#chinastock

Introduction: China’s capital market, with its vast potential and growing global influence, continues to be a focal point for international investors. As of December 2, 2024, China’s regulatory landscape is set to undergo significant changes with the implementation of new measures designed to ease foreign investment in its A-share market. These measures aim to lower entry barriers, reduce lock-up…

When China catches the flu, America gets pneumonia? | Precarious #Economics on Blog#42

Beginning in October 2015, many economists warned that the expected decision of Fed Chair Janet Yellen to raise interest rates was premature. A mere eight days into 2016, we are seeing volatility in the Chinese stock market, due to known, nonetheless adverse economic factors.

When thinking about the effects a downturn in China might have on the US economy, one cannot ignore the dependencies…

He explained that Chinese companies that entered the American market at an early stage did so for several basic reasons.

Number one, America had a lot of money. During the 1990s the capital flow in the American market was at its best. All the money in the world was in the American market. 

Secondly, America’s investment industry was the most creative in the world, as well as the most radical and investors went all around the world doing business. The first people to bring investment ideas to China were American capitalists. Naturally they would want to bring the Chinese back to their own native market to do business. 

Thirdly, America had the most public-listed TMT companies. In the area of high-tech everyone felt that the people who truly understood TMT investment were all in America. Therefore, if you want to find a relatively better appraisal, you needed to go to the American market. 

The fourth reason was that the requirements for entering the market were lower; here requirements being technological requirements. 

The current situation is a very big departure from ten or so years ago. Mr. Bao believes that these several basic conditions have gradually disappeared. 

Number one, the movement of capital has definitely changed. Currently the flow in China is better than in America. China is not lacking money. 

Secondly, the overhead costs of entering the American market are very high, although it says the official cost is 7%, in America if your raised revenue doesn’t exceed $20 million, the company will end up paying a cost of almost 10% to enter the market. This doesn’t include the fees to continue in the market. This is a very high cost. 

Thirdly, from the angle of appraisal, the outstanding qualities of the American market don’t exist anymore, now the appraisal system is the same for everyone, all of these high technology appraising systems have offices in Hong Kong. It doesn’t make sense that Hong Kong market has 10 times PE ration, but America have 30 times PE ratio. 

Fourth, there is the issue of politics, for example America currently faces problems with the SEC suing and auditing system. These are all the fish suffered when the city gate was on fire.