China Stocks Not Doing Well

Couldn’t happen to a more deserving set of folks… but I find myself wondering just “Why?”. They got just about everything they wanted. Usurper Biden as POTUS In Name Only (PotuSino). USA complacent and nearly paralyzed on the global stage. Africa theirs for the taking. Japan nearly in lockdown even with the Olympics as protests against it rage. Chaos seeded all over the world as they work to buy up assets at firesale prices, or buy up Government Political Offices at even better rates.

Yet their stock market is not looking so good. Makes a fella go “Hmmmm…..”

FXI China stocks VS SPY S&P 500 23 July 2021

FXI China stocks VS SPY S&P 500 23 July 2021

All the indicators say it’s in the toilet. Below PSAR (Periodic Stop And Release) or those little red dots. Fully inverted SMA stack (Simple Moving Average – longest duration on top lagging the decline). Volume peaked at the bottom in early 2020, calling the bottom, then was very low at the local top in Feb 2021, calling that top. Now it is dropping but without any bottoming spike in volume, so still a ways to go.

MACD (Moving Average Convergence Divergence) is “red on top” and “below zero” showing ongoing decline.

ADX / DMI is “red on top” but with the black ADX line still on the bottom says “trend to continue”. (note that in March 2020 it briefly crossed the blue line at the bottom, then in Feb 2021 it had pulled away hard from the red line indicating a top.

Yahoo Finance has a page about the tech sector (Bolding by me):

https://finance.yahoo.com/news/down-831-billion-china-tech-043708179.html

Down $831 Billion, China Tech Firm Selloff May Be Far From Over
Jeanny Yu and Abhishek Vishnoi
July 7, 2021·3 min read

(Bloomberg) — China’s technology giants have seen a combined $823 billion wiped from their market value since a February peak, with Beijing’s expanding crackdown on the sector fueling investor concern that the selloff is far from over.

Authorities on Tuesday issued a sweeping warning to the nation’s biggest companies, vowing to tighten oversight of data security and overseas listings just days after Didi Global Inc.’s contentious decision to go public in the U.S. That has put further selling pressure on China’s biggest technology names including Tencent Holdings Ltd., Alibaba Group Holding Ltd., JD.Com Inc., Baidu Inc. and Meituan.

“The selling will continue in the third quarter,” said Paul Pong, managing director at Pegasus Fund Managers Ltd. He says he sold two thirds of his technology stock holdings, including in Tencent and Alibaba, in May. “The measures from authorities will keep coming.”

The losses have come from 10 firms including three U.S. listed names. Didi’s ADRs fell 20% stateside on Tuesday, erasing about $15 billion of its market value.
[…]

China’s sweeping warning Tuesday followed the opening of a security review by the nation’s internet regulator last week into Didi and a demand for app stores to remove it.
The move stunned investors and industry executives and has hammered the Hong Kong shares of peers such as Tencent — one of Didi’s largest backers.

Investors worry that the latest security-based probes have opened a new front in President Xi Jinping’s broader campaign against China’s internet giants
that began in November with the collapse of Ant Group Co.’s mega IPO and subsequent antitrust investigations into Alibaba and Meituan. Over the weekend, China moved against two other companies that also recently listed in New York — Full Truck Alliance Co. and Kanzhun Ltd.

Investors are likely to take “a sell first, talk later approach” to limit policy risks in their portfolio, said Justin Tang, the head of Asian research at United First Partners in Singapore. Stock prices are likely to be driven by near-term sentiment swings as opposed to company fundamentals, Jian Shi Cortesi, a Zurich-based fund manager at GAM Investment Management, wrote in an email.
[…]

The Hang Seng Tech Index is down 31% from its February high.
Investors in mainland China, who accounted for about a third of turnover in Tencent shares this year, turned net sellers of the stock in June.

Oh, right, when your “fortunes” depend on Government, you can have them turn in an instant if suddenly “out of favor with Dear Leader”… Perhaps USA based Government Teat Sucking companies ought to remember that too.

I don’t suppose a significant part of the world being PO’s at China and deciding to just not buy their stuff might have an impact… /snark;

Then there’s this:

https://finance.yahoo.com/m/b83839ff-914e-3ffe-897d-28fd0cc25df2/why-new-oriental-tal-and.html

Why New Oriental, TAL, and Other Chinese Education Stocks Crashed Today

Joe Tenebruso, The Motley Fool
Fri, July 23, 2021, 12:48 PM·1 min read

What happened
The Chinese government might tell for-profit education companies to become nonprofit organizations,
according to a report by Bloomberg. The news led to a violent industrywide sell-off.

Here’s how some of the U.S.-listed Chinese educations stocks fared on Friday:

New Oriental Education & Technology Group (NYSE:EDU) was down 58%.
TAL Education Group (NYSE:TAL) was down 70%.
Youdao (NYSE:DAO) was down 42%.
Gaotu Techedu (NYSE:GOTU) was down 62%.
17 Education & Technology Group (NASDAQ:YQ) was down 39%.
So what>b?
The potential restrictions could prevent China’s currently for-profit education companies from raising capital in the financial markets or acquiring other businesses. Regulators are also expected to intensify their scrutiny of online learning platforms, as well as place an outright ban on tutoring services during the weekends and vacations.

When the government controls and runs your business, you do not have a business. You have a concession that can evaporate as soon as Dear Leader wants to squash you.

Me? NOTHING invested in China. Not going to either. Not going to buy their products. Not interested in the products of their “USA domiciled Chinese Owned businesses either”; such as GE Appliances (not the jet engine biz though) nor Smithfield Hams nor Ingram Micro nor AMC Theaters, etc. Yes those are fully owned by China, unlike the likes of Disney that are only sucking up to China with only 2 of their 6 theme parks majority owned by China…

IMHO, couldn’t happen to a more appropriate set of folks. Get Chinese Woke, go hard broke.

Were’s my money? About 95% in Real Estate. We’ll roll some of it into new property in the next few months, but in an inflationary environment, with $Trillions of debt overhang, and more on the way, and hyperinflation nipping at the heels, well, let’s just say things with interest rates and long holding periods or things with “money risk” are not of interest.

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
This entry was posted in Economics - Trading - and Money, Stock Charts. Bookmark the permalink.

9 Responses to China Stocks Not Doing Well

  1. Julian Jones says:

    China stocks off my territory .. but a few thoughts – there are (often) rumours of problems/divisions in the leadership in Beijing. Scrapping over the spoils maybe, or perhaps deeper issues ..
    Chinese infrastructure is (again) taking a hammering, decades of poorly constructed dams, urbanisation etc is now going under water or collapsing in the summer monsoon. Not good for confidence in the Party.
    Those intensified storms are Convective events, amplified by lack of rain infiltration .. caused by deforestation, chemical farming, urbanisation and other imperviosity associated with the failing western model (that only QE now supports) being applied in China.
    The bellicosity seen recently likely a response to such internal problems.

  2. E.M.Smith says:

    @Julian Jones:

    In general I agree with your statements. There is often an internal party aspect to things like knocking the profit out of an industry in China ( you often find some high ranking, but not high ranking enough and causing irritation, party member was key beneficiary prior to the knock down…).

    Haven’t checked China weather news. Probably ought to…

    One Nit to harvest: Chemical Farming is not a monolith. Done “in moderation” it is a great thing. If, for example, your soil is poor in Phosphorus or Manganese, not a lot you can do to fix that other than add the missing elements. There’s a limit to how much Bone Meal we make in a year, and even that is just really moving the phosphorus from one plot of ag land to another. So mining a load of ancient bird dung (aka phosphate rock…) and spreading it around is a great idea.

    Where things go wrong is when it is done to large excess. Essentially mining the soil and sterilizing it. Most large vascular plants need a network of mold filaments to do best. Sterile soils don’t provide that. Mining the aquifer has a limited lifespan. Will the Western USA Farming Ogalala belt dry up and die before the next Glacial period starts replenishing the water? Probably. Would be better used as “emergency supply” with a more dry adapted crop and longer lifespan to the water. Spraying megatons of glyphosate to “dry down” grains for easier harvest timing? IMO incredibly dumb. Just wait and harvest when nature dries it. Why expose everyone who eats that grain to Roundup?

    IMHO, what would be best is a hybrid system. Not full on “Organic” (though it does work fine, but with much higher labor costs) and not full on “Chemical” (though it does work well, but with much higher soil damage and limits to lifespan of resources and risks of chemical exposures); but a Middle Ground. Farm close to organic as long as it is working well, but use the chemical methods when you have a specific problem to fix. Use weed sprays ON WEEDS not on grains. Apply the minerals that are missing, but don’t use your soil as a “hydroponic medium” with the fertilizing liquid just allowed to drain into rivers or aquifers. (Hydroponics works fine, but too often the “spent” hydroponic mix is just flushed instead of measured and the missing bits put back in…)

    Oh Well. As long as people are greedy and short sighted every system will be somewhat wrong and broken…

  3. Julian Jones says:

    @EM thank you,

    China, yet another “one-in-1,000-year weather event” (becuase of continuing and worsening imperviosity, because of continuing environmental degradation ) :
    https://www.globalconstructionreview.com/news/chinese-army-warned-yihetan-dam-could-collapse-any/
    … have to attend a child will revert on the ‘farming’ soon …

  4. E.M.Smith says:

    @Julian Jones:
    South China Morning Post (Hong Kong) used to be reputable. Don’t know what it is now under CCP control, but they have a lot of weather “news” here:

    https://www.scmp.com/topics/extreme-weather-china

    Per farming: My long wandering replay amounts to “Yeah, everybody does it wrong. It would not be a problem if they did it right. But they don’t.”… In other words, the usual “If only I were In Charge, I’d fix it all!!!!” hubris…

  5. beththeserf says:

    Great Leap Forward?

  6. philjourdan says:

    The bubble that is Grumplestiltskin’s new economy is not being shared by the rest of the world. And yes, some (Hello Oz and India) are royally POed at the Flu creators (funded by Faucci). SO I suspect the foreign demand is down and the future (near term) looks bleak.

    It is only a matter of time before the US is in the tank as well. I don’t care how many “Krugman” economists claim that massive government deficit spending will shrink inflation. Every major faction of Economics says the exact opposite. It is only Political economists (read: useful idiots) that say it will.

  7. John Hultquist says:

    Vanguard’s real estate offering: Vanguard Real Estate Index Fund [VGSLX] has been doing well over the past 18 months.
    _ _ _ _ _ _ _ _ _
    The quandary is that if I need a product I can only find “made in China” on the label. I can remember when the label would say “made in Japan” and one town named itself Usa (search up Usa, Ōita).
    I’ve never seen a product with a label having an African nation’s name on it. Other than South Africa’s wines, what might I buy from such a country?
    The USA, Canada, and the European countries still make some things, but I can’t immediately name something.

  8. E.M.Smith says:

    Europe to some extent, the USA A LOT, make airplanes and weapons systems galore… Also cars and trucks (headed for destruction as part of the “woke agenda” of “decarbonizing” carbon based life… /snark;) GE just sold it’s “small appliance division” to Haier in China, but the Chinese get to keep USING the GE BRAND until something like 2050. (Note to self, do NOT buy any GE Appliances…)

    We also manufacture extraordinary sized machines, like coal hauling trucks (also headed for destruction) and bucket wheel mining gear (ditto the destruction).

    It’s almost like someone wants to destroy what is left of American Manufacturing… Gee, I wonder who that might be… Perhaps some Asian Country? One Biden is owned by and who expects to get $200 Billion / year out of us for the “Paris Accord Ripoff”… maybe?…

    I’ll have to take a look at the real estate fund. There’s also REITS out there (Real Estate Investment Trusts) but they are not always allowed in IRAs / 401Ks… Some yes, some no. Not sure why.

    Oh, and stuff you get from Africa:

    Coffee
    Cocoa
    Bananas
    etc.

  9. Julian Jones says:

    @EM .. apologies…
    Well of course South China Morning Post (like most media will) attributes Climate Change here … all controlled by the same Politbureau …
    Since last posting now London been hit with intense storms, much like China :
    https://www.dailymail.co.uk/news/article-9823591/Torrential-thunderstorms-lightning-hailstones-lash-UK.html
    And last week it was Germany …
    https://www.sciencemag.org/news/2021/07/europe-s-deadly-floods-leave-scientists-stunned
    Intense storms were forecast for my region during past 24hrs, none appeared, though very overcast …
    I was mentioning above – the impervious farmland seems key to these events on adjacent cities BUT there is something else, that I think messed up our local forecast – the difference between my area and London 100 miles to the East, is that the harvest hasn’t yet started here. It had in Germany the week before and is in progress all around London.
    So there may be two phenomena going on here, in addition to the ‘concrete’ soils (all across EU – especially where ‘low till double glyphosate applied’, the soil just ‘slumps’). Maybe also, the dusts generated by the harvest are required to nucleate (under certain conditions) the initial rainfall to commence the storm process. Just a thought ?
    _____________________
    Broadly agree with your farming perspectives. The UK experience has been catastrophic – Subsidies were necessary to enable agrochemicals, these were very specifically not to help the small farmers, who are the most resource efficient; they have been driven out of business (like so many all around the world – that is where, substantially, the immigrant problem originates; Western Agriculture).
    Modern agriculture unfortunately for all its clever techs & practitioners has been a huge social, environmental & economic loss to our planet; like much else in our debt based system, now ending.
    https://sustainablefoodtrust.org/key-issues/true-cost-accounting/
    How to fix this – around the world; not that difficult, store rainwater and irrigate with it. Guarantee yields, extend cropping & enable more diverse cropping. Stop floods and droughts.
    See example here in Darfur https://www.theguardian.com/world/2019/dec/18/how-water-is-helping-to-end-the-first-climate-change-war (no Guardian, it wasn’t a Climate Change war, it was another Oil War, stirred up by Western interests, just being provoked again presently). Scroll down to The Wadi El Ku – see the humus/carbon being created in soil after just a few years. The polar opposite of Western Ag.

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