From Bloomberg via MSN, August 17:
At the heart of why consumers in China save so much and spend so little, and why Xi Jinping and Donald Trump will struggle to change that behavior even if they want to, lies the country’s stock market.
Even after a recent rally, Chinese indexes have only just returned to levels seen in the aftermath of a dramatic bubble burst a decade ago. Instead of incentivizing consumers to spend, poor equity returns have nudged them toward saving. A $10,000 investment in the S&P 500 Index a decade ago would now have more than tripled in value, while the same amount in China’s CSI 300 benchmark would’ve added just around $3,000.
Part of the reason, long-term China watchers say, is structural. Created 35 years ago as a way for state-owned enterprises to channel household savings into building roads, ports and factories, exchanges have lacked a strong focus on delivering returns to investors. That skew has spawned a host of problems from an oversupply of shares to questionable post-listing practices, which continue to weigh on the $11 trillion market.
The country’s leaders are under pressure to fix this. President Xi is counting on domestic spending to reach the 5% economic growth goal, especially as a tariff war with the US heats up over the massive trade imbalance. At the same time, Beijing has reasons to keep prioritizing the market’s role as a source of capital: the country needs vast funding to nurture companies that underpin its tech ambitions — even if their profitability remains questionable.
“China’s capital market has long been a paradise for financiers and a hell for investors, although the new securities chief has made some improvements,” Liu Jipeng, a securities veteran who teaches at China University of Political Science and Law, said in an interview. “Regulators and exchanges are always consciously or unconsciously tilting toward the financing side of the business.”....
....MUCH MORE
Additionally trillions of yuan in retirement savings are tied up in never-occupied (and deeply underwater) apartments and after ten or fifteen years they are losing that "new apartment smell."
December 22's [2021] "CORRECTION—China Does NOT Have 90 Million Empty Apartments"
It's only 30 million.
In the introduction to last Sunday's "China's Credit Impulse Is Positive As Global Credit Impulse Goes Negative" someone (ahem) wrote:
What's this have to do with the price of copper in China?And will China start tearing down those 90 million empty apartments and recycling the metals?So many questions.....A good example of the "read too fast, process too slow" problem. My retention of the Bloomberg story from last September was good, unfortunately I retained the wrong number....
On the other hand Chinese large-cap equities are up 17-odd-percent from recent (April) lows and are up ~27%. in the last twelve months. Here's our bogey, the Shanghai - Shenzhen CSI300 index via TradingView:
