Trade War with China

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Tam

Brigadier
Registered Member
Smart observation. China ...and Japan... are both lightening their positions on US Treasuries. Both have been doing gradually over time so it does not imperil their investments.

But another nation has been taking up the slack --- namely the Saudis. That for me puts the relationship between the White House and the Saudis in a new light, especially in the face of this Khashoggi crisis.

 
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xiabonan

Junior Member
Let me explain a little bit about the Chinese stock market. First of all, China's stock market is dominated by small players, i.e. individuals like you and me, the "mom and dad" type buyers. This is in stark contradiction to the US stock market where it's largely dominated by institutional investors. The ups and downs of the stock market affects both the companies that issue stocks and those who buy those stocks.

For companies, be aware that most large Chinese companies do not rely heavily on the stock market to raise capital. For SOEs, they get direct cheap loans from state-owned banks, even though they may be publicly listed on the Shanghai stock exchange. For large private companies like Tencent and Alibaba, they are often listed overseas, mainly in the US and Hong Kong. So what happens with the Chinese stock market doesn't affect them much too. For small and medium sized companies, they're usually not listed. So the ups and downs of the stock market affect only a small chunk of Chinese companies, the main pillars are either supported directly by the state, or listed overseas.

For those buying stocks, it's an even more interesting story. Unlike many in America who invest in stocks as part of a "portfolio" of investment, many in China buy stocks simply because a) they have the spare money to invest and b) they feel the stock market is going to go up. Many know the stock market is full of crap, i.e. insider tradings, unreliable reports, internal manipulations. They don't trust the regulatory authorities too. Then why would they buy stocks you might ask? Well, as long as there's money to be made people will take risks. When that risk eventually precipitates, many lose hundreds of thousands of dollars and make jokes about jumping down a building, but deep down they know this day will come. Many would simply choose to ignore these assets and wait for the market to recover.

So, people who buy stocks are basically those who are a) rich with a lot of spare money to invest somewhere; b) knows fully well that the market might simply plunge one day; and c) can withstand the risk of losing all that money without having his or her life severely impacted.

I hope this explains why the stock market isn't as important an indication of the general level of economic activity in China as it is in America.

Remember, China only had its first stock exchange in 1990. That's only 28 years ago. In many ways stocks and the stock market are still at its infancy in China.
 
Hendrik_2000

Hendrik_2000

Lieutenant General

That is the problem with Chinese intellectual they are so insecure and the west fanboy because they are blinded by the light of Hollywood
Didn't they know that most of US company are just assembly operation contributed little to the Chinese technology advancement with most of the components come from somewhere else
 
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azesus

Junior Member
Registered Member
For those of you can read mandarin , google 黄奇帆:近十年美政府债务演变格局和风险含义 and you will know whats up real situation
Hendrik_2000 said:
That is the problem with Chinese intellectual they are so insecure and the west fanboy because they are blinded by the light of Hollywood
Didn't they know that most of US company are just assembly operation contributed little to the Chinese technology advancement with most of the components come from somewhere else
Click to expand...
 
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Anlsvrthng

Captain
Registered Member
LesAdieux said:
Treasury Secretary Mnuchin: I won't be 'losing any sleep' if China dumps US bonds in retaliation over trade
  • Treasury Secretary Steven Mnuchin says he isn't worried about China selling U.S. Treasurys in retaliation over trade.
  • "If they decide they don't want to hold them, there are other buyers," he says.
  • Some have speculated that China could hit back at U.S. tariffs by selling a huge chunk of the more than $1 trillion of U.S. Treasury bonds it holds.

"If they decide they don't want to hold them, there are other buyers," Mnuchin told CNBC's Geoff Cutmore. "And, obviously, that would be very costly for them to do."

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the former Goldman excutive is contradicting himself here: if you have other buyers, then the treasury yield should remain stable; if it's very costly for China to sell, then the treasury price will crush and the yield will spike.

the current boom is largely driven by the massive QE generated asset price bubble, the bubble make people feel wealthier and spend more which helps corporations' financial reports which in turn drives the market even higher, this is the so-called “income effect".

the treasury yield underlies all asset class, crushing it, you'll take the floor away.
Click to expand...
Or maybe he know well the market.

What for they can sell that?
Yuan ?: D
There is two side of every transaction, what is the other side?
 
L

LesAdieux

Junior Member
Anlsvrthng said:
Or maybe he know well the market.

What for they can sell that?
Yuan ?: D
There is two side of every transaction, what is the other side?
Click to expand...


gosh, you never fail to amaze. if there's no counter party on the other side, or not enough on the other side, the price will go down, that's the very purpose of dumping.

all you need to do is look into the mirror, and say SB.
 
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