We are going to see more radical changes in the Chinese stock market and it’s not going to be good for chinese stocks, ADRs and will be a shock to the financial system globally.
In the old days communist leaders dressed differently so you could avoid them but now they are suited and booted!
Xi is fortressing the communist way in China – this is regime change with a smile
People have been thinking that the recent clampdown on Chinese Internet stocks was based on a deep desire to improve quality of life and quality of competition. What we will see is that this is not grounded in those worthy ambitions but is a secular change in philosophy and wealth distribution.
What’s the West motives for capitalism are to promote wealth for those that achieve it and to reward their hard work, the Chinese, or shall we call it communist, style sheet seeks to level up the bottom by flattening down the top.
In short if people with capital-gain suffer, then that’s a price well worth paying for true red equality.
The President Xi has now been leading the country for sufficient time (since March 2013) to start really implementing his philosophical leanings Whilst not as evil as the Cultural Revolution it nevertheless promotes a radically different form of society than the western free for all.
Removing Didi or other companies’ ability to do business or restructuring education companies does not hurt the little people. Those hurt are a few famous and popular Chinese CEO and American investment funds/pensions/retail investors sitting in front of their accounts.
Xi has moved quickly to remove the threat from Bitcoin, banning its use, purchase or mining – more of his campaign to fortress communism.
Jack Ma demonstrated to Xi the danger of building role models in the Chinese capitalist world. What if one of these was to build support like Elon Musk, where a tweet could mobilise people!!! That is a clear and present danger – better to get rid of the cause.
And by luck this action resonates in the population – There is distress that big companies get richer, and the small companies get poorer. This is not in sympathy with the equal socialist regime and resonates in the population.
So, we should expect to see further move in the capitalist model China operates. Whilst many people are sitting on losses on Chinese investments it is only going to get worse. This is secular change. Chinese Capitalism is not the same as the west!
So, what does this mean for the global and American markets
Any stocks which represent companies with significant exposure to China are threatened.
How this affects supply chain in China, from the manufacturing off an iPhone 2 commodities, is clearly in uncharted territory. Further afield, a reduction in China U.S. trade will clearly wipe value from the market. It may also intensify trade war concerns with the region.
WE know he has changed his position in China above president and to make him unremovable ever. He has also enshrined his ideals in the constitution in the same way as Mao Zedong (Mao Tse-tung) did.
I wonder, with presidents new strength in, will he have further ambitions to make his tenure even more legendary and perhaps we should look to Taiwan with concern.