China’s stock markets took a sudden dive this week for no apparent reason, which was a useful reminder of how out of touch with economic realities those markets are. Investing in Chinese stocks on the basis of research into economic trends and company performance, as in a normal market, makes little sense here. That is not say it is not a buy. It can be, but for reasons other than those given above. Tencent, for instance, this week topped Facebook to become the fifth most valuable company in the world in terms of market cap, and the underlying factor there is political.
Fintech is currently the big buzzword, and there is lots of activity in this area. Mobile payments have remade the consumer cash scene in China far faster than anywhere else in the world, and the likelihood is that the same is happening in terms of other aspects of fintech. AI may or may not be the nemesis of humankind, but it’s sure changing the financial playing field fast.
In terms of foreign policy, North Korea continues to dominate with the threat of serious US trade pressure on China lurking in the shadows. The US appears to be upping the pressure on Chinese companies that facilitate Pyongyang, and while Beijing is willing to relent to some extent, their bottom line is the survival of the status quo in the northern half of the peninsula. A stable failed state.
It all adds up to further interesting times ahead. It could be 2017 is not an outlier but the start of the future. Damn. Have a good weekend.