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China Overtakes Japan as World’s Second-Biggest Stock Market

bloomberg.com

11–20 of 47 posts

Re: China Overtakes Japan as World’s Second-Biggest Stock Market

#11
post #5

I wonder if the rest of the Sinosphere will eventually suffer from the same sort of economic malaise as Japan, once they reach first-world status. They all have hierarchical cultures that make creative destruction difficult. So while they can quickly catch up to the West through efficient social organization, they can't break them down and replace them with something better.

Counter to most western thought, you can in fact have heavy social control but small-government in terms of economics ala Singapore and have a country make rapid economic process. China's CRC can loosen their grip on business, or selectively ignore it often enough, while still maintaining heavy control of culture and social issues, while still maintaining high growth rates. As we've seen in the last few decades. It d…

Can you point to any other examples other than Singapore or Hong Kong?

Both of these to me take advantage of inefficient neighbouring countries (in a doing business sense) to offer a safe place for those with the resources to do business. I don't know if you can apply that example to somewhere like China.

I also cannot see them lessening their grip on business. Ultimately money is power and in the past the Communist party has always seemed to favour maintaining political control over economic consequences. I cannot see them allowing potentially competing power structures to develop outside of the Communist party structure.

Re: China Overtakes Japan as World’s Second-Biggest Stock Market

#12
post #7
post #4

Given that China's population is 10.8x Japan's, this seems inevitable. Is there more to this that make it notable that I'm missing? Source: https://www.wolframalpha.com/input/?i=china+population+%2F+j...

I don't think a country's size correlates to its stock market size. http://www.internetworldstats.com/stats8.htm So, I don't see why you would think that's inevitable.

How does it not? I guess companies can trade their stocks at foreign exchanges, but over time that should cease. Assuming that productivity per person becomes more than half what it is in the US and that Chinese companies will trade their stocks in a domestic exchange it does indeed seem inevitable. Those aren't very wild assumptions.

Re: China Overtakes Japan as World’s Second-Biggest Stock Market

#13
post #4

Given that China's population is 10.8x Japan's, this seems inevitable. Is there more to this that make it notable that I'm missing? Source: https://www.wolframalpha.com/input/?i=china+population+%2F+j...

By that line of reasoning, India's stock market should be the same size as China's, and both China and India should have a stock market that is 4 times bigger than the USA. But that is not going to happen.

Re: China Overtakes Japan as World’s Second-Biggest Stock Market

#14
post #12
post #7

Earlier quoted context omitted.

I don't think a country's size correlates to its stock market size. http://www.internetworldstats.com/stats8.htm So, I don't see why you would think that's inevitable.

How does it not? I guess companies can trade their stocks at foreign exchanges, but over time that should cease. Assuming that productivity per person becomes more than half what it is in the US and that Chinese companies will trade their stocks in a domestic exchange it does indeed seem inevitable. Those aren't very wild assumptions.

"over time that should cease" why? companies are globally owned, listing is largely about which accounting rules and disclosure and ownership rules you follow, no need for a home bias in the long run.

Look at London for an example of a stock exchange largely full of international companies.

Re: China Overtakes Japan as World’s Second-Biggest Stock Market

#15

I wonder if the rest of the Sinosphere will eventually suffer from the same sort of economic malaise as Japan, once they reach first-world status. They all have hierarchical cultures that make creative destruction difficult. So while they can quickly catch up to the West through efficient social organization, they can't break them down and replace them with something better.

It's conveinent to see things through western or SV capitalism eyes, but Japan's 'malaise' is all about demographics and a 20 year inept Government response to deflation. If you look at metrics like GDP per working age adult, household net worth, etc then it's a very different story.

Re: China Overtakes Japan as World’s Second-Biggest Stock Market

#17
post #4

Given that China's population is 10.8x Japan's, this seems inevitable. Is there more to this that make it notable that I'm missing? Source: https://www.wolframalpha.com/input/?i=china+population+%2F+j...

By that line of reasoning, India's stock market should be the same size as China's, and both China and India should have a stock market that is 4 times bigger than the USA. But that is not going to happen.

It absolutely will happen. Maybe not in the immediate future, but almost certainly before the end of the century.[0]

http://www.bloombergview.com/articles/2014-10-30/china-is-ve...

[0] Barring some kind of technicality, i.e. stock markets merge such that in the future there is only one "stock market" or something.

Re: China Overtakes Japan as World’s Second-Biggest Stock Market

#18
post #4

Given that China's population is 10.8x Japan's, this seems inevitable. Is there more to this that make it notable that I'm missing? Source: https://www.wolframalpha.com/input/?i=china+population+%2F+j...

By that line of reasoning, India's stock market should be the same size as China's, and both China and India should have a stock market that is 4 times bigger than the USA. But that is not going to happen.

India's stock market is 3Trillion (Not very far behind China's).

Re: China Overtakes Japan as World’s Second-Biggest Stock Market

#19

I wonder if the rest of the Sinosphere will eventually suffer from the same sort of economic malaise as Japan, once they reach first-world status. They all have hierarchical cultures that make creative destruction difficult. So while they can quickly catch up to the West through efficient social organization, they can't break them down and replace them with something better.

It's conveinent to see things through western or SV capitalism eyes, but Japan's 'malaise' is all about demographics and a 20 year inept Government response to deflation. If you look at metrics like GDP per working age adult, household net worth, etc then it's a very different story.

> Japan's 'malaise' is all about demographics and a 20 year inept Government response to deflation.

Why do you think the demographic issue exists? Low birth rates are due to gender inequality and long working hours, both of which are endemic in the Sinosphere. And the government's failure (which goes far beyond not tackling deflation) is due to its cozy relationships with incumbent firms - a factor that makes it very difficult for creative destruction to occur.

Re: China Overtakes Japan as World’s Second-Biggest Stock Market

#20
post #2

Here is a scary detail, Japan's stock market capitalization over the last twenty five years. Look how it keeps cycling around $4 Trillion. Year Value 1988 $3,910,000,000,000 1989 $4,390,000,000,000 1990 $2,920,000,000,000 1991 $3,130,000,000,000 1992 $2,400,000,000,000 1993 $2,999,760,000,000 1994 $3,719,910,000,000 1995 $3,667,290,000,000 1996 $3,088,850,000,000 1997 $2,216,700,000,000 1998 $2,495,760,000,000 1999 $…

A couple things to note on this: 1) Market cap changes of the stock market doesn't tell much. If a company changes it's capital structure (more or less debt relative to stock, or Private Buyouts) the market cap changes. 2) A better metric would be "Total value of the equity and debt of all the companies" with an equity and debt breakout. 3) Even still, this would miss privately held companies. It also would just meas…

IDK, the original article talked about the stock market. On that exchange, market capitalization is measured and is a proxy for everything going on with public companies. What you are talking about in 1) and 2) is some non-existent market on which total equity and debt with vastly different characteristics is valued on one shot. What exchange do you have in mind here? The only time you fully measure all the effects to calculate the enterprise value is when you are buying the company outright. There are several practical reasons why you don’t measure and trade on the enterprise value of the listed companies. To list a few

1.On the equity side you only know the prices of outstanding shares, how will you value the non-traded shares and options? There is no simple measure to assign the control premium on a single company much less the entire stock market. This doesn’t include debt that might convert to equity on different schedules.

2.On the debt side, debt can be convertible to equity, have different seniority, payment schedule, liquidity and risk profiles. What does a consolidated number tell you? Not to mention off-balance sheet commitments and the fact that debt for some sectors like a financial company might not make any sense. What does the enterprise value of Bank of America even mean?

3.Even valuing cash has problems if you are like a US tech company with billions abroad that might be subject to myriad tax rules.

Finally with 3) you talked about private companies, at that point you probably need to look at SOE in China as well. Now you are looking at total wealth and not the stock market.

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