becoming influencers.”

 

Beijing has fundamentally altered the kinds of content Chinese youths can consume this year.

 

In September, Douyin, the Chinese version of TikTok, imposed a forty-minute time limit on video consumption for children under 14. Young viewers can now only view “prepared” content such as historical information, science experiments, and patriotic clips.

 

 

Edited August 15, 2023 by Luca