China Overtakes Japan as World’s Second-Biggest Stock Market • Hacker News Board

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

#41

Post by seanmcdirmid » Fri, Nov 28, 2014, 11:42 PM UTC

nl wrote: post #37

dmix wrote: post #5

Earlier quoted context omitted.

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…

Singapore is a pro-business, large government benevolent dictatorship with a small population and almost limitless supplies of cheap, non-citizen labour. Their society is a miraculous achievement, but it isn't clear that model generalizes to larger countries. It's also not really in the 'Sinosphere', unless you consider all ASEAN countries to be (which they would strongly disagree with!) I agree with your points abou…

Scary that the Chinese leadership does see Singapore as its best role model. Not sure if it will work out though, for the reasons you stated.

Taiwan, South Korea, and even Japan had or have governing structures that would be dubious by western standards, but still have succeeded well enough in reaching developed status (the former being dictatorships until recently, the latter being a reluctant democracy).

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

#42

Post by seanmcdirmid » Fri, Nov 28, 2014, 11:47 PM UTC

dmix wrote: post #25

w1ntermute wrote: post #8

Earlier quoted context omitted.

> 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. Singapore's rapid economic progress is due to anything but small government. If you read Lee Kuan-yew's memoirs, you'll see the lengths to which the Singaporean government went to kowtow to Western (and later, Japanese) multinationals. They rolled out the red carpet over…

Regarding #3, he said that the reason they can't control people as they move to cities is to: a) the use of cellphones/internet spreads information b) their ability to collectivize and locally share information in high-density cities But have you read any recent books on China post-internet? They have largely succeeded in maintaining control of the peoples perceptions of vast amounts of issues. They might not be able…

The government's ability to guide public opinion is quite limited, especially in the cities with the urban aspiring young who are already quite cynical. They get their best influence by pushing nationalism buttons, but this doesn't work very well for domestic issues.

I would say rather that the CPC manages to hang on to public opinion because they are quite stable and the economy does well enough under their leadership. But all the stuff that they do to control the minds of the public (censorship, wumao's, controlling the bloggers) is pretty much a failure, they hang on despite this.

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

#43

Post by nl » Fri, Nov 28, 2014, 11:49 PM UTC

seanmcdirmid wrote: post #41

nl wrote: post #37

Earlier quoted context omitted.

Singapore is a pro-business, large government benevolent dictatorship with a small population and almost limitless supplies of cheap, non-citizen labour. Their society is a miraculous achievement, but it isn't clear that model generalizes to larger countries. It's also not really in the 'Sinosphere', unless you consider all ASEAN countries to be (which they would strongly disagree with!) I agree with your points abou…

Scary that the Chinese leadership does see Singapore as its best role model. Not sure if it will work out though, for the reasons you stated. Taiwan, South Korea, and even Japan had or have governing structures that would be dubious by western standards, but still have succeeded well enough in reaching developed status (the former being dictatorships until recently, the latter being a reluctant democracy).

I think Chinese leadership sees Singapore as an aspirational goal, rather than a development model.

For all their faults, the Chinese leadership is rarely dumb.

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

#44

Post by seanmcdirmid » Fri, Nov 28, 2014, 11:49 PM UTC

moogleii wrote: post #33

w1ntermute wrote: post #3

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.

Huh? Chinese culture (whether we're talking about the losers of the civil war or the victors) is not nearly as hierarchical as Japan's (or Korea's).

They are all pretty Confucian, but China is a lot more heterogeneous (in culture at least) than Japan or Korea.

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

#45

Post by seanmcdirmid » Fri, Nov 28, 2014, 11:52 PM UTC

adventured wrote: post #29

jim_greco wrote: post #15

Earlier quoted context omitted.

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 hasn't suffered any meaningful deflation in the last 25 years. In fact, they've suffered immense inflation, as have most major economies. That's why they have among the highest costs of living on earth, their consumer goods are expensive, and almost everything in Tokyo costs a fortune. Run 2% deflation against 25 years, and tell me consumer goods in Japan should cost what they do. The only thing Japan suffered,…

http://www.tradingeconomics.com/japan/inflation-cpi

Set the start date to 1990. Inflation has never risen above 4%, and most of the time hovers around 2%, which is considered normal and hardly "immense". You even see deflation at a few points, which is almost unheard of in developed economies and always considered quite bad.

I've traveled to Japan a few times, and noticed that it is a bit cheaper to go now than before. Definitely not expensive outside of hotels and shinkansen tickets.

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

#46

Post by mathattack » Sat, Nov 29, 2014, 1:10 AM UTC

adventured wrote: post #28

mathattack wrote: post #9

Earlier quoted context omitted.

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…

That's not true. A company taking on more debt does not automatically alter its market cap. There is no automatic correlation for any given valuation metric, whether we're talking about how high a PE ratio should be, or how debt should be valued when deciding if a market cap is reasonable. Your 1) item rests on the efficient market theory, which is false. It is entirely up to investors - their reasoning and emotion -…

Thank you for the comments.

Here's the point I'm making...

Let's take an oversimplified view of the world. 1) In 2008 a company has $1 billion in stock value, no debt and goes belly up. 2) In 2009 a new company starts with $2 billion in debt financing, and $100 million in equity financing.

According to a "Total stock market cap" there is a drop. But that drop doesn't mean anything. A larger company was created in it's place. It just gets missed because of the debt financing.

Similar things happen within a company. If a $1 billion company goes private in a leveraged buyout, there will be $1 billion less on the public equity side (in the total stock market capitalization) but you're not measuring the increase in privately held equity or debt side. The total value of equity may also change if companies issue or pay back debt, or issue or buy back equity.

The main point I'm arguing is that total capitalization of stock only doesn't tell you much, for the same reason that only looking at equity on a company's balance sheet is an incomplete picture.

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

#47

Post by mathattack » Sat, Nov 29, 2014, 1:12 AM UTC

npalli wrote: post #20

mathattack wrote: post #9

Earlier quoted context omitted.

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 t…

Thank you for your comments/thoughts.

It's very hard to come up with a lot of these numbers. In the US it's possible to look at the aggregate corporate debt market, but you would still miss some liabilities. It doesn't change the point, though, which is that aggregate "public equity only" analysis doesn't tell you much. (Just like looking only at a company's balance sheet equity doesn't tell you much)