A. FIRST, WE NAILED THE VICIOUS MOVE - SINCE OUR BUYS IN MID-AUGUST
- Buy on Technology on Aug 22, 2024 - with +30% gain
- Buys on Single name Tech stocks:
- Tencent since Aug 26, 2024 - with +14% gain
- Baidu on Aug 22, 2024 - with +10% gain
- Meituan Dianping since Aug 22, 2024 - with +70% gain
- Alibaba since May 9, 2024 - with +31% gain
B. YES, WE ARE AWARE OF HORRIBLE DEMOGRAPHIC AND THE HOUSING OVERHANG
- demographic crisis and aging population
- housing overhang and Real Estate Crisis
- and those issues are deeply priced in
C. BUT THE PROPOSED STIMULUS IS LIKELY TO EXPAND
- important Chinese ethics of Confucian gradualism
- despite the misperception that Chinese government does listen to its nation:
- the 2022 White Paper Protests exposed public discontent with the government's strict zero-COVID policies
- authorities censored the Sitong Bridge protest in October 2022 and cracked down on demonstrators
- widespread unrest in November 2022 eventually forced the government to ease restrictions after significant protests
- after long, brutal COVID lockdowns, the Chinese government quickly reversed its zero-COVID policy in response to public pressure!
D. AND INVESTORS (BOTH DOMESTIC AND OFFSHORE) ARE HUGELY UNDERINVESTED IN CHINA
- Chinese consumer saves excessively
- for the past 5 years, Chinese consumers have shifted their money to government bonds, avoiding risky equities
- in fact, all major runs in Chinese stocks were catalyzed by the sell-off (yields higher) in Chinese government bonds
- we are also forecasting a steepening of the yield curves for neighboring trading partners - Japan and Australia
- separately, overseas investors investing in Emerging Markets started to move money from the overvalued winners (like, India) and into China
- Chinese government has an ample capacity to borrow
- not everything is so good – Chinese 5.8% budget deficit highlights rising debt and fiscal strain
Curious to explore our latest charts with forecasts?
Message me your email, and I will send you the latest forecast.
