January 31, 2024
Analyzing Market Dynamics: Hong Kong and China’s Market Capitalization

Greetings, everyone. The cumulative market capitalization of Hong Kong and China has plummeted from $20 trillion to $13 trillion, reverting to pandemic levels.

The Chinese ETF has collapsed to its 2016 levels, reflecting significant market shifts.
A notable development is the bursting of the real estate bubble in China, with property prices plummeting by 20-50%, and even more in some regions.

Key Factors Contributing to the Decline:

  1. The US-China Trade War: Initiated by Trump, this conflict significantly impacted market sentiments.
  2. Internal Struggle Among Elites and Clans: Resulting in the destruction of many companies, imprisonment of key figures, and some suspicious deaths.
  3. Delisting of Chinese Giants from US Exchanges: A move that has affected investor confidence.
  4. Potential Taiwan Conflict: Disruptions in supply chains and increased costs are a significant concern.
  5. Withdrawal of Global Investors: Notable figures such as Ray Dalio and Warren Buffett have sold off their Chinese stock portfolios, indicating a lack of confidence in the Chinese market.

Conclusions and Outlook:

  1. China remains the world’s second-largest economy, growing faster than the global average.
  2. The lingering scent of war and instability deters investment in Chinese stocks.
  3. While Chinese stock prices are currently attractive, caution is advised.
  4. The domestic market has become crucial for the economy, with Chinese consumers increasingly important for businesses.
  5. China is likely to emerge first from an economic crisis that has yet to hit the US and Europe, potentially becoming a dominant player in the financial market.

Final Thoughts:
Monitoring the situation in Asia closely, it’s evident that there are concerted efforts to destabilize the region. However, China has so far managed to stay away from major conflicts and key issues. If China navigates these challenges successfully, it could emerge significantly stronger from the crisis.

Wishing everyone wise investments and a pleasant day!