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Post by Norbert on Jan 3, 2021 8:45:05 GMT
China and the EU (well, Germany; more specifically Chancellor Merkel) have reached a far reaching deal that opens doors to investment in the respective countries. The NYT: "The pact would loosen many of the restrictions imposed on European companies working in China, including a requirement that they operate through joint ventures with Chinese partners and share sensitive technology." This goes to the heart of many complaints about doing business in China. In exchange, China gets more freedom to invest directly in the EU. The deal is not yet approved and the Biden group has expressed concerns. Also, some groups think that China has crossed the line by doing forced "reeducation" of millions of Muslims (while other groups applaud China's determination to avoid the kind of mess France is experiencing). But, this isn't a political post. I see the deal as maybe offering further support for investing in China. What say you? Is this a game changing deal? Is it a win-win for Europe and China? Is it evidence that China is moderating its mercantilist habits? Or is it the opposite? Is this another reason to buy China funds? Link to NYT piece: www.nytimes.com/2020/12/30/business/china-eu-investment-deal.htmlN. |
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Post by Chahta on Jan 3, 2021 12:32:34 GMT
Maybe China has changed their approach to conquer the world and become the most dominant economic and military force. I do not trust China one bit. Making a buck off of them is OK. Reeducation is going too far anywhere but disallowing them to disrupt the Chinese culture is fine. Mixing trade deals and human rights issues is similar to investing in the US and using politics as a forecaster.
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Post by chang on Jan 3, 2021 12:43:47 GMT
European industries want a deal like this. I remember when BASF constructed a large facility in China. China will give Europe lip service on human rights and make the usual promises. Biden will back down lest the US erode its own ability to secure a trade deal with China. I am increasing my exposure to Chinese large caps.
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Post by anitya on Jan 3, 2021 20:47:40 GMT
Like the alternate energy investment, investing in SEANs has a long-term potential. Investing in Chinese stock market has a good potential for profit. I only wish the Chinese make more babies - their demographics (especially when nobody wants to immigrate there) is a deterrent - may be advances in nutrition and longevity will make that a non-issue.
My take is US (and the other four eyes) will also do a deal with China. China can become the #1 GDP by 2030 - great recession and Covid-19 accelerated the trend and another pandemic will only further accelerate that trend.
My prognosis is based less on my prediction on what the CCP and by extension China is going to do and more on how the rest of the world has conducted itself over the decades and thus is likely to behave going forward. I think the subject deal is a reflection of that.
Hopefully, this thread does not delve into culture (human rights, conduct, etc.) and politics.
It will be great if we can continue a discussion about how best to invest in the opportunity.
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Post by anitya on Jan 4, 2021 6:00:40 GMT
A timeline of reserve currencies or dominant trade
currencies (years are approximate) (Info from JPM):
• Rome: 1st century BC – 4th century AD
• Byzantine empire: 5th century
• Arabian Dinar: 7th to 10th centuries
• Florence: 13th to 15th centuries
• Portugal: 1450 to 1530
• Iberian Union: 1530 to 1640
• Netherlands: 1640 to 1720
• France: 1720 to 1815
• UK: 1815 to 1920
• US: 1920 -
Info from IMF Q2, 2020 - Reserve level as percentage of total allocated foreign exchange reserves - Chinese Renminbi constitutes only 2% about the same as Canadian dollars (1.9%), with USD at 61.3% and Euro at 20.3%.
Looks like we have ways to go before we become the has been. But
US Federal debt in real terms per working age person, since that’s the source of tax revenue that will eventually service the debt was, $30K in 1945 (highest before the 2000s as a result of WW II) and $90K now. This shows the impact of worsening demographics on the debt burden in addition to the surge in the debt itself. One can not but wonder if this is the sort of debt burden that devalues a currency and the loss of reserve status.
I remember 11-12 years ago when China became the second largest economy surpassing Japan and it was big news. Of course, a lot of nationalistic pundits in the US were at that time dismissive about the rise of China. Their thought was that we are going to stay as the undisputed economic (and I would not be surprised if their thought extended to militaristic) king and whoever is second is going to be a distant second anyway and who cares. At that time, China GDP was $5T and ours was $15T. In a short 10 year period, China closed the Gap considerably. As of 2019, China GDP is $15T and we are at $20T. Not sure what the numbers would be at the end of 2021, the presumed date when the pandemic clears.
As a nation, it is time for self reflection!
As a member of this investment forum, it is time for me to increase international exposure (currently only 4%), with specific exposure to APAC and overweight to China.
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Post by anitya on Jan 4, 2021 6:24:38 GMT
Wrong thread but how does one buy, sell, and hold Bitcoin (BIT-USD), as a retail investor?
Not looking for bitcoin mining companies' stocks.
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Post by Norbert on Jan 4, 2021 6:26:48 GMT
US Federal Debt vs. GDP Chart ...  N. |
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Post by yogibearbull on Jan 4, 2021 12:58:01 GMT
Wrong thread but how does one buy, sell, and hold Bitcoin (BIT-USD), as a retail investor? Not looking for bitcoin mining companies' stocks. Check Barron's 12/21/20, Part 2: "Bitcoin tripled to 23,000+ in 2020. Apps [Robinhood, Coinbase, Cash App/SQ] and online services [PYPL] are making investing and using cryptocurrencies easy but beware of high fees [up to 2%] and bid-ask spreads. Each site has restriction on what one can do with cryptocurrencies. There are Bitcoin ATMs. Bitcoin trade on loosely regulated exchanges 24/7. But there is limited access to Bitcoin in traditional brokerages and there is no Bitcoin ETF [due to SEC reluctance]. There are Grayscale Bitcoin Trust/GBTC and Bitwise 10 Crypto Index/BITW on pink-sheets/OTC. Crypto hedge-funds include Pantera Bitcoin Fund, etc." |
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Post by anitya on Jan 4, 2021 20:19:12 GMT
Euro area GDP in 2019 was about 90% of ours with similar population levels. In 2020 USD depreciated more than 11%. So, measured in 2020 dollars, it seems Euro area GDP was already bigger than that of the US in 2019. I think the Eurozone survived thru sufficient number of crisis that we can no longer treat it as a 6th grade experiment. My point is, it is not just China, we also need to keep an eye on the Euro zone and what they are doing and how they are investing / spending their money / wealth. Not to overlook the tiny, efficient Switzerland.
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Post by Chahta on Jan 4, 2021 21:06:18 GMT
anitya, what are you thinking about increasing your euro exposure to? I am at 8% at that has been a burden. 1, 3, 5 10 year has not been great.
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Post by anitya on Jan 4, 2021 22:20:47 GMT
anitya, what are you thinking about increasing your euro exposure to? I am at 8% at that has been a burden. 1, 3, 5 10 year has not been great. I sympathize with you. I think structural changes both positive and negative take a long time to play out and that is what we experienced. I should have qualified my previous post that it was meant for people like me who are currently low in dedicated non-US equity investment - I am at 4% (M* portfolio x-ray says 9% non-US) and zero dedicated APAC. I did attempt previously to increase non-US and pulled back when it was not working - shows I am not blessed with correct timing skills. I do not have a target for anything, I move within my pain threshold which changes over time - I know that is blasphemous in investing circles. I am currently at 70% equities and can see myself putting as much as 75-80% of it in non-US before my time is over. P.S.: your marks will be better than mine today! In deference to the OP we should take follow-up to a different thread or offline. |
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Post by chang on Jan 5, 2021 1:01:24 GMT
I should have qualified my previous post that it was meant for people like me who are currently low in dedicated non-US equity investment - I am at 4% (M* portfolio x-ray says 9% non-US) and zero dedicated APAC. I did attempt previously to increase non-US and pulled back when it was not working - shows I am not blessed with correct timing skills. On the contrary, if in the recent past you have experimented with international investments and pulled back, you exhibited a great deal more skill than those of us who stubbornly dug in our heels and muttered "... but the valuations are so much lower!", and held our foreign exposures. What's different now? Good lord, I don't know. I think I have an idea that the USD is going to weaken, though. Exploring what forces might or might not push the dollar down belongs in another thread. But if the USD is going to weaken, then I think you either want to focus on (American) pure exporters or on foreign companies in an unhedged fashion. |
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Post by steadyeddy on Jan 5, 2021 1:10:33 GMT
There is something the opium war(s) of 1800s teach us... just be cautious out there with international investments, particularly China-centric investments.
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Post by anitya on Jan 5, 2021 4:24:31 GMT
There is something the opium war(s) of 1800s teach us... just be cautious out there with international investments, particularly China-centric investments. Without further elaboration, you are leaving it to reader's imagination as to who we are supposed to be suspicious about: the ex-colonial powers or the China Govt. From my understanding, China did what we now do w/r/t drugs coming in from south of us. May be you are referring to our threat of delisting Chinese companies and hence the potential for losses in such companies' stock. Please help us understand. |
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Post by Norbert on Jan 5, 2021 6:18:48 GMT
Regarding the Opium Wars, wouldn't those actually be a solid reason for China to mistrust the West?
Presently, my take is that China wants its currency and stock markets to gain international stature. That means avoiding nasty surprises.
I have 50% of equities overseas, mostly in Asia. Unlike in Europe, the growth and performance are attractive, plus valuations are not bad compared to US growth.
Events regarding Hong Kong are a concern; but maybe our tolerance for civic disruption in our own cities should be the larger worry?
N.
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Post by steadyeddy on Jan 5, 2021 22:11:01 GMT
There is something the opium war(s) of 1800s teach us... just be cautious out there with international investments, particularly China-centric investments. Without further elaboration, you are leaving it to reader's imagination as to who we are supposed to be suspicious about: the ex-colonial powers or the China Govt. From my understanding, China did what we now do w/r/t drugs coming in from south of us. May be you are referring to our threat of delisting Chinese companies and hence the potential for losses in such companies' stock. Please help us understand. My reference to opium wars is that the opium trade was introduced by the Brits to get back the silver coins that were amassed by the Chinese treasury - we know how that ended. Now EU recognizes the "cash" China has available in their coffers, I see history rhyming...pretty soon. |
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Post by anitya on Jan 5, 2021 23:14:15 GMT
Without further elaboration, you are leaving it to reader's imagination as to who we are supposed to be suspicious about: the ex-colonial powers or the China Govt. From my understanding, China did what we now do w/r/t drugs coming in from south of us. May be you are referring to our threat of delisting Chinese companies and hence the potential for losses in such companies' stock. Please help us understand. My reference to opium wars is that the opium trade was introduced by the Brits to get back the silver coins that were amassed by the Chinese treasury - we know how that ended. Now EU recognizes the "cash" China has available in their coffers, I see history rhyming...pretty soon. I am too thick to grasp cryptic messages. Please lay it out. My simple mind can only think of Europe and the US being able to debase their currency so they owe less. May be too drastic a step. China's reserves have been coming down - only 3 trillion USD at the moment. China does not sit on its reserves; it continually invests and it already buys real estate or other real assets in all countries both downstream and upstream in its trade relations. China is a permanent member of the security council and it has as many friends around the world as we do. China was able to tell Russia off before China became a nuclear power. Unlike the US, China is very flexible with its friendships. The culmination of the Opium wars resulted in China ceding control of Hong Kong to Britain but what destroyed China more were subsequent successive civil wars and internal strives. The current power structure of CCP is much stronger and better than the waning days of the (decaying) Qing court. If anything, current China is trending in the opposite direction to when the Opium wars started, including HK folded back into China. Of course, my good case assumes China opening its markets similar to the deal with the EU and the speed of its implementation will determine the level of investment opportunity to the retail investor like me. In the US, we have a dual problem of too much hopelessness (and hence, the FU mentality) in the common man and lack of visionary political leaders at the top which is not very encouraging for me to continue to be so overweight in the US. I am surprised there is no expression of sense of urgency or despair yet among the business leaders in the US. But I worrying about that sort of stuff is like worrying about the weather. At the end of the day, nobody knows the future. We are playing the game of probabilities. 95+% of my investment is in the US. Would I ever put that much in China? No, not even half. My thinking is, every good investor is also a good trader; we have to live today to be able to fight another day! Look forward to hearing what is bothering you w/r/t investing in China stocks. Thanks. |
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Post by steadyeddy on Jan 6, 2021 1:04:22 GMT
My reference to opium wars is that the opium trade was introduced by the Brits to get back the silver coins that were amassed by the Chinese treasury - we know how that ended. Now EU recognizes the "cash" China has available in their coffers, I see history rhyming...pretty soon. I am too thick to grasp cryptic messages. Please lay it out. My simple mind can only think of Europe and the US being able to debase their currency so they owe less. May be too drastic a step. China's reserves have been coming down - only 3 trillion USD at the moment. China does not sit on its reserves; it continually invests and it already buys real estate or other real assets in all countries both downstream and upstream in its trade relations. China is a permanent member of the security council and it has as many friends around the world as we do. China was able to tell Russia off before China became a nuclear power. Unlike the US, China is very flexible with its friendships. The culmination of the Opium wars resulted in China ceding control of Hong Kong to Britain but what destroyed China more were subsequent successive civil wars and internal strives. The current power structure of CCP is much stronger and better than the waning days of the (decaying) Qing court. If anything, current China is trending in the opposite direction to when the Opium wars started, including HK folded back into China. Of course, my good case assumes China opening its markets similar to the deal with the EU and the speed of its implementation will determine the level of investment opportunity to the retail investor like me. In the US, we have a dual problem of too much hopelessness (and hence, the FU mentality) in the common man and lack of visionary political leaders at the top which is not very encouraging for me to continue to be so overweight in the US. I am surprised there is no expression of sense of urgency or despair yet among the business leaders in the US. But I worrying about that sort of stuff is like worrying about the weather. At the end of the day, nobody knows the future. We are playing the game of probabilities. 95+% of my investment is in the US. Would I ever put that much in China? No, not even half. My thinking is, every good investor is also a good trader; we have to live today to be able to fight another day! Look forward to hearing what is bothering you w/r/t investing in China stocks. Thanks. Nothing is bothering me about China. I live in the US, and I accumulate and spend US dollars - so my investments are tied to US dollars. That is all. I have home-country bias. And I see no need to have international holdings (stocks or bonds) in my portfolio - at least for my lifetime. Now, coming to the topic of the thread: the reason EU entices China to invest more of China's money is because that is where the silver coins are. China is the country with largest USD trade surplus in their treasury, and they need to invest somewhere and the US not the most favorable right now even with the new administration. All EU countries have trade deficit with China, not surplus. In order to entice China, EU has to concede/relax ownership rules etc. That is exactly what is going on. |
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Post by chang on Jan 6, 2021 2:08:36 GMT
The comments regarding corruption in China, silver, and the Opium War remind me of an old John Derbyshire article for NRO. Derbyshire is a severe China critic (but married to a Chinese and has lived there, so he knows what he is talking about and should be given serious credence), and his articles about China are collected here: Opinion Columns — China. The article I was thinking about was "Beware the China Boosters", where Derbyshire wrote: The central concern is, of course, corruption. This is a topic difficult to talk about to Westerners, because they cannot grasp the sheer stupendous scale of Oriental corruption. In the events leading up to the Opium War (1840-42), the Emperor in Beijing sent a high official down to south China to see what was going on. The Chinese merchants of the south coast, who were all up to their necks in the opium traffic, pooled their resources for a bribe, to ensure that this official would send a good report back to the capital. The bribe was so huge that it perceptibly raised the world price of silver. That is Chinese corruption. |
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Post by anitya on Jan 6, 2021 3:16:34 GMT
The comments regarding corruption in China, silver, and the Opium War remind me of an old John Derbyshire article for NRO. Derbyshire is a severe China critic (but married to a Chinese and has lived there, so he knows what he is talking about and should be given serious credence), and his articles about China are collected here: Opinion Columns — China. The article I was thinking about was "Beware the China Boosters", where Derbyshire wrote: The central concern is, of course, corruption. This is a topic difficult to talk about to Westerners, because they cannot grasp the sheer stupendous scale of Oriental corruption. In the events leading up to the Opium War (1840-42), the Emperor in Beijing sent a high official down to south China to see what was going on. The Chinese merchants of the south coast, who were all up to their necks in the opium traffic, pooled their resources for a bribe, to ensure that this official would send a good report back to the capital. The bribe was so huge that it perceptibly raised the world price of silver. That is Chinese corruption.Having experienced Asian corruption and fraud first hand, I have been reluctant to invest in Asia all these years. Between the US and Europe, I always thought US has a lot going for it, including where immigrants want to go. If GDP growth is increase labor plus increase in productivity, immigration helps with the first variable. What is really impressive to me is none of the Chairmen or Presidents of China or their families have made it like bandits. That goes to Xi as well. Also, I think China has been trying to clean up its international image. Not having corruption at the highest level helps to set the societal tone and expectations - I get that it takes time to wean people off cultural habits. If there is no money to be made from staying as a Congressman in the US, our Congress would agree to term limits. You see some Congressmen voluntarily leave after a few terms, even though their re-election prospects are not in question, but they are an endangered species. |
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Post by anitya on Jan 6, 2021 4:29:54 GMT
Sorry to be a Debbie downer but the last twenty years have been a case study in failure of governance and loss of hope for the common man in the US. Inability to prevent terrorist attacks (domestic and international), financial crisis and the accompanying great recession, and the current pandemic handling. I do not foresee future winners on world stage as winners of wars but winners in pandemics. For instance, the amount of money we spent on wars and military in the 2000s, the ROI has been hugely negative (including the effect on military families). Our politicians treat our military personnel as hired help and not as patriots. Reserve currency is the last thing we got and the rest of the world can not wait to have other alternatives because we have not been a good guardian of the USD's status as a reserve currency.
The other countries may have long standing problems, but they are headed in the right direction - the last 20 years of trend for the US has been in the wrong direction. So, I can not continue to be a US centric investor.
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Post by FD1000 on Jan 6, 2021 4:34:27 GMT
The Chinese virus has been the nail in the west coffin. China will do whatever to suck in all these weak countries including Europe. China will continue to steal, spy, use cheap labor, lie, don't abide fully, copy as much as they can, dump their products cheaper than any country in the west and when these companies shut down start to increase prices and/or be so dominant the sleepy west will be dependent. The above works perfectly with the Chinese regime. Just watch and learn. Hey Anitya, the US can turn around the ship in just several years if both parties work together. Clinton did it. The Simpson-Bowles( link) had it right too but Obama shut it down |
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Post by chang on Jan 6, 2021 4:39:44 GMT
FD1000 That sounds like a pretty strong recommendation to invest in China. That is what I am doing, and I expect to make a few more buys this week.
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Post by FD1000 on Jan 6, 2021 4:49:53 GMT
FD1000 That sounds like a pretty strong recommendation to invest in China. That is what I am doing, and I expect to make a few more buys this week. It's already here, see the chart below VG EM bonds vs BIV+PIMIX...and...SPY vs EEM Attachments:
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galeno
Commander
KISS & STC
Posts: 221
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Post by galeno on Jan 8, 2021 23:35:30 GMT
Due to higher dividend withholding taxes for non-USA investors (15% vs 10%) a global equity allocation is cheaper for us than a 100% US centric allocation. Our equity port is 5.2% Chinese stocks. I'm happy allowing FTSE to do our global equity allocation. If they think 5% Chinese stocks is OK. So do I. I guess.
That said I don't trust the CCP at all. Zippo! I've been dealing with communists my entire life. "No me like." But my trust in the US government is also not what it was in the past. Jan 6th really scared the heck out of me.
My country's government (Costa Rica) could use some BIG improvements also. Last election my choice was between a socialist and a guy who speaks in "tongues". I held my nose and voted for the socialist. It's just a giant mess.
The CSNY song "All Along the Lee Shore" is in my head. "From here to Venezuela........".
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Post by rhythmmethod on Jan 9, 2021 0:24:37 GMT
All the above definitely has truth to it. Also true is the Chinese work ethic is something most westerners can only imagine in their wildest dreams and view on the distant horizon as a mirage. I wouldn't bet against them anymore than Elon Musk! I'm overweight China and still eating.
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Post by Chahta on Jan 9, 2021 0:29:46 GMT
The Chinese virus has been the nail in the west coffin. China will do whatever to suck in all these weak countries including Europe. China will continue to steal, spy, use cheap labor, lie, don't abide fully, copy as much as they can, dump their products cheaper than any country in the west and when these companies shut down start to increase prices and/or be so dominant the sleepy west will be dependent. The above works perfectly with the Chinese regime. Just watch and learn. Hey Anitya, the US can turn around the ship in just several years if both parties work together. Clinton did it. The Simpson-Bowles( link) had it right too but Obama shut it down China got their wish on 11/3. We are a sitting duck for China and the ship will never turn around again. |
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Post by chang on Jan 9, 2021 0:42:19 GMT
All the above definitely has truth to it. Also true is the Chinese work ethic is something most westerners can only imagine in their wildest dreams and view on the distant horizon as a mirage. I wouldn't bet against them anymore than Elon Musk! I'm overweight China and still eating. Agreed on the "work ethic". Know where I really saw this most keenly? In NYC. We used to live down by the Fulton Fish Market in the Financial District, and walk up to Chinatown for breakfast on the weekends. The industriousness of the 1st, 2nd and 3rd generation Cantonese in Chinatown-NYC was simply amazing. I am also averaging up in FHKCX and wishing I'd done it faster. Also wishing I hadn't stopped adding to MITEX/MATFX. |
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galeno
Commander
KISS & STC
Posts: 221
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Post by galeno on Jan 9, 2021 0:53:36 GMT
Yes. While in my home jail because of the "VID" I'm watching a LOT of YouTube. Too much. For a while I was watching several about China. Their work ethic is INCREDIBLE. They built us (Costa Rica) the BEST soccer / concert stadium in Central America. Before the "VID" I'd go there at least twice a month on Sunday to watch ANY and soccer game I could. Great place. I need this "VID" to end. So I can go back there. All the above definitely has truth to it. Also true is the Chinese work ethic is something most westerners can only imagine in their wildest dreams and view on the distant horizon as a mirage. I wouldn't bet against them anymore than Elon Musk! I'm overweight China and still eating. |
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Post by anitya on Jan 11, 2021 21:50:57 GMT
Working Paper No. 27439 from the National Bureau of Economic Research (NBER)— the official arbiters of recessions - cites Covid scars in terms of beliefs. The paper’s abstract:
“The largest economic cost of the COVID-19 pandemic could arise from changes in behavior long after the immediate health crisis is resolved. A potential source of such a long-lived change is scarring of beliefs, a persistent change in the perceived probability of an extreme, negative shock in the future. We show how to quantify the extent of such belief changes and determine their impact on future economic outcomes. We find that the long-run costs for the U.S. economy from this channel is many times higher than the estimates of the short-run losses in output. This suggests that, even if a vaccine cures everyone in a year, the COVID-19 crisis will leave its mark on the U.S. economy for many years to come.”
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