Australian (ASX) Stock Market Forum

End of the China Bull? Part 2.

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qldfrog said:
Why we might suffer from RE madness in China
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why not there is plenty of madness in RE elsewhere

the Chinese ( at Evergrande ) used Western building/leveraging strategies the Chinese have a hyper-bubble in units , the West has one in office space , both will have messy outcomes (making life at the banks very stressful )
 
BEIJING -- Chinese corporate and household funds crossing the border to other countries exceeded inflows in 2023, marking the first such capital flight in five years.

Last year saw $68.7 billion of corporate and household capital leave the country on a net basis, according to monthly data kept by China's State Administration of Foreign Exchange (SAFE).

When the last annual net outflow of funds occurred in 2018, it capped four straight years of capital flight. Following that, rising exports and pandemic-era border restrictions led to an unbroken streak where fund inflows surpassed outflows.

Now that China is dealing with persistent economic stagnation, its market is losing the power to draw and retain global capital.

According to SAFE's data, there was a notable outflow of funds concerning direct investments, such as those for factory construction. The last time direct investments experienced net fund outflows was in 2016.

Last year's net outflow of direct investment funds amounted to $118.5 billion, an all-time high for comparable figures dating back to 2010.

g-GB%2Fchinas-transactions-with-overseas-via-banks.jpg

Unfortunately, it is now known how much of this outflow was due to Chinese corps shifting money to ther countries to build infrastructure, factories etc, how much is private citizens stashing their money overseas, and how much of it is foreign capital getting out.
Mick
 
I'm watching China for a recovery this year.

It is in what many economists consider to be an advantageous situation. It is not a democracy and not bound by fads nor fools, picking the best to push through with reforms.

Admittedly this is at a cost to freedom of speech but there is no famine nor internal disturbance even though living standards have stagnated or fallen backwards. .

A quick pivot is therefore possible. So, I see an improvement in China through 2024 and 2025, with the deployment of AI whether indigenous to China or stolen, to promote better vehicle and heavy manufacturing, pharma, housing and infrastructure.

For us this will translate to higher Copper and Iron ore prices. All good for Australia imo.

gg
 
Yesterday, one of the biggest Quant funds was suspended for 3 days for "agressive selling".
From Zero Hedge
To appreciate how "sensitive" Beijing has become to any sharp and/or continued selling of Chinese stocks, now that public sentiment is adversely impacted by China's relentless rout, look no further than major quant fund Lingjun Investment, which on Tuesday was suspended for three days amid broader regulatory efforts to revive market confidence. The fund's transgression: it broke rules on orderly trading. Or, stated simply, at a time when it's no secret that selling of Chinese stocks is frowned upon, Lingjun took it to the next level when the fund dumped a combined 2.57 billion yuan ($357.4 million) in A-shares in a minute between 9:30 a.m. and 9:31 a.m. on Monday, the Shanghai and Shenzhen bourses revealed in identical statements on Tuesday, and said they would strengthen monitoring and analysis of quantitative, especially high-frequency trading. Such trading "has obvious advantages over small investors in terms of technology, information and speed" and could at times contribute to market volatility, the exchanges said.

The orders from Lingjun to dump stocks in early trade on Monday coincided with rapid declines in the benchmark indexes, the Shenzhen and Shanghai stock exchanges said, adding they would restrict the hedge fund's trading until Feb. 22. The implication was clear: anyone who likewise aggressively sells stocks, is next.

Lingjun is one of China's biggest quant funds, and according to its website, it manages more than 60 billion yuan (supposedly that include the 2.5 billion the fund just dumped). The fund later apologized for the negative impact in a statement on its website on Wednesday, saying that the firm said it "holds long-term bullish views on Chinese stocks and will stick to long positions," adding it will review the problems existing in transactions.

And just like that, selling stocks in China - especially in a brisk manner - is de facto banned.
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Overnight, Chinese authorities have banned trading on the open and close, and limited the ability of shorters.
Once again from Zero hedge
China where public sentiment is ever more adversely impacted by the country's relentless stock rout, took the latest desperate measure to prop up the market on Wednesday when it banned major institutional investors from reducing equity holdings at the open and close of each trading day, part of the government’s most forceful attempt yet to prop up the nation’s imploding $8.6 trillion stock market which recently dropped to levels not seen since the early 2000s.
While increasingly panicked Chinese authorities have been ratcheting up curbs on bearish trades for months, the ban on net selling at the open and close represents a notable tightening of the government’s grip on market activity that risks upending popular strategies used by hedge funds and other institutional investors, especially those who short stocks. Firms affected by the ban are unable to sell more shares than they buy during the first and last 30 minutes of trading, the people said.

Bloomberg adds that while it remains unclear how widely the ban is being applied across the financial industry, and there’s no indication it will affect individual investors who account for a large portion of volume in Chinese stocks, the sidelining of major institutions during two of the most closely watched parts of the trading day may make it easier for government-backed funds to influence the market — especially the closing levels for benchmark indexes.
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That last paragraph is further examples of the way the CCP manipulates markets, society, and sentiment.
Only a vaive fool would invest in China.

A quick of the Chinese stock exchange Index shows a fairky dismal performance over the last ten years.
Still around 30% of its value of the 2015 highs.
1708549529182.png

Mick
 
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In a further crackdown on trading to support its stock market, Chinese authorities have bbanned another quant and cracked down on HFT .
From Zero Hedge
Just days after China cracked down on quant funds, Beijing took our advice (from around 2009) and started cracking down on the market parasites better known as HFTs (which Michael Lewis decided to give a starring role in his 2014 book Flash Boys about five years after we first popularized this market segment).

One week after Beijing suspended Lingjun Investment, one of China's largest quant funds for three days, on Thursday, China also banned another top-performing quant fund from the stock-index futures market and vowed tighter oversight of high-speed trading, expanding a crackdown on computer-driven investment strategies that some have blamed for exacerbating market turmoil (funny how nobody blames (15 years later, we still find it funny how nobody ever blames algos for surging stock prices, just for crashes).

The China Financial Futures Exchange banned Shanghai Weiwan Fund Management from opening stock index futures positions for 12 months, while confiscating 8.9 million yuan ($1.2 million) in illegal gains, the bourse said in a statement late Wednesday.

The hedge fund had allegedly used high-frequency trading to circumvent transaction limits on multiple equity index futures, the exchange claimed. It also failed to disclose the links between accounts by its controller and relatives and accounts used for managing its products.

Shanghai Weiwan was the top performer for the CTA strategy in 2022 among managers with less than 500 million yuan, with a 105% gain through November of that year, according to Shenzhen PaiPaiWang Investment & Management Co. One of its products was ranked 19th among all CTA strategies by managers with less than that amount over the past year.

The penalty marks an escalation of scapegoating a clampdown on quant trading, as regulators try to shore up confidence in the stock market after three years of losses, and somehow blaming algos is supposed to open the floodgates and see billions flow right back into the Chinese market (without trillions in fiscal stimuli from Beijing first).

It also shows the strong resolve of Wu Qing, who was named chairman of China Securities Regulatory Commission in early February, to punish wrongdoing. Wu pledged to enhance judicial protection and law enforcement efficiency in the stock market to stabilize expectations and foster its long-term development, according to a CSRC statement late Wednesday.

The latest moves suggest the regulator is shifting to a more “results-oriented” stance, said Yu Yingbo, a fund manager at Zhuhai Wanfang Investment Management Co. Rather than just plugging loopholes, “once they identify a certain type of strategy they want to quell, it’s an all-round chase with measures to prevent it from ever cropping up again.
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Certainly, given the fact that China's CSI has been the best performed index in Februrary, we can say that the CCP has achieved their aim.
History suggests that these types of interventions are but temporary. Look for the CSI to resume its downward trend.
Mick
 
is this the China thread ? There seem to be so many of them.

The FT recently ran with a story (paywalled) that the place is a mess and efforts to turn around are not working.

an excerpt
What China needs is a targeted fiscal stimulus to raise demand and beat deflationary pressures. Households, particularly the poorest, need a boost. That means raising social security and healthcare support to ease the financial worries that encourage saving. Incentives to buy up unsold housing inventory and for business investment would help too. Then, to unleash the animal spirits of China’s investors and entrepreneurs, policy stability and deregulation is necessary. All this requires Beijing to overcome its hesitance to spend big and its desire to control the private sector...
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The stimulus is, at least, a step in the right direction. It is a sign that Chinese officials are waking up to the urgent need to re-energise its economy. But turning China’s slump around will require more money, a more focused policy response and an end to the rhetoric that has hurt investor and consumer confidence alike.
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... Here's a similar article from around the traps:

Will Beijing’s market stimulus reignite China’s real economy?​

By Peter Milios | More Articles by Peter Milios

fnn-471186.jpg


Chinese markets have reacted positively, albeit briefly, to Beijing’s "unprecedented" measures aimed at stabilizing capital markets and boosting investor sentiment. However, the bigger question remains whether these initiatives will be enough to reignite the faltering real economy.
On Tuesday, the People's Bank of China (PBoC) unveiled an RMB800 billion ($114 billion) package to support the stock market by providing loans to asset managers, insurers, and brokers for equity purchases, as well as offering funds for listed companies to conduct stock buybacks. This marks the first time the PBoC has employed such monetary policy tools specifically to bolster capital markets, a move central bank governor Pan Gongsheng described as "innovative." If successful, the fund could be expanded significantly.

Although the announcement briefly lifted the Chinese stock market, with the CSI 300 index rising 4.3%, economists are skeptical about the long-term impact. Despite the short-term boost, concerns about the broader economy linger. Jason Lui, head of Asia-Pacific equities strategy at BNP Paribas, highlighted the novelty of some of these tools, such as the new lending and swap facility, but acknowledged the uncertainty around how willing institutions will be to assume the risks associated with stock purchases using PBoC loans.
The measures also come amid other PBoC stimulus actions, including interest rate cuts and reductions in downpayment requirements for mortgages. However, analysts, including those at Morgan Stanley, noted that while these initiatives are positive for market sentiment, they are not enough to ensure China’s broader economic recovery.

Economists argue that a more comprehensive fiscal stimulus is required, particularly to address the ongoing property slump, which continues to weigh on household confidence and spending. Without a significant bailout for the property sector, experts warn that consumer spending will remain subdued, prolonging the economic slowdown despite efforts to boost the stock market.
 
Dona Ferentes said:
is this the China thread ? There seem to be so many of them.

The FT recently ran with a story (paywalled) that the place is a mess and efforts to turn around are not working.

an excerpt



... Here's a similar article from around the traps:

Will Beijing’s market stimulus reignite China’s real economy?​

By Peter Milios | More Articles by Peter Milios

View attachment 184854

Chinese markets have reacted positively, albeit briefly, to Beijing’s "unprecedented" measures aimed at stabilizing capital markets and boosting investor sentiment. However, the bigger question remains whether these initiatives will be enough to reignite the faltering real economy.
On Tuesday, the People's Bank of China (PBoC) unveiled an RMB800 billion ($114 billion) package to support the stock market by providing loans to asset managers, insurers, and brokers for equity purchases, as well as offering funds for listed companies to conduct stock buybacks. This marks the first time the PBoC has employed such monetary policy tools specifically to bolster capital markets, a move central bank governor Pan Gongsheng described as "innovative." If successful, the fund could be expanded significantly.

Although the announcement briefly lifted the Chinese stock market, with the CSI 300 index rising 4.3%, economists are skeptical about the long-term impact. Despite the short-term boost, concerns about the broader economy linger. Jason Lui, head of Asia-Pacific equities strategy at BNP Paribas, highlighted the novelty of some of these tools, such as the new lending and swap facility, but acknowledged the uncertainty around how willing institutions will be to assume the risks associated with stock purchases using PBoC loans.
The measures also come amid other PBoC stimulus actions, including interest rate cuts and reductions in downpayment requirements for mortgages. However, analysts, including those at Morgan Stanley, noted that while these initiatives are positive for market sentiment, they are not enough to ensure China’s broader economic recovery.

Economists argue that a more comprehensive fiscal stimulus is required, particularly to address the ongoing property slump, which continues to weigh on household confidence and spending. Without a significant bailout for the property sector, experts warn that consumer spending will remain subdued, prolonging the economic slowdown despite efforts to boost the stock market.
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I thought about this yesterday and thought it's like applying a bandaid to a fracture. Hope I'm wrong being so cynical.
 
Dona Ferentes said:
is this the China thread ? There seem to be so many of them.

The FT recently ran with a story (paywalled) that the place is a mess and efforts to turn around are not working.

an excerpt



... Here's a similar article from around the traps:

Will Beijing’s market stimulus reignite China’s real economy?​

By Peter Milios | More Articles by Peter Milios

View attachment 184854

Chinese markets have reacted positively, albeit briefly, to Beijing’s "unprecedented" measures aimed at stabilizing capital markets and boosting investor sentiment. However, the bigger question remains whether these initiatives will be enough to reignite the faltering real economy.
On Tuesday, the People's Bank of China (PBoC) unveiled an RMB800 billion ($114 billion) package to support the stock market by providing loans to asset managers, insurers, and brokers for equity purchases, as well as offering funds for listed companies to conduct stock buybacks. This marks the first time the PBoC has employed such monetary policy tools specifically to bolster capital markets, a move central bank governor Pan Gongsheng described as "innovative." If successful, the fund could be expanded significantly.

Although the announcement briefly lifted the Chinese stock market, with the CSI 300 index rising 4.3%, economists are skeptical about the long-term impact. Despite the short-term boost, concerns about the broader economy linger. Jason Lui, head of Asia-Pacific equities strategy at BNP Paribas, highlighted the novelty of some of these tools, such as the new lending and swap facility, but acknowledged the uncertainty around how willing institutions will be to assume the risks associated with stock purchases using PBoC loans.
The measures also come amid other PBoC stimulus actions, including interest rate cuts and reductions in downpayment requirements for mortgages. However, analysts, including those at Morgan Stanley, noted that while these initiatives are positive for market sentiment, they are not enough to ensure China’s broader economic recovery.

Economists argue that a more comprehensive fiscal stimulus is required, particularly to address the ongoing property slump, which continues to weigh on household confidence and spending. Without a significant bailout for the property sector, experts warn that consumer spending will remain subdued, prolonging the economic slowdown despite efforts to boost the stock market.
Click to expand...
Interesting, one thing i think worth noting is that all focus is on domestic consumption, rightly but most of the China economics deniers,( i reuse the term voluntarily😂) always point to competitiveness in oversea market, how the inshoring of manufacturing by the west will kill the China thread etc etc.
That view is obsolete imho..and i believe these article bring back a lot of real world in the debate..
Domestic economy and consumption is what matters there as it does in the US.
I also can not hold on my level of irony when commentators just say that China should boost QE, spray money via helicopters and increase social security payments.
We all know how successful this recipe was in the EU, US of A and now Australia.
Debt bloated overfed governments in a debt spiral..
I hope for China ..and so for Australia, that they will find a more reasonable way out.
Looking at the US example, this ciuld also be the best way for us not being bombed out as a distraction for the Chinese populace...😟
 
from an analyst out there... their stock market has lifted recently .
"The price/earnings ratio of China’s stocks is often cited as low and attractive. But it has always been low, except in previous episodes of heightened market activity...
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“According to our estimates, financial assets represent only 21 per cent of household balance sheets in China, while property’s share was 60 per cent in 2019. This compares with the respective figures of 68 per cent and 28 per cent in the US in Q2 2024.....
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"By August, household deposits reached CNY148trn, 85 per cent higher than August 2019 (pre-COVID). It seems that the authorities want to mobilise idle funds to revive the [Chinese] capital market
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