Mar. 18 at 2:01 AM
$YANG $FXI $BABA $YINN $VEXC Why anyone would want to invest in Chinese equities "long-term" is baffling. Their market is a great trader's paradise, don't get me wrong. But it has been flat over the long run for over two decades.
China is an authoritarian regime masquerading has a quasi-capitalist society. Their own citizens do not even trust their own stock market hence why they prefer buying gold and real estate abroad.
The basic construct of the Chinese economy is flawed. And it’s been flawed since its formation. They entered the WTO in 2002 and they’ve only been in banking writ large for 20 years. That’s a short period of time when you build up banking assets the size that the Chinese system has.
China's system is exactly 2X more levered than the United States. 40% of their loans in their banking system are lent to real estate. Real estate is down anywhere between 30-50% in China. Their banking system is insolvent. They are experiencing a "banking crisis" worse than the United States did back in 2008. The reason why the mainstream media is not hyperbolic about this is because the Chinese government protects the data flow.
The Chinese Communist Party has stated publicly before that economists, securities analysts, and fund managers must "harmonize" their economic talk to the rest of the world. This means they are controlling everything that is leaving the country. So, it is hard to believe anything that comes out of the country.