China markets in turmoil as Russia ties add to list of risks

Fog of war.

I've seen it done even in the same day.

Morning: DOW down 300 points because of Fed decision

Evening: DOW up 300 points because of (same) Fed decision

Context: most financial analysts at places like Bloomberg are literally some of the lowest paid employees. Most of them never traded any financial market in their entire life, which is quite short since they tend to be in their 20s.

Beware that -300 a day, +300 the next one still means a -, a thing too many forget...

Apple’s stock app is awesome in that matter. “Why NASDAQ:_____ ticker is bound to go down in the next months” – the day after it gains 20% and doubles within the year…

These are pretty much all automated.

They take market movements and append the most relevant piece of news to that movement. If you track any stock closely you'll find your daily Motleyfool article "Why is XYZ stock is moving because of [most recent relevant news for that company]"

The article is usually one paragraph stating the stock movement and a summary of the most recent news. You can get the same summary for different movements due to the automation here.

But they don't "have to" report it. It's become standard because it's free, guaranteed content. Finance and sports both follow the same model. Every trading day (or game, for sports) is guaranteed to have an article: Up or Down; Win, Loss or Tie. The content is filler as the articles' inclusion is justified regardless.

Dave Chappelle famous words explain pretty well why we really should stop caring about twittokbooktagram.

A large source of CCP elite's wealth comes from Evergrande, Sunac, Country Garden.

A large chunk of Chinese savings is tied to it. If they allowed people to sell or liquidate their shares, it would cause real instability.

Too big to fail combined with an autocratic government ostensibly built upon stability. Who dares push it into bankruptcy and risk the certain wrath of that government?

Evergrande (real estate in general) is undergoing intentional, controlled unwinding initiated by CCP kicked off by "three red lines". It was never going to collapse, the entire point of Evergrande was to avoid an Lehman moment by preempting it.

They're carefully trying to change ownership of the hot potatoes so that as many of them are in foreign hands as possible.

If Evergrande defaults, foreign bondholders will claim their collateral.

So instead, for example, they have state-owned companies buying up Evergrande's assets, then Evergrande using that money to pay back local creditors, so that Evergrande is eventually left owning neither money nor assets to pay back foreign bondholders. Nothing left to seize in court.

Meanwhile, they are trying not to create a shock in real-estate prices that would undermine the other overleveraged developers, such as would occur if Evergrande unloaded all of their assets at once. Each developer is balancing their debt-to-asset ratio, so if their real estate assets drop in paper value, they end up in Evergrande's position.

Foreign bondholders appear to be playing along with this, which is fascinating; it suggests that either those bondholders are, too, looking to offload their hot potatoes and want to preserve the appearance that they're still worth something as they search for buyers, or else they're using those bonds as collateral for their own loans. As long as credit rating agencies play along and don't drop the credit rating to full default, they may be able to do so.

It's not just evergrande, it's all property developers pretty much. It's a real estate bubble popping when an immense portion of wealth and growth is in real estate.

A lot of it is tied in with local government. The central Chinese government inadequately funds local governments. The local governments close the funding gap by selling/leasing land to developers (often kicking citizens off their land without proper compensation). Chinese citizens buy the properties due to a number of cultural and financial factors. There is not much else to invest in. Savings interest rates are very low. Chinese citizens often distrust the local stock market due to corruption issues and shared memory of previous crashes. Ordinary Chinese citizens are not permitted to invest overseas. Local property is the only reasonable investment to many. Many of these properties are never even lived in. However Chinese citizens are going to stop buying eventually as property prices are already well into greater fool territory. When that happens, local government will be in trouble.

YEAH! Those chinese amateurs should do what we do in the USA ; just print more money and bail them out, and let their competitors acquire the company for pennies on the dollar after our government employees have had the opportunity to let all the people in their family know that trillions in bailouts is n the way -- oh yeah, and dont forget to setup an LLC in your spouses name to slurp off such bailout funds as well.

(This seriously happened BTW, if you dont recall)

Well, that's to be concluded.

An additional stress on the system could make the problem exponentially worse.

Where did the comment say that its more of a problem for China than the west?

Because China is not food independent. Most of western countries are.

Chinese food security is generally lower than that of the west

https://impact.economist.com/sustainability/project/food-sec...

The US ranks 9th whereas china ranks 34th. They're not going to famine or anything but food prices, or really just inflation more broadly, could be an issue. The reason china stockpiles grain is because it doesn't produce enough for itself.

Yes, but what will China do with the goods it manufactures? If they have the internal demand to consume them, that's good. If their plan is to sell exports to Western nations then they need to be strategic. TFA is about sanctions being extended to Chinese firms that invest in Russian energy firms, but one could imagine a spiral where the sanctions expand to other Chinese firms that produce manufactured goods ("embodied energy") as well. We're not there yet, but it is a possibility.

For now ;) or as the old proverb goes:

Бесплатный сыр только в мышеловке

Or Russia could just say this is a price and either swallow it or fuck off. Oil price is already high and due to West not buying it from Russia competition increases. So China can either pay exorbitant prices to compete with the western buyers or just take some reasonable price from Russia. Win win for either. The West of course can get mad and start sanctioning China but nobody can really predict how / when / if this is going to play.

Russia's primary problem is going to be the instability that comes out of the reveal that Putin is a typical incompetent authoritarian and Russia's military is weak (and there's nothing they can do about it, clearly, or the past decade of 'modernization' and spending would have). To the extent Russia has had some limited stability under Putin, it has been built on the image of Putin's competency as a command & control operator of the Russian state and Russia's supposed potent military strength in particular - the projection of strength generally, all the fake imagery the propaganda machine has dished out regarding Putin over two decades. Naturally, as it turns out, the truth is closer to the opposite. It always seemed a distinct aberration that Russia would manage to somehow maintain a competent, potent, relatively well-organized military while everything else was so subpar and rotting. Everything makes sense again, their military looks like the rest of the nation.

The knives will come out for Putin now that everybody knows he's weak and fragile. His recent moves to punish powerful internal figures will force him to go even further. Being likely paranoid as dictators commonly are, Putin will likely do as much damage to Russia's internal functioning as sanctions do from the outside to its economy. Putin is likely to elevate the fascism to the point where their system stops functioning much at all, including their domestic economy. Purges, gulags, genocide, things typical of later stage statist regimes, it's all on the table if Putin's intention is to retain his present power. Putin only has two choices: give it up, or kill lots of people to try to fend off the sharks that will inevitably come for him and challenge his position. The considerable, fake image of strength was previously making it largely unnecessary to go as far as most dictators do to retain control, that luxury will now vanish and it'll dramatically damage Russia. People fleeing Russia are making the right choice, get out while you can.

> There are quite a lot of people who try to immigrate to China.

Do you have a source i can read about that? I'd be interested to know more about this.

There are 1.4 billion people in China, and ~1 million immigrants pre pandemic. The number of new migrants required would be astronomical in a country already struggling with food and energy insecurity.

It takes 20 years to make a 20 year old consumer while the rest of the population ages 20 years.

Seems a bit optimistic and wishy washy to say the least.

That's the correct answer. I never cease to be astounded that so many people don't seem to grasp that you can increase output per capita, productivity per capita, as the population contracts.

The focus should be on improving the quality of life of the people, not on expanding the economy in absolute terms.

China would be better off with 1/2 the people at the same GDP (ie ~700m people at ~$24,000 per capita GDP).

Population contraction is desirable in many cases, so long as you can continue to increase productivity per capita. China has a long ways to go yet in terms of potential to raise their per capita economic output, if they're willing to pair that with a contracting population. And the lightening (from depopulation) on their resource needs is a huge help, it makes their situation so much easier.

Western Europe has a lot of immigration and the population is actually increasing. Japan has stagnated for about three decades now.

It's simple. 90% of people feeing know English to at least some extent, but almost no one know Chinese.

Also regardless of what Russian regime propoganda trying to sell we all grown on western culture and want to live in western world. People who wanted to live in Asia moved to Thailand / Vietnam / Bali long ago.

Yeah, up and down constantly. I'm following markets and the worst I've seen was almost -20% YTD for DAX recently, this is scary

No dictator is absolute. I’m sure a lot of politics is happening behind the scenes.

So I guess everyone's preparing for when he surprisingly loses his mind and decides to invade Taiwan? Can't say we didn't see it coming then.

Why are people still saying this? This statistic has been unmasked to be quite useless and only used for fear mongering so politicians/bureaucrats can cling to their emergency powers.

These “Thousands of deaths” are where the deceased happened to also test positive for COVID. Most of the deaths were people who were already very sick and likely not caused by COVID.

> dirty free societies have everyone immunized by infections

They don't, they really don't, they just stopped caring about people dying

Did it work well or did China just stop reporting cases?

> but Shanghai is under lockdown.

Damn, I honestly didn't expect to read about this first on HN, you are indeed right, almost everyone seems fixated on the war (for understandable reasons, I would say).

I remember posting on this forum 2+ years ago about the Chinese authorities locking down Tianjin and potentially Guangzhou/Shenzen in the South (in early February 2020, I think), I remember a HN-er from Shenzen telling me that things were just fine there. Time does fly fast.

What WHO investigation said it didn't originate in China?

China have not allowed a proper investigation to take place i.e by people from outside of China. China originally tried to cover up the extent of the problem so I don't trust China to investigate China.

China dropped the ball here, there is no reason they aren't in the same stage as the rest of the world, other than their own decisions. As an autocratic state they can lock down apartment blocks and just stop people moving around and people can't do anything about it. It has ended up being the reason they still need to lockdown now.

Animals spread Covid. Was anyone expecting the world to wait for every animal to be vaccinated as well?

Lockdowns are a delay strategy until vaccines are available.