China

[hillfronter83]

https://www.ft.com/content/1e9e7544-974c-4662-a901-d30c4ab56eb7

 

 

[rogermunibond]

That FT article is pretty inaccurate.

 

[Hektor]

15 minutes ago, hillfronter83 said:

https://www.ft.com/content/1e9e7544-974c-4662-a901-d30c4ab56eb7

I feel this might be a fall out of the gov cutting Ma to size. People with the means would look to take them elsewhere. Doing so has been the norm for ages.

[hillfronter83]

32 minutes ago, rogermunibond said:

That FT article is pretty inaccurate.

 

 

It seems that FT reported data from ITJUZI and the founder got a call from government :). Of course the data is probably not complete. But there is no doubt it is the trend for the last a few years. Jack Ma is still not back in China. Bloomberg reported some bankers got detained and passports are taken away from bank employees. On top of that, I saw some places real estate price is back to more than 10 years ago and there is no sight of bottom. Things will get worse before they get any better.

[hillfronter83]

This is the statistics of retirement fund distribution in 2023 from a local county in China.

It basically says: RMB785 million for 8778 Government retirees at RMB89428/person; RMB369 million for 13220 SOE retirees at RMB27912/person; RMB251 million for 119400 other retirees at RMB2102/person.

 

There is a reason the Chinese system collapses every a few hundred years. 

 

[Spekulatius]

I mentioned Anta a few times and their recent result were quite impressive given the state of the Chinese consumer. Mid teens sales growth and a 25% profit margin are quite good.

 

Its not deep value , but if the business grows and the share price stagnates or worse, those business get cheaper and more interesting. I also think they have the wind at their back, because the Chinese consumer increasingly prefer Chinese goods/ brands over the likes of Nike etc.

https://manager.wisdomir.com/files/394/2024/0827/20240828095726_67345600_en.pdf

Edited September 16 by Spekulatius

[Hektor]

https://fortune.com/2024/09/18/ray-dalio-china-property-bubble-bridgewater/

[Luke]

https://www.scmp.com/economy/policy/article/3279153/china-eyes-sci-tech-venture-capital-boost-industrial-upgrade-economic-growth?module=top_story&pgtype=homepage

[Dinar]

On 9/15/2024 at 9:23 AM, hillfronter83 said:

This is the statistics of retirement fund distribution in 2023 from a local county in China.

It basically says: RMB785 million for 8778 Government retirees at RMB89428/person; RMB369 million for 13220 SOE retirees at RMB27912/person; RMB251 million for 119400 other retirees at RMB2102/person.

 

There is a reason the Chinese system collapses every a few hundred years. 

 

How is it different from the US?  Have you looked how insanely generous pensions for government employees are if they retire at 65?  

[Luke]

https://qz.com/bill-gates-would-make-the-rich-poorer-1851652364

 

Back to communism for the US? 

[hillfronter83]

20 hours ago, Dinar said:

How is it different from the US?  Have you looked how insanely generous pensions for government employees are if they retire at 65?  

 

not familiar with US government pension plan so i asked ChatGPT:

"The average pension for a federal retiree varies depending on several factors, including years of service and salary history. As of recent estimates, the average annual federal pension is typically around $40,000 to $50,000.

 

As of 2023, the average Social Security payment for retired workers is about $1,800 per month, which translates to roughly $21,600 annually."

 

So an average government retiree will get about $70K (pension+SS) vs $20K for an average Joe with no other retirement income sources. That is 3.5 times at the worst, VS 42.5 times in the Chinese data above. 

[Dinar]

2 hours ago, hillfronter83 said:

 

not familiar with US government pension plan so i asked ChatGPT:

"The average pension for a federal retiree varies depending on several factors, including years of service and salary history. As of recent estimates, the average annual federal pension is typically around $40,000 to $50,000.

 

As of 2023, the average Social Security payment for retired workers is about $1,800 per month, which translates to roughly $21,600 annually."

 

So an average government retiree will get about $70K (pension+SS) vs $20K for an average Joe with no other retirement income sources. That is 3.5 times at the worst, VS 42.5 times in the Chinese data above. 

Well, a NYC teacher who retires at 65 collects a $175K per year pension, which is not taxed in NYC & NYS.  (I know because friend of the family just retired.) Also free healthcare for her and spouse, vs $10k per year for others.  So call it 200K+ tax adjusted.  Or 10x average social security.   

[zippy1]

1 hour ago, Dinar said:

Well, a NYC teacher who retires at 65 collects a $175K per year pension, which is not taxed in NYC & NYS.  (I know because friend of the family just retired.) Also free healthcare for her and spouse, vs $10k per year for others.  So call it 200K+ tax adjusted.  Or 10x average social security.   

Vs. about 42 times in China?

Edited September 20 by zippy1

[RichardGibbons]

7 hours ago, Luke said:

https://qz.com/bill-gates-would-make-the-rich-poorer-1851652364

 

Back to communism for the US? 

 

This is the key flaw in Gates' thinking: "The tax system could be more progressive without damaging significantly the incentive to do fantastic things."

 

He asserts this, but it seems extremely implausible to me.

 

I'd love to actually hear Gates' reasoning about why people's incentives aren't dramatically impacted by the chance to become rich, why moderately successful companies will be equally likely to grow and innovate when they're confiscated from the founders who were responsible for them growing and innovating, and why obliterating the venture capital market won't have an impact on innovation.

[Spekulatius]

I posted this before, just a reminder how China’s works - chance to get your lost wallet back, broken down by country. My take is you do need a high premium to invest in China;  the default risk for government bonds is probably not a good measure.

[james22]

 

[sjh]

6 hours ago, Spekulatius said:

I posted this before, just a reminder how China’s works - chance to get your lost wallet back, broken down by country. My take is you do need a high premium to invest in China;  the default risk for government bonds is probably not a good measure.

 

Hmm, just looked at the methodology that was used. China has a digital lost and found process. I wouldn’t be surprised if the system just detected that something was wrong with those wallets and that therefore the „owners“ were not contacted. 

[WayWardCloud]

6 hours ago, james22 said:

 

 

Meanwhile their GDP was multiplied by 24. I'm still unsure how such a discrepancy is even possible. But yeah if you take a long term view it's pretty clear foreigner's money has only ever been welcomed in and never out. Must be nice to have people invest in you so much with nothing in return. Maybe we got our money back in cheaper goods? But then de-industrializing wrecks social cohesion at home and makes us dependent on their stuff.

 

Re:wallets experiment I wish they had tested Japan I bet it would have made number one in the list. Safest and most honest country I've ever visited.

[Spekulatius]

This is also an opportunity for Chinese stocks and a risk for Indian ones. The valuation for Indian stocks are sky high and could easily come down a lot. In the meantime here are very cheap Chinese stocks if you can get past the political risk. but then again, Russian stocks were cheap too in early 2022.

 

As far as the money going out part is concerned, Chinese companies have been increasing capital returns. Alibaba is a prime example with dividends and buybacks but there are many others.

 

I think the best companies to own are those that focus Chinese domestic consumption and have a shareholder friendly management and are somewhat aligned with the goals of the CCP. Anta and other sports good manufacturers seem to check some boxes here.

Edited September 22 by Spekulatius

[formthirteen]

 

Quote

As Beijing set GDP growth targets that were increasingly unrealistic during the past 15 years, the only way to achieve these targets required relying on increasingly non-productive investment, and this meant shifting economic activity from the private sector, which...

 

 

The Chinese economy and stock market is working exactly as intended, as the stock market total returns and GDP figures since 1993 clearly show:

21 hours ago, WayWardCloud said:

 

Meanwhile their GDP was multiplied by 24. I'm still unsure how such a discrepancy is even possible. But yeah if you take a long term view it's pretty clear foreigner's money has only ever been welcomed in and never out.

 

[Hektor]

https://www.barrons.com/articles/china-economy-debt-slowdown-recession-65f51b85

 

China’s Economy Is Lurching. A Recession Could Be Ahead.

 

China’s economic troubles are deepening, with one economist warning clients the country is headed for a recession—and could need a U.S.-style bank bailout.

[mattee2264]

Big China stimulus. Good for sentiment but I think without meaningful fiscal support won't do much for the economy. 

[Hektor]

https://www.wsj.com/world/china/china-central-bank-takes-more-steps-to-boost-flagging-economy-b43e8aef

[rogermunibond]

Agreed most of these measures are directed at banking, property market and stock market.  Maybe makes Chinese consumers a bit more happy to spend via the wealth effect channel.  Shoring up the capital adequacy of banks helps.  But who's taking out loans?  I don't expect much though.

 

2 hours ago, mattee2264 said:

Big China stimulus. Good for sentiment but I think without meaningful fiscal support won't do much for the economy. 

 

[Hektor]

https://www.wsj.com/world/china/top-economist-in-china-vanishes-after-private-wechat-comments-50dac0b1

 

Top Economist in China Vanishes After Private WeChat Comments

A government adviser was detained and removed from his posts after he allegedly criticized leader Xi Jinping’s management of the economy.