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26 Dec 2021: US vs China competition. How is China fighting back?

Hopehope赋予希望wrote a column12/26/2021 16:56
If you have watched the following youtube video that I have circulated recently:
you would have known that I have analysed what China authorities can do to mitigate concerns revolving Chinese tech stocks. I make another statement saying that it is no longer just a pure regulatory point coming from China. In fact, the shortsellers or maybe even US have capitalised on the opportunity to make Chinese assets less credible and attractive.
There are now emerging signs that Chinese authorities are aware of this plot given two recent developments since 24 December 2021. I will be posting an update video on regulatory developments in China and do subscribe (and set your notification button) my youtube channel if you would like to be updated.
So what has happened these few days? First, China securities regulator has announced explicitly that they are not against variable interest entity ("VIE") structure. So now the pressure is only coming from the US SEC side.. But again, CSRC has indicated several times that they are working to resolve the concerns shown by SEC and that they are in favour of the corporations in China to decide their choice of listing avenues.
My youtube channel:

Another sign is that PBOC has indicated on 25 December 2021 that they continue to support open markets in two directions, meaning that be it supporting the inflows of capital into China, they would also support the outflow of capital from China. What does it mean? To me, I think this is a statement that allowing the local aka domestic investors from China to invest overseas will be allowed. The so called non-chinese media saying that online brokers like Tiger Brokers and Futu will be banned from China may actually be a fake news... Well but you have to know that I am a tiger brokers shareholder and have been adding tiger brokers shares slowly and have since built a decent position in Tiger Brokers.

But in the coming week, I will add Tiger Brokers shares more aggressively but nevertheless, will do this as a portfolio management approach to manage my risk. Will I be right in my analysis and prediction? Only time will tell.

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22 Comments · 390K Views
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  • haiwei183 : good

  • styleomileo : It remains fluid and hopeful... I would argue that decoupling of both  economies is set in motion and will grow momentum in coming months or years. So it is highly risky and unlikely there is return to normal. The Chinese stocks concened listed in US remain to be on the radar for delisting no matter what.

  • Revelations 6 : I don’t think it’s going to be a choice for Chinese companies to list one way or the other. It’s coming down to the SEC stopping Chinese companies from listing because investors pour massive amounts of cash in to these companies only to have the Chinese Government strip it out for the “Common Poverty” plan. This leaves stock holders with worthless stock. Also, there’s no way for the SEC to physically check companies with the Chinese restrictions on visas and such. Not to mention, there is no way to verify earnings reports. It’s coming to the point where they are not going to be able to list on the stock market and the ones that are there are going to submit or be delisted. The Chinese Government knows this and wants them to move before action is taken and assets in America are frozen by the courts. China is going to feel a financial and industrial squeeze that’s going to reduce her population the most painful way. The government doesn’t care.

  • Hopehope赋予希望OP Revelations 6: maybe you can consider reading the prospectus and see if the stocks are fungible. the worst case scenario is to go for Hong Kong listing. shares are not going to be worthless. Hedge funds who are short selling Chinese adrs capitalised on inadequate retail investors' knowledge to say the Chinese adrs are worthless. the truth is most Chinese adrs will do HK listing. also us has no way to freeze the assets of Chinese adrs since their businesses are mostly in China. that is why I strongly disagree with your point

  • Hopehope赋予希望OP styleomileo: you should read the prospectuses and see if the adrs are fungible. by Didi's recent structure, the adrs are fungible into Hong Kong shares. the shortsellers are capitalising on retail investors lack of knowledge to say these adrs are worthless. most of these companies will do a dual listing on Hong Kong and allow investors to move their adrs into Hong Kong shares.

  • styleomileo : Whether fungible or not is not the main focus, the key is to know the long term earnings in regards to ride sharing and data privacy  regulations hampering it's growth. if regulated like any taxi company with union and welfare benefits, DIDI is no longer what it used to be unless it transforms.

  • Hopehope赋予希望OP styleomileo: your line of debate is on delisting and I have reverted based on the Didi's delisting structure to say there is no need to be overly worried about delisting of Chinese adrs as long as they go Hong Kong listing. I have always emphasised on Chinese tech stocks with good balance sheet and growth prospects. I don't care about Didi. by the way, you just change your point of debate from delisting to growth. this is not consistent in your debate

  • Revelations 6 : I respect that you disagree with my point of view and your views may have some merit. Some, not all, Chinese companies have satellite offices in the U.S. to help with outside sales, order processing, shipping, warehousing and financial transactions. All of the before mention logistical actions take funding in U.S. Dollars. This requires local banks large enough to convert millions, if not billions, of Chinese Yen to dollars to support the companies. So I do believe companies have large assets in the U.S.. As for the stocks being convertible and listed on the HKE, it’s true they can be but by the time they get there they would lost so must value it would be a disaster to investors not to mention that most retail investors in the U.S. don’t have access to that market at this time and would have to learn a whole new set of rules once the did. Also, you can be sure that the hedge funds are going to get out of them before they leave the U.S. market. China has to be careful about how they approach this mess that they have created. There energy grid and industrial output are in serious trouble. The price of oil and coal are up along with shipping delays in imports and exports. If it wasn’t for huge orders from the U.S. and the high financial output from Hong Hong the mainland would collapse. I think they believe they have a better hand than they have.

  • Revelations 6 Hopehope赋予希望OP: As Chinese stocks leave the American stock exchange they will be devalued and investors will sell stock in a panic. That will cause even more losses for the stock. It will be lucky to be a penny stock after the move. As for dual listing, well, I’m sure there are some super high risk takers out there who won’t mind funding the “Common Poverty” plan the government continues to employ. At this point Chinese stocks are no better than a scalp/ day trade play.

  • Hopehope赋予希望OP Revelations 6: Asian investors love Chinese tech stocks. anyway if you haven't checked, these us tech stocks have fallen almost 70 percent or more from all time peak. I think this is exactly what the hedge funds (shortsellers) want to capitalise on this line of thinking. am sure they are starting to scoop up these Chinese tech stocks (those with good growth and good balance sheet) at the cheap. feel free to have your line of thinking. I am happy to scoop up more shares. alot of Asian investors don't mind holding Hong Kong shares

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