China

[Castanza]

1 minute ago, Whensthepaintdry? said:

I don’t think that’s how it works. 

Well I didn’t feel like doing the math on tax after certain amount lol but it’s not that far off. Tax incentives are bad either way imo.

[Whensthepaintdry?]

Ha, ya I guess the good news related to China and taxes is my tax loss is just getting bigger! 

[Spekulatius]

Nikes profit warning could be a secular problem rather than a temporary or cyclical one. From what I read and hear, the Chinese consumer increasingly prefers domestic brands rather than foreign ones.  Japanese (Fukushima water resales) and US brands (geopolitical tension) could be harder hit than Europeans ones.

https://finance.yahoo.com/news/nikes-warnings-china-scare-other-025856754.html

[Luke]

https://www.nytimes.com/2023/12/26/us/politics/trump-2025-trade-china.html#:~:text=Mr. Trump has said he,like electronics%2C steel and pharmaceuticals

 

Mr. Trump has said he would “enact aggressive new restrictions on Chinese ownership” of a broad range of assets in the United States, bar Americans from investing in China and phase in a complete ban on imports of key categories of Chinese-made goods like electronics, steel and pharmaceuticals.

 

 

 

 

 

In 2018, the Trump administration set tariffs on more than $360 billion in goods, in an effort to encourage Americans to purchase domestic products. In response, China set its own tariffs on more than $110 billion worth of U.S. goods.

 

The conflict is still ongoing, and so far, there’s no clear winner in sight. The tariffs and trade barriers have hurt both countries, and with bilateral trade sputtering, many are left wondering if the peak of globalization is well behind us.

 

https://www.visualcapitalist.com/cp/biggest-trade-partner-of-each-country-1960-2020/

[Luke]

Would be bearish for Chinese equities initially if Trump gets reelected...

[ICUMD]

From those diagrams, China is still very well interconnected. Further, a made in USA mandate will likely stoke inflation. 

 

No easy choices.

[Luke]

3 minutes ago, ICUMD said:

From those diagrams, China is still very well interconnected. Further, a made in USA mandate will likely stoke inflation. 

 

No easy choices.

Yep

 

 

[cubsfan]

26 minutes ago, Luca said:

Would be bearish for Chinese equities initially if Trump gets reelected...

 

And very bullish for US stocks...

[Luke]

2 minutes ago, cubsfan said:

And very bullish for US stocks...

How many Jobs will fall away if the US can't export to China? I mean yeah, US citizens will buy more expensive US made goods but what about Chinese buying US goods? Is it fundamentally that easy to say "fuck china" and be good? @cubsfan

[cubsfan]

8 minutes ago, Luca said:

How many Jobs will fall away if the US can't export to China? I mean yeah, US citizens will buy more expensive US made goods but what about Chinese buying US goods? Is it fundamentally that easy to say "fuck china" and be good? @cubsfan

 

It was very good for the country when he was the US President, and I see no reason why it won't be again. For one, the energy "jobs" will be a boon to the economy, and the destruction of useless regulations will fuel corporate profits and jobs. President Biden has strangled this economy with low paying jobs and inflation.

 

China can do whatever they like - I'm concerned about a thriving US economy. @Luca

[Luke]

 

 

 

[james22]

Once you start thinking about growth, it's hard to think about anything else.

 

https://fasterplease.substack.com/p/the-china-degrowth-syndrome

[Spekulatius]

Trade war getting serious - Cognac. They cleverly target French goods since French politicians were behind the EU antitrust/ dumping claim for Chinese EV sales in Europe.

https://www.reuters.com/world/china/china-launches-anti-dumping-investigation-brandy-imported-european-union-2024-01-05/

 

Porsche/ LVMH etc also have a lot to lose here.

[Ulti]

https://www.seafarerfunds.com/prevailing-winds/china-commission-testimony-2023/

U.S.-China Economic and Security Review Commission

China’s Current Economy: Implications for Investors and Supply Chains August 2023

 

 At least for me, a well thought out presentation of China's issues and how the US should interact.

 

[Ulti]

https://www.seafarerfunds.com/prevailing-winds/

 

Not an investor in the fund but some occasional  commentary  on China financ\econ (Does not discuss funds).

[Ulti]

https://www.thewirechina.com/

A paid site but seems well worth it if you are investing in China

[james22]

US intelligence indicates that President Xi Jinping’s sweeping military purge came after it emerged that widespread corruption undermined his efforts to modernize the armed forces and raised questions about China’s ability to fight a war, according to people familiar with the assessments.

 

https://www.battleswarmblog.com/?p=56913

 

Has to make action against Taiwan less likely.

 

[Luke]

https://www.bloomberg.com/news/features/2024-01-09/if-china-invades-taiwan-it-would-cost-world-economy-10-trillion

 

https://www.taiwannews.com.tw/en/news/5075352

 

TAIPEI (Taiwan News) — A Chinese invasion of Taiwan would cost the global economy US$10 trillion (NT$311 trillion), equivalent to 10% of global GDP, higher than the Ukraine war, COVID-19 pandemic, and the 2009 global financial crisis, according to a Bloomberg Economics estimate.

 

 

China's relations with major trading partners will be disrupted and it will be unable to obtain advanced semiconductors. As a result, its GDP is expected to suffer a 16.7% slide in the first year.

The U.S. GDP is expected to slump by 6.7% in the first year. Despite being far from the center of the conflict, the U.S. faces significant risks due to its reliance on the Asian electronic supply chain, particularly with companies like Apple Inc.

The world's GDP is projected to drop by 10.2% in the first year, with South Korea, Japan, and other East Asian economies suffering the greatest harm.

 

According to Bloomberg Economics research, if a war breaks out in the Taiwan Strait, the potential global GDP losses could surpass those incurred by the 2020 COVID-19 pandemic, the 2009 global financial crisis, the 1991 Gulf War, the 2001 U.S. 9/11 terrorist attacks, and the 2023 Israel-Hamas war.

Edited January 12 by Luca

[Luke]

https://www.scmp.com/news/china/diplomacy/article/3248301/belgian-prime-minister-meets-xi-jinping-beijing-vows-oppose-decoupling

[Luke]

https://www.bloomberg.com/news/articles/2024-01-12/tencent-added-back-by-3-billion-top-asia-fund-despite-china-s-gaming-rules?srnd=technology-vp

 

$3 Billion Top Asia Fund Bets on Tencent Again Despite China Gaming Rules

 

Federated Hermes Asia Ex-Japan Equity Fund, which beat 83% of its peers for the past three years, made the purchase in the new year, even after China released a draft rule on gaming restrictions in December. The investment reflects the fund’s optimism over the nation’s beaten-down market, where valuations are “absolutely incredible,” said Jonathan Pines, who manages the $3.1 billion fund.

“We are buying it now because of its very cheap value,” he said in an interview Wednesday, referring to Tencent’s shares. Pines’ fund sold most of its shares in Tencent as well as in Taiwan Semiconductor Manufacturing Co. about a year ago.

Edited January 13 by Luca

[james22]

15 hours ago, Luca said:

https://www.scmp.com/news/china/diplomacy/article/3248301/belgian-prime-minister-meets-xi-jinping-beijing-vows-oppose-decoupling

 

 

[mattee2264]

So China is a bit of a basket case and outside some of the tech companies is considered un-investable by most investors.

Question is what impact will Chinese economic malaise have on the ROW and specific stock sectors?

 

The failure of China's reopening has clearly depressed commodity prices as China drove the super cycle.

Possibly some benefits for other exporters that can pick up some of the slack.

But maybe some contagion to neighbouring countries such as Japan?

Probably not great for Apple and Tesla which unlike the other Mag7 countries have a heavy exposure to China.

Definitely not good for luxury goods companies (which we are already seeing in results of Burberry/LVMH) 

 

Any other thoughts?

 

 

[Luke]

https://www.scmp.com/news/china/diplomacy/article/3248661/chinas-economy-beat-target-52-growth-2023-premier-li-qiang-tells-davos-forum?module=top_story&pgtype=homepage

 

China’s economy beat target with 5.2% growth in 2023, Premier Li Qiang tells Davos forum

 

 

[mattee2264]

US grew the exact same amount Q3 (before revisions). 

 

I think economic data is pretty suspect and subject to a lot of political motivation in both countries. As a famous politician once said "It's the economy stupid". 

[Joseywales]

Is there anyone on this board who currently resides in China or has lived there in the recent years? I'm interested in gaining some perspective from someone with firsthand experience.

 

From the outside it seems like the sky is falling and people much smarter than me are predicting doom and gloom for the next 50+ years with projections such as demographics, debt, labor, housing crisis etc... 

Edited January 17 by Joseywales