Foreign investment flowing rapidly out of China and the US market has turned into a Bull. Foreign investors have been dumping vast amounts of Chinese assets, and putting money there will only get riskier (msn.com) "But foreign fund managers have already stolen a march on the policy: They've been selling vast amounts of securities over the past two years in response to Chinese leader Xi Jinping's policies and mounting US-China tensions," wrote Jeremy Mark, a senior fellow with the Atlantic Council's Geoeconomics Center. In fact, international institutional investors have sold a net $148 billion of China's bonds since early 2022, and Chinese stocks have seen sharp declines, especially on exchanges in New York and Hong Kong, he said. ...................... Separate reports have also shown that foreign investors are selling Chinese stocks at a faster pace. And a former IMF official predicted China's economy is likely headed for a so-called lost decade. Mark said that this shift in market sentiment underscores how de-risking is as much about the bottom line as it is about diplomacy. "And it does not bode well for China amid growing anxiety about the country's economic prospects," he added. ................................ Mark acknowledged Chinese efforts to bring back some overseas investment, but foreign capital flows are set to keep declining, especially with new US restrictions on the horizon. Already, private equity investments in China led by Americans fell 76% last year. "Combined with recent Biden administration restrictions on sales to China of advanced semiconductors and cutting-edge chip-making gear, the message to all classes of investors will be clear: Putting money in China is going to become riskier, and de-risking is only going to become more commonplace," he concluded.
The S&P 500 is in a bull market. Here's what that means and how long the bull might run | AP News The S&P 500 is now in what Wall Street refers to as a bull market, meaning the index has risen 20% or more from its most recent low. ..................................... By entering a bull market, the S&P 500 effectively put an end to the bear market that began on Jan. 3, 2022. Officially, the bear market is considered to have ended on Oct. 12, 2022. Declaring the end of a bear market may seem arbitrary, and different market watchers use different definitions, but it offers a useful marker for investors.
I wonder how much of this is the years of the Chinese manipulating their currency finally catching up to them.
If you are as old as I am you will remember the Japanese scare from the 90s. Crichton even wrote a book about it, Rising Sun. It is possible china can pull out of it but it seems their remarkable growth is over or close to over. There are major similarities between both rises. Growth fueled by cheaper labor for American export. A really insane property Market. A crazy high savings rate. I am not predicting a 20 year malaise like Japan has had but it’s going to be interesting to see.
Add in the aging population with no immigration and it seems like they are set up for the same thing if not worse as Chinese politics are much worse for capital than Japan was
I don't know danmanne65 - some folks (Peter Zeihan) are suggesting population demographics will be absolutely catastrophic for China, leading to a market free fall for them and very soon. To listen to Peter it's (Gotterdammerung) for them. I'm not sure I believe it but it's an interesting topic to consider.
The demographics are a long term problem but they still have hundreds of millions of very low wage citizens that could fuel economic growth. Their woes are largely self inflicted, especially their heavy handed tactics and their turn away from capitalism and capital markets. Yet another example of a totalitarian destroying his country from the inside in order to consolidate his power.
When I was back at UF majoring in international economics I had one professor that was very into the Chinese economy. Even back then I remember him harping on how it was all a fraud and a collapse was inevitable. His main point, if I recall, was you can't build a sustained economy from the top down. Or something like that.
Hello I-Boy Question - And this is just speculation on my part - No one can deny the incredible economic expansion of the Chinese Economy this century. However - it seems that expansion is hitting some serious road blocks now. The high rise "over-build" is certainly just one indicator of numerous problems. I was "thinking" that perhaps "Li" is shifting course to foreign policy matters: Taiwan, China Sea military base expansion, Belt and Road inititive, African "rare earth" metals policies etc are an attempt to shift from economic domestic policy to more ambitious foreign policy goals. Thoughts?
Well I was moderating my actual outlook. I think their demographics major league suck. The one child policy and selective abortion and even infanticide, Has a majority of their youth being male. Their demographics are worse than Japanese.
I’m not an expert on such matters, but China was already hitting some economic roadblocks (debt, demographics) and foreign policy and nationalism are always a way to distract a population that is becoming uneasy with stagnation. Whether that is an explicit thought process of Xi or if he really has more nationalistic goals I don’t know. Probably both.
The one thing that strikes me as a bit odd about this OP on first glance is that it seems incongruous that the two separate markets would move so disparately, given how interconnected they are. It would seem that this significant downturn in the Chinese economy would necessarily serve as a drag on the US economy, at least to some extent
US markets aren't too bothered by the Trump indictment today, with all 3 major indices being up a little.
Not entirely accurate. The Chinese government had been taking a direct hand in their exchange rates for a long time. Trump actually got them to admit and stop it (or at least promise to) in 2019. China Agrees To Stop Currency Manipulation, Trump Says