Given the recent happening at China’s party congress, I think it’s clear that foreign capital in China is starting to dry up. Here’s an excellent opportunity for you to make money on the way.
If you’re not already aware, the previous president of China, Hu Jintao, got kicked out Congress by security, and it is well-known that he is a supporter of Western/International cooperation and investment. Well, if it’s not symbolic enough to you now, let me spell it out to you: China will increasingly feel the pain of foreign investment rapidly being withdrawn from its economic system, and left with only domestic “redbacks” which are quickly losing their value. If that wasn’t bad enough, let’s also not forget about their lack of a reported national GDP for 3Q, looming real estate crisis, general malaise across their populace (look up “Bai Lan culture”), and an aging demographic crisis.
Today I bought calls on NYSE: YANG (Direxion Daily FTSE China Bear 3X Shares) with an option to expire in mid-November.
This is a leveraged bear, or inverse stock which shorts a portfolio of China stocks (mostly tech, banks, real estate) with 3x leverage so you benefit from the drop more. If you want less risk than I took, then just buy NYSE:YANG and hold.
In addition to my calls order, I bought puts directly on NYSE:EWH (iShares MSCI Hong Kong ETF) with an option to sell at $17. Given the rate of 10% decline MoM, falling under this price is all but guaranteed. Notably, compared to the mainland, Hong Kong is more susceptible to the favor of foreign investors since it the former British colony once served as the financial hub for all of East Asia. That title, increasingly
I am the legitimate author of the above and I really did execute those trades. Will post proof in later the thread.
This is certainly true but it’s well known and the market has adjusted prices to take it into account. Your bet is that it will be worse than the market expects. That may be true but it’s not a slam dunk.
Edit.
See this. Xi has stacked the politburo with his lackeys. He is a communism believer who wants to be the next Mao. The future for China is definitely not good. Question: what fraction of Apple devices are manufactured in China?
Speaking via a series of tweets, Kuo said that Apple is set to move production of MacBooks set for sale outside of China to Thailand, while those sold inside China would still be built there. That’s something that Apple is also reportedly working to do across its product lines, including iPhones.
some history on the trade / economic side, and how things are breaking down now that national security interests are more important than trade (or your pocketbook).
Xi seemed to feel that China had extracted all it could from the [cooperative] system, and that the benefits no longer outweighed the costs. His industrial crackdowns in 2021 included measures to limit Western, Japanese, and South Korean cultural influences. Under his Zero Covid system, China became much more closed to the world, with inflows of people from abroad basically halted.
But these were only the first of a number of ways in which Xi, who just cemented his absolute power over his country at the 20th Party Congress, has made it clear that China’s era of “reform and opening up” is over
