I'm not a stock market person at all but my wife is. When she wanted to invest our money in the US stock market, I said I wanted her to put it in the Chinese market instead. She told me she has no confidence doing that and doesn't want to be on the edge of her seat every waking moment. She says the US stock market is a stable long term investment; you invest $100 in Google and watch it become $800 in 10+ years, even if the US economy doesn't really grow. It's a safe long-term investment and it doesn't scare her or cause her to have to moniter trade by the hour because small temporary dips or even year-long adjustments will inevitably be lost in the long term trend of growth. But people in China see the Chinese stock market way differently. It's a short fast gambling game. The goal is to get in and get out with a huge amount of money earned at other peoples' expense. It's not a long term win-for-all investment but a trip to the casino and you are very much in danger of losing. She said NIO's stock is a good example. Starting at $10, it began a slow descent and fell to less than $2, typical of a garbage stock no one would want to get in on; then, a sudden mad growth to over $60, then it drops back to below $10. If you were a genius and gambled right, you could more than 30X your money in a year. If you gambled wrong, if you are like the majority of people who only get attracted to a stock once it becomes valuable thinking it will rise more, you can lose it all. And this volatility exists regardless of how much China's actual economy grows. In America, long term strategists invest in the stock market; in China, it's a gambler's world.
And this, is precisely the goddamn problem.
There's a lot of "the foreign machine is by definition better than the Chinese machine" energy from this line of thinking.
Why is it that the US market is treated as a wealth accumulating market whereas the Chinese market is not?
Are you saying that global elites prefer a reserve USD so they can be corrupt using it as it would be too dangerous to themselves to be corrupt with their own currencies?
I am saying that wining and dining in NYC on caviar and lobster and 3 star restaurants is the cultural identity of what it means to be 'global elite'. Going back to my earlier point on 'calling the shots' - this is a function of Hollywood's propaganda successful at portraying the US as something it is not. The US as a 'destination' of debauchery and opulent/luxurious lifestyle is attractive especially when the government takes a laisse faire attitude towards these issues. China, on the other hand, does not take so kindly to this - ask Kris Wu.
There are far more forceful statements on "Common Prosperity" which basically says they (Chinese Government) see the stock market with its speculative income as something actually detrimental to society if too much profit is made without actual production.
First of all, quote these "forceful statements" - where are they?
Second of all, I think you have a fundamentally misconstrued understanding of how stock markets actually work vs. what you saw in Wolf of Wall Street. Like, seriously. Just stop. Go read his book on Structural Reform if you are interested in learning about the plans/goals of reforms in China. I've read it and that is why I am categorically calling you out here.
Investing 101:
The present value of a stock is the cumulative sum of all future cashflows discounted to the present using an appropriate discount rate. As such, return of a stock equate to a combination of: dividends + earnings growth + change in the valuation (P/E ratio as a standard). Over the very long term, change in valuation should net out so return from a stock is a sum of dividend + earnings growth.
While you may think stock market involves frequent trading - true returns are made from actually investing in companies over the long term. This means participating in the company's growth as it adds value to customers, employees, and shareholders. This equation breaks when any particular stakeholder is sacrificed. In China, the current problem is that employees and shareholders are sacrificed to overly benefit the customer.
I would recommend you read Poor Charlie's Almanack if you want to understand the 'proper' way of doing things.
Commodity prices stayed high in China. If the stock reflects the actual economy and things are in the shitter. They would collapse.
There's a lot of activity that is not profitable - you can use all the electricity and commodities you need but prices for your end products keep deflating - there is less money made. More stuff produced =/= better companies. Total corporate profits in 1H23 was actually down for publicly listed companies - let alone the swath of private small businesses that went bankrupt.
Nobody, absolutely nobody serious in China is calling for 'excessive profit made without production'.
Because the world is dumping dollars like never before.
The Chinese bond market doing well is precisely an indicator of poor economic sentiment, and this isn't something you want to brag about...
