Part 2: What’s The Driving Force In China?
Understanding what is going on in China means understanding the politics – which should be very familiar to students of 1970’s and 80’s US films.
Blain's Morning Porridge
Financial Commentary for Smart People
Blain's Morning Porridge
Financial Commentary for Smart People
Category China
Part 1: What to fear most? Markets? Energy? America or China?
October is the cruellest month for markets. What to fear most? Markets? Energy? China? or America? Or will it be a “no-see-um” that sinks us?
The Silly, the Uncertain and The Time to Look Elsewhere moments around us..
It’s silly season in the UK as the queues lengthen at petrol stations, raising fascinating questions about how the pandemic has changed behaviours, the pricing of corporate credit and equity fundamentals. In Europe the power vacuum left by the last days of Merkel is set to deepen. China’s property meltdown should be making investors look elsewhere and into new Emerging Markets for future growth.
Is Evergrande a symptom of deeper malaise?
Evergrande’s imminent default is rocking markets – but few believe the collapse of a Chinese property developer could trigger a global financial crisis. What if Evergrande is just a symptom of a deeper malaise within the Chinese economy and its political/business structures? Maybe there is more at stake than we realise? What if Emperor Xi decides he needs a distraction?
What China can teach the west about Equality
China’s clampdown on big tech is painted as the Party’s programme to engineer a more socially-equal economy. This puts China way ahead of the West where the consequences of monetary distortion and the pernicious effects of social and wealth-inequality are well understood, but no one seems able to address them.
Even as China’s markets wobble, they will view The Afghan Skedaddle as an opportunity to pressure the US.
China’s markets are under pressure from the widening Chinese Communist Party’s regulatory crackdown – which is likely as much about imposing party discipline and control as much as it was ever about consumer protection. But as investors fret about crashing China stocks, rising global uncertainty and the destabilisation caused by the Afghan debacle, the Chinese are likely to up the pressure and further test a distracted US administration. “Interesting times” lie ahead for global markets as the tension threatens to escalate.
China Syndrome and Taper Tantrums – just two of many things to fret about…
Some of the heat was taken out the escalating China Syndrome yesterday when the Chinese regulator held a “secret” meeting with global firms, while Jay Powell took the pressure out of immediate taper fears. Both issues remain sources of massive future pressure on markets – they are sorted for now, but not resolved!
Tech sector’s tectonic plates keep shifting
Yesterday’s events across Tech served to remind us it’s a fluid sector where what we believe one day may be false the next, but deep down there is bedrock. Crypto currencies saw a last-chance bubble pop, while Tesla genuinely surprised me by producing solid results – which don’t for one moment change my perspective its fatally overvalued. Meanwhile, the latest China clampdown on listed stocks shocked markets, but reminds us we need to think differently about the wakening Dragon.
Will China ever be as investible as the West?
The media is full of China noise – does the rising tension mean it may become un-investible? The Chinese economy is very different, but recognisably similar. Investment into China boils down to how effectively a capitalist economy can succeed in the face of government diktat, bureaucracy, and intervention – and on that basis it’s a proceed with caution market.
100 years of Chaos
The big event this week is how China celebrates 100 years of it’s Communist Party. What does it mean for markets, and where is China likely to go from here?