China

[Luke]

2 minutes ago, John Hjorth said:

 

 

Thank you for the kind way to respond on my words, @Luca & @Cod Liver Oil,

 

I may here on CoBF appear sober or chill most days I post, but what's going on inside my head can't be really be described by representing my mental state most days as  I'm sober or chill most of the time.

 

Simply because I'm not, while I'm forcing myself to stay about fully invested all time long term. However I think I'm gradually getting better at it.

 

It's about a large position in that Danish pharma every media is writing about, here now at above 20 per cent of total portfolio, which for me personally not is easy to sit on.

 

So I already really have my mouth, hands and mind full with risk, that I try to relate to on a continuing basis.

 

Also, It has become clear to me, that I likely possess a personal propensity to underestimate political risk related to foreign investments, based on my experiences in 2020 with Russian stock investments [Gazprom, Lukoil & Sberbank], however losses not cribling, but not forgotten.

 

- And as always I may change my mind any day. ...

 

- - - o 0 o - - -

 

So, good luck with China! [sincerely meant!]

Thank you for the kind words John and all the best to you! 

[Luke]

So funny seeing Yellen ranting about "excess capacity"

 

https://www.reuters.com/world/yellen-meets-with-chinas-central-bank-chief-presses-case-excess-capacity-2024-04-08/

 

I thought we were in a "free market"? Why don't they just remove the tariffs and US consumers buy it all....;-)? 

[Luke]

"you cant produce more because consumers are not allowed good prices and business cant have too much competition because the wealthy will loose money of which they have too little and consumers have to much goods and excess wealth" 

Edited April 9, 2024 by Luca

[hillfronter83]

how often do we see billion$ market cap wiped out in 10 minutes?

 

https://finance.yahoo.com/quote/1252.HK?.tsrc=fin-srch

[backtothebeach]

20 minutes ago, hillfronter83 said:

how often do we see billion$ market cap wiped out in 10 minutes?

 

https://finance.yahoo.com/quote/1252.HK?.tsrc=fin-srch

 

What happened?

[hillfronter83]

19 minutes ago, backtothebeach said:

 

What happened?

No idea. Can't find any news or disclosure. Someone dumped 280m shares (about 1000 times average daily volume or 10% of shares outstanding) in about 10 minutes yesterday before closing bell.

[Intelligent_Investor]

3 hours ago, hillfronter83 said:

how often do we see billion$ market cap wiped out in 10 minutes?

 

https://finance.yahoo.com/quote/1252.HK?.tsrc=fin-srch

I'd assume quite frequently...big tech can move tens of billions in market cap in a single tick

[formthirteen]

How can I invest in China?

[Luke]

31 minutes ago, formthirteen said:

How can I invest in China?

https://letmegooglethat.com/?q=How+to+invest+into+chinese+stocks%3F+

[Malmqky]

3 hours ago, formthirteen said:

How can I invest in China?

Though the NYSE if listed there, through Hong Kong, or OTC.

 

If you mean directly and not via ADR…I don’t think you can.

Edited April 9, 2024 by Malmqky

[Spekulatius]

7 hours ago, hillfronter83 said:

No idea. Can't find any news or disclosure. Someone dumped 280m shares (about 1000 times average daily volume or 10% of shares outstanding) in about 10 minutes yesterday before closing bell.

The infamous HK dump. This happened a few time with Hk stonks which often have issues that the public later learns about.

[formthirteen]

7 hours ago, Malmqky said:

I don’t think you can.

 

Thanks. That was the answer I was looking for. I don't think you can invest in China. My data seems to verify this:

 

 

[Luke]

3 hours ago, formthirteen said:

 

Thanks. That was the answer I was looking for. I don't think you can invest in China. My data seems to verify this:

 

 

 

So let me get this straight. As a Value Investor, you are looking at the fundamentals (which are good and growing) but then see that the share price has not grown with the fundamentals (dislocation of valuation) and then proceed to not buy it because there can not be dislocation in order for you to buy?

 

In fact, quite the opposite of what a value investor would do. 

[Luke]

Just look at Alibaba/Tencent. Huge buyback programs and 3x the buyback size of MAG 7 while shareprice flat for 10 years. I think its pretty obvious which stock will perform better from here...

[Parsad]

https://finance.yahoo.com/news/chinese-cement-maker-halts-trading-041141586.html

 

Domino effect of a real estate downturn. 

 

How many other Chinese companies are vulnerable?

 

Cheers!

[Sweet]

1 hour ago, Luca said:

Just look at Alibaba/Tencent. Huge buyback programs and 3x the buyback size of MAG 7 while shareprice flat for 10 years. I think its pretty obvious which stock will perform better from here...

I don’t think it’s obvious.  An investment in China is to invest alongside the CCP and whatever way the political wind is blowing.  Although it’s unlikely you also cannot rule out measures like being unable to get your money out of China.  Not to mention the huge amounts of innovation from the top US tech companies that nobody can compare to.

[Luke]

44 minutes ago, Sweet said:

I don’t think it’s obvious.  An investment in China is to invest alongside the CCP and whatever way the political wind is blowing.  

An investment in China is an investment alongside the people of China and their Government. 

 

An investment in the US is an investment alongside the people of the US and their Government. 

 

Both are the same thing so whats important is to understand how do the people and the government see your business? 

 

If you study CCP releases, Xis speeches, what public officials say, all lights are on green. Nobody wants to take your business away, nobody wants communism and a Stalinist economy, China will remain a partly private partly public economy just like other economies in the west. 

 

What is different is that china can regulate the bad parts in their markets and will do so, same should be true for the US but I don't know whats going on inside congress and their plans against mag 7. 

 

Alibaba will remain a private business for the coming decades and nothing will change in that regard with a 98% probability. 

44 minutes ago, Sweet said:

Although it’s unlikely you also cannot rule out measures like being unable to get your money out of China.  Not to mention the huge amounts of innovation from the top US tech companies that nobody can compare to.

30% of the worlds manufacturing and industry is in China, ALL incentives are there to cooperate with China and not increase confrontations. If there is war, its over and I will probably be sent to fight in WW3 too so my portfolio will become irrelevant. If you think its thinkable that the same happens with China what happened with Russia then you are wrong, those are two completely different economies, the effect of China cut off would be 20x worse and lead to a hard depression for 5-10 years and global growth will probably stagnate for way way longer, I can afford to lose 25% of my PF in that case. 

 

Innovation in China is not to be underestimated, we already see how far they are and Tencent/Alibaba can easily compete with US tech. 

 

 

 

 

Edited April 10, 2024 by Luca

[Luke]

If you think the odds of a china cut off are so high @Sweet, then you need to reposition your portfolio way different than just buying "good companies at reasonable prices", because those will get fucked when China leaves. So if you are so short China and long war, then you cant be long QARP stocks at the same time. 

[Luke]

Owning military stocks is the best play here probably if you think it will escalate in the next 5 years. With that you will outperform everyone. 

[Sweet]

1 hour ago, Luca said:

An investment in China is an investment alongside the people of China and their Government. 

 

An investment in the US is an investment alongside the people of the US and their Government. 

 

Both are the same thing so whats important is to understand how do the people and the government see your business? 

 

 

That’s a generalisation, there are differences in the two systems and those matter in practice.

 

The US has separation of powers and a restraining constitution.  The US President doesn’t have the power of Xi, can be blocked by courts or Congress, and the balance of power in both houses of Congress can be changed every two years through elections.

 

You note that “china can regulate the bad parts in their markets and will do so”.  Yes they are so effective at that because power is concentrated but that cuts both ways.

 

Say a Chinese president decides he doesn’t like a particular company, goes on another anti-corruption drive, sours in capitalism, or prohibits capital from leaving the country.  What is there to restrain him?

 

Investing in China comes with that risk and that risk is why I don’t invest in China.

 

Edited April 10, 2024 by Sweet
Comment vanished

[Luke]

https://www.scmp.com/news/hong-kong/education/article/3258541/hong-kong-universities-rise-newly-published-global-subject-rankings-driven-positive-employer?module=top_story&pgtype=homepage

• More than 50 per cent of subjects offered moved up the rankings in a newly published global league by Britain-based education information firm Quacquarelli Symonds
• City’s four public universities included in league table for data science and artificial intelligence programmes, with Hong Kong University of Science and Technology in top 10

[hillfronter83]

1 hour ago, Luca said:

An investment in China is an investment alongside the people of China and their Government. 

 

An investment in the US is an investment alongside the people of the US and their Government. 

 

Both are the same thing so whats important is to understand how do the people and the government see your business? 

 

If you study CCP releases, Xis speeches, what public officials say, all lights are on green. Nobody wants to take your business away, nobody wants communism and a Stalinist economy, China will remain a partly private partly public economy just like other economies in the west. 

 

What is different is that china can regulate the bad parts in their markets and will do so, same should be true for the US but I don't know whats going on inside congress and their plans against mag 7. 

 

Alibaba will remain a private business for the coming decades and nothing will change in that regard with a 98% probability. 

30% of the worlds manufacturing and industry is in China, ALL incentives are there to cooperate with China and not increase confrontations. If there is war, its over and I will probably be sent to fight in WW3 too so my portfolio will become irrelevant. If you think its thinkable that the same happens with China what happened with Russia then you are wrong, those are two completely different economies, the effect of China cut off would be 20x worse and lead to a hard depression for 5-10 years and global growth will probably stagnate for way way longer, I can afford to lose 25% of my PF in that case. 

 

Innovation in China is not to be underestimated, we already see how far they are and Tencent/Alibaba can easily compete with US tech. 

 

 

 

 

The big difference is that the interests of Chinese government and its people are not aligned. Chinese people (shareholders) get a much smaller piece of its GDP.

 

Here is a good thread for understanding the fundamental issue with Chinese economy. And here is the link to the original article in Chinese.

http://m.xugaoecon.net/nd.jsp?id=16

 

 

 

[Sweet]

@hillfronter83 my comment disappeared by I agree.  They really aren’t the same.  Separation of powers in the US is an important difference.

[Luke]

33 minutes ago, hillfronter83 said:

The big difference is that the interests of Chinese government and its people are not aligned. Chinese people (shareholders) get a much smaller piece of its GDP.

 

Here is a good thread for understanding the fundamental issue with Chinese economy. And here is the link to the original article in Chinese.

http://m.xugaoecon.net/nd.jsp?id=16

 

 

 

 

I disagree, if you look at what Li Qian recently said, its exactly these talking points. They are aware of the problem and obviously working on it. So many people make China look like its this "nothing can change its over" economy while they regularly publish writings that tackle all of the critical points...its a very dynamic economy as you can see by the past 20 years of success. 

 

Your article says: 

 

Xu highlights the profoundly obstructed channel of income transfer from the corporate to the household sector as the primary reason behind this distinctive consumption pattern. The extensive presence of state-owned enterprises (SOEs) in China, whose profits and dividends primarily flow to the state rather than households, diminishes the wealth effect that might otherwise stimulate household consumption. Nor is the highly concentrated ownership of many Chinese private enterprises doing much to increase the wealth or consumption of the wider population.

 

I don't see why people working at SOEs couldn't get an income increase ordered by the government which will boost consumption. They did the same at JD where wages was forced up, which is smart. 

 

Privately owned enterprise need to pay their workers more so consumption increases, the CCP already regulates it quite heavily: 

 

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

 

Ironically THATS then seen as "BAD" by the market. While they do exactly what is good for the overall economy. 

 

 

Furthermore, Xu points to the absence of an efficient market mechanism (again, a result of the disconnect between the corporate and household sectors) to balance the distribution of national income between consumption and investment. This shortfall means the household sector is unable to influence corporate dividend policies, resulting in excessive corporate savings and overinvestment.

 

What they are trying to say is that consumers are too weak and corporations don't want to reinvest because they lack demand. Time for enterprises to increase wages...if they don't the CCP will do its job and regulate the economy. 

 

 

[Luke]

30 minutes ago, Sweet said:

@hillfronter83 my comment disappeared by I agree.  They really aren’t the same.  Separation of powers in the US is an important difference.

I cant believe that you are convinced of "separation of powers" within the US. Reality is that the US is completely dominated by business interests and the pendulum is way reversed compared to china. Yes, that's good for shareholders but the US consumer isn't looking particularly bright either where 45% earn below 29k USD a month and concentrated markets with lacking competition will bring their own ills to an economy over time.