China’s stock market bubble: A goring concern
economist.com
China’s stock market bubble: A goring concern
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Re: China’s stock market bubble: A goring concern
#2[deleted]
Re: China’s stock market bubble: A goring concern
#3I find myself noticing that a lot of the solutions that The Economist proposes are very similar - opening markets, decreasing regulation - make everything more "liberal". They always make compelling arguments for their suggestions but I also find myself wondering whether they ever argue for any alternative
Re: China’s stock market bubble: A goring concern
#4I find myself noticing that a lot of the solutions that The Economist proposes are very similar - opening markets, decreasing regulation - make everything more "liberal". They always make compelling arguments for their suggestions but I also find myself wondering whether they ever argue for any alternative
The Economist has always been "The answer is free markets! What was the question?".
I always find it a reassuring read, in the sense that well-written, well-researched, persuasive articles that I disagree with are a sign that I haven't been completely engulfed by my own little information bubble, but take it with a pinch of salt.
Re: China’s stock market bubble: A goring concern
#5I find myself noticing that a lot of the solutions that The Economist proposes are very similar - opening markets, decreasing regulation - make everything more "liberal". They always make compelling arguments for their suggestions but I also find myself wondering whether they ever argue for any alternative
The Economist has always been "The answer is free markets! What was the question?". I always find it a reassuring read, in the sense that well-written, well-researched, persuasive articles that I disagree with are a sign that I haven't been completely engulfed by my own little information bubble, but take it with a pinch of salt.
Actually having lived in China for a significant period of time I can say that the answer is to remove capital controls on Chinese citizens and allow them to invest anywhere else.
This will deflate the Chinese market bubble(and property bubble) almost immediately, you'll see this happen however when pigs are flying to the moon.
Re: China’s stock market bubble: A goring concern
#6I find myself noticing that a lot of the solutions that The Economist proposes are very similar - opening markets, decreasing regulation - make everything more "liberal". They always make compelling arguments for their suggestions but I also find myself wondering whether they ever argue for any alternative
As a short term solution, I would say they're probably right. However, sane advice would be to look for a sustainable alternative. I guess it's just because they have a liberal bias, but in any case I can't see The Economist proposing a slower, yet more sustainable growth.
"After double-digit growth for much of the past decade, sales have slumped" - you don't say... or perhaps they expect that rate of growth to continue without end? Yes, it was a bubble.
Re: China’s stock market bubble: A goring concern
#7I find myself noticing that a lot of the solutions that The Economist proposes are very similar - opening markets, decreasing regulation - make everything more "liberal". They always make compelling arguments for their suggestions but I also find myself wondering whether they ever argue for any alternative
If you instinctively and intellectually adhere to a system of values, why would you advocate something that goes against it?
Re: China’s stock market bubble: A goring concern
#8> Global investors are not buying into the mania: the shares of companies listed in both Hong Kong and Shanghai are now 30% more expensive in the latter.
I'm quite confused by this statement -- if the shares on both exchanges are equivalent, this seems like an insanely good arbitrage opportunity. Are China's capital controls really tight enough to prevent Chinese nationals from finding a way to invest in the same stocks on the HK index for a 30% discount? And even if they are, I'm not clear why the Chinese government would do this -- it's like charging a 30% premium to domestic investors just for being Chinese.
Re: China’s stock market bubble: A goring concern
#9> Global investors are not buying into the mania: the shares of companies listed in both Hong Kong and Shanghai are now 30% more expensive in the latter. I'm quite confused by this statement -- if the shares on both exchanges are equivalent, this seems like an insanely good arbitrage opportunity. Are China's capital controls really tight enough to prevent Chinese nationals from finding a way to invest in the same sto…
Are China's capital controls really tight enough to prevent Chinese nationals from finding a way to invest in the same stocks on the HK index for a 30% discount?
The answer has to be yes - otherwise, as you say, it would be arbitraged away. It's still a bit leaky, but when it leaks it seems that investors much prefer to diversify into ownership of overseas property.
Why capital controls? Because China is more nationalist than globalist. It's also critical to keeping the industrial policy working by forcing local re-investment and preventing capital flight. Chinese growth depends on cheap money, which in turn relies on forcing people not to charge a risk premium for the percieved confiscation and rule-of-law risks in China.
Re: China’s stock market bubble: A goring concern
#10Earlier quoted context omitted.
The Economist has always been "The answer is free markets! What was the question?". I always find it a reassuring read, in the sense that well-written, well-researched, persuasive articles that I disagree with are a sign that I haven't been completely engulfed by my own little information bubble, but take it with a pinch of salt.
Actually having lived in China for a significant period of time I can say that the answer is to remove capital controls on Chinese citizens and allow them to invest anywhere else. This will deflate the Chinese market bubble(and property bubble) almost immediately, you'll see this happen however when pigs are flying to the moon.
The answer to what question? The policy has to be to defer the bubble collapse as much as possible in hope of the mythical "soft landing". Far more than western countries they depend on continuous economic growth as the tradeoff for lack of political freedom.