Hi folks, I have been quite busy with work (post-holiday syndrome) so I only got to send out this week’s review on Saturday, not the typical Friday. Let’s jump into this week’s content right away. (For who I am and why I write, please check here. For what unique things I can bring to the table,
I don't like having to choose just one section that is of the most value. I'm a beginner in learning about China—I have read the equivalent about 20 books about China in the last year, so there is almost nothing that I don't find of value. I find everything you write to be in the upper 20% of value for me.
Your material is to the minute and presented by a tour guide fluent in Chinese and Western modes of thought. What's not to like?
Thanks for the interesting comment on “populist censorship” and how challenging it is to censor populist content. I think this is an issue everywhere, the “Western liberal” is belatedly discovering that (1) there is some “populist content” they do not like, and (2) it is not easy to censor them. (And the rest of us have now realised that there is plenty of censorship in the West, it is just subtle and sneaky.)
I feel (and hope) censorship in China should be more transparent. The censorship regulator should give reasons for censoring content, and decisions to censure should be subject to appeal by a tribunal. The tribunal should give reasons for upholding or overturning censorship decisions.
Be transparent about censorship, vs being sneaky about it (as in the West)! I know this is hard, but it is something to aspire to. In the long run, it gives people more freedom to debate sensitive topics and doing so in a responsible way. Just my view.
Whenever talk of a short selling ban emerges during market turmoil I think of the trader that rightly points out, “what about those parabolic moves to the upside?”
Another less draconian measure used to quell unwanted selling in the stock market is to limit short sales to the “uptick rule”, where a short sale can only happen when the price of a stock is higher than the last sale, even if only by pennies, or when the rule was first introduced, in 1/8ths of a dollar.
Again the question was asked, why not then limit buy orders to a “downtick”? All with the goal of market stability.
My point conjures the old refrain, “Live by the sword, die by the sword.”
Everybody’s happy when stocks are to the moon, but therein lays the seeds of the next correction.
So if your concern is the unfortunate crowd that piled in while things were on a rip to the upside, and through State assistance mitigating their resultant pain when things finally succumb to gravity, you must understand that is akin too opening a box with no bottom*.
*”box with now bottom.”
My own little analogy, that, while jotting this note sprung to mind with Zen like aplomb.
The whole point in having a stock market is to allow individuals to pursue various market strategies freely, in the conviction that the market's collective “mind” is smarter than any individual, including the market regulator. Market fads have emerged repeatedly over the centuries as people stampede into one kind of investment and then all stampede out simultaneously. All of this cast doubt on the idea of free markets in capital investment, but there is no obvious successful alternative.
I've searched on-line in the past about the purpose/point of a stock market. I've found thousands of differing answers, but I'd look to the people who set up the markets, the people who regulate the markets, and those who list on the markets as having the most impactful definitions. As to the players in the market, may a million flowers bloom. I remember asking one old lady in Hong Kong why she was playing the market in the lobby of a bank in Hong Kong, she said it was cheaper way to pass the time than going to a mahjong parlor, ie: she expected to lose money, but could keep it at an affordable loss in exchange for the entertainment value.
The first people who gathered in Amsterdam or on Wall Street in New York to buy and sell stocks were trying to raise capital for their own enterprises, but it has certainly taken off from there.
Great post. I enjoyed the “quant quake” section which contained some info and WeChat references that were not in Western media analysis. How/if China regulates or even cracks down on quant/hedge funds will be a very interesting piece of data for capitalism and free markets in my opinion.
Also the anti populism section was good. Definitely something worth articulating to readers outside China (although I would be interested to see how much censorship is anti-populist compared to populist)
Also, why do you think non of the quant funds adjusted strategy for the incoming Stabilization government funds (my understanding is that they boosted large cap stocks which the quants had shorted)?
Was it hard to tell where the funds were going to boost? Or was there not enough time to alter strategies?
This is a great question. I think one big factor is that most of them live in the illusion that their strategies are somewhat unique. This community is not famous for communication among each others. They are super hush-hush about their strategies. It turns out, everyone is doing the same! They far underestimated the severity of covariance. That’s why I think that “dark room” analogy is so accurate. They really don’t know everyone is in the same room until the last moment.
1, 4, 3, 2, 5 is how I'd place my vote on preference for coverage.
1. Market
There is quite a bit of coverage in general, but what I appreciate is a different take on it, and where you breakout some of the causes.
4. Tutorial School Industry Regulation
It's a window into the struggle between the party's philosophy/cause for being, and the monied interest who are trying to get their hands on power. The back and forth reveals that the party is not the monolith the west sees, but even more interesting would be to know how the pressure was applied, If you have that kind of knowledge to report, that would be extremely valuable.
3. Populism
I wonder if there any background on Iron Head Brother's shut down, such as criminal charges being pressed or he was just de-platformed? When is it announced that criminal charges are pressed with the name of an individual, at arrest or upon arraignment before a justice/court?
If no charges follow, then this is disappointing. I hope they didn't just go for the lazy bureaucrat solution. As such it's a good window on how much care is taken to move from big hero saves the day sort of party line we see on tv and putting more trust in the middle management and systems. It also can be a window into how much monied interest can shape the politics of the party.
2. quant quake
This isn't terribly odd or interesting to me, I see it in the line of using the stock market as a way of gambling. I have my earlier comments last year and this about what I think should be done, to which I'd add having a real, robust bond market, including proper supervision and regulation, would help temper this constant urge to gamble.
5. Hunan
I agree, many of my friends were/are from Hunan, it's interesting that an inland province has such an outward look. Don't forget Hanlin Academy, near Changsha. This an interesting observation, but I'm probably too much of a China hand to find much new in this types of items. You have to know your audience and where the majority land on their expertise, I'll still tag along for the ride.
Something I read got me to come back and review this article, and that in turn got me thinking that it would be nice if you had a 6 month or 1 year follow up on some of open issues, like in point 3 what happened Iron Head Brother, were criminal charges pressed, has there been any attempt to regularize the useful function of investigating bad corporate behavior or has everything reverted to the old back door norms. Too few media like newspapers have this sort of continuity which might be a niche market for you, although it could just be me.
I have to share a joke that involves a dark room and economics: There was a man who ended up in a department store when the lights went out. His friend asked him, “What did you get?” the man shook his head: “Nothing! I was in the piano department!”
I don't like having to choose just one section that is of the most value. I'm a beginner in learning about China—I have read the equivalent about 20 books about China in the last year, so there is almost nothing that I don't find of value. I find everything you write to be in the upper 20% of value for me.
Your material is to the minute and presented by a tour guide fluent in Chinese and Western modes of thought. What's not to like?
Thanks so much!
Thanks for the interesting comment on “populist censorship” and how challenging it is to censor populist content. I think this is an issue everywhere, the “Western liberal” is belatedly discovering that (1) there is some “populist content” they do not like, and (2) it is not easy to censor them. (And the rest of us have now realised that there is plenty of censorship in the West, it is just subtle and sneaky.)
I feel (and hope) censorship in China should be more transparent. The censorship regulator should give reasons for censoring content, and decisions to censure should be subject to appeal by a tribunal. The tribunal should give reasons for upholding or overturning censorship decisions.
Be transparent about censorship, vs being sneaky about it (as in the West)! I know this is hard, but it is something to aspire to. In the long run, it gives people more freedom to debate sensitive topics and doing so in a responsible way. Just my view.
I absolutely agree with you on this.
Whenever talk of a short selling ban emerges during market turmoil I think of the trader that rightly points out, “what about those parabolic moves to the upside?”
Another less draconian measure used to quell unwanted selling in the stock market is to limit short sales to the “uptick rule”, where a short sale can only happen when the price of a stock is higher than the last sale, even if only by pennies, or when the rule was first introduced, in 1/8ths of a dollar.
Again the question was asked, why not then limit buy orders to a “downtick”? All with the goal of market stability.
My point conjures the old refrain, “Live by the sword, die by the sword.”
Everybody’s happy when stocks are to the moon, but therein lays the seeds of the next correction.
So if your concern is the unfortunate crowd that piled in while things were on a rip to the upside, and through State assistance mitigating their resultant pain when things finally succumb to gravity, you must understand that is akin too opening a box with no bottom*.
*”box with now bottom.”
My own little analogy, that, while jotting this note sprung to mind with Zen like aplomb.
, 🦦
The whole point in having a stock market is to allow individuals to pursue various market strategies freely, in the conviction that the market's collective “mind” is smarter than any individual, including the market regulator. Market fads have emerged repeatedly over the centuries as people stampede into one kind of investment and then all stampede out simultaneously. All of this cast doubt on the idea of free markets in capital investment, but there is no obvious successful alternative.
I've searched on-line in the past about the purpose/point of a stock market. I've found thousands of differing answers, but I'd look to the people who set up the markets, the people who regulate the markets, and those who list on the markets as having the most impactful definitions. As to the players in the market, may a million flowers bloom. I remember asking one old lady in Hong Kong why she was playing the market in the lobby of a bank in Hong Kong, she said it was cheaper way to pass the time than going to a mahjong parlor, ie: she expected to lose money, but could keep it at an affordable loss in exchange for the entertainment value.
The first people who gathered in Amsterdam or on Wall Street in New York to buy and sell stocks were trying to raise capital for their own enterprises, but it has certainly taken off from there.
Great post. I enjoyed the “quant quake” section which contained some info and WeChat references that were not in Western media analysis. How/if China regulates or even cracks down on quant/hedge funds will be a very interesting piece of data for capitalism and free markets in my opinion.
Also the anti populism section was good. Definitely something worth articulating to readers outside China (although I would be interested to see how much censorship is anti-populist compared to populist)
Also, why do you think non of the quant funds adjusted strategy for the incoming Stabilization government funds (my understanding is that they boosted large cap stocks which the quants had shorted)?
Was it hard to tell where the funds were going to boost? Or was there not enough time to alter strategies?
This is a great question. I think one big factor is that most of them live in the illusion that their strategies are somewhat unique. This community is not famous for communication among each others. They are super hush-hush about their strategies. It turns out, everyone is doing the same! They far underestimated the severity of covariance. That’s why I think that “dark room” analogy is so accurate. They really don’t know everyone is in the same room until the last moment.
1, 4, 3, 2, 5 is how I'd place my vote on preference for coverage.
1. Market
There is quite a bit of coverage in general, but what I appreciate is a different take on it, and where you breakout some of the causes.
4. Tutorial School Industry Regulation
It's a window into the struggle between the party's philosophy/cause for being, and the monied interest who are trying to get their hands on power. The back and forth reveals that the party is not the monolith the west sees, but even more interesting would be to know how the pressure was applied, If you have that kind of knowledge to report, that would be extremely valuable.
3. Populism
I wonder if there any background on Iron Head Brother's shut down, such as criminal charges being pressed or he was just de-platformed? When is it announced that criminal charges are pressed with the name of an individual, at arrest or upon arraignment before a justice/court?
If no charges follow, then this is disappointing. I hope they didn't just go for the lazy bureaucrat solution. As such it's a good window on how much care is taken to move from big hero saves the day sort of party line we see on tv and putting more trust in the middle management and systems. It also can be a window into how much monied interest can shape the politics of the party.
2. quant quake
This isn't terribly odd or interesting to me, I see it in the line of using the stock market as a way of gambling. I have my earlier comments last year and this about what I think should be done, to which I'd add having a real, robust bond market, including proper supervision and regulation, would help temper this constant urge to gamble.
5. Hunan
I agree, many of my friends were/are from Hunan, it's interesting that an inland province has such an outward look. Don't forget Hanlin Academy, near Changsha. This an interesting observation, but I'm probably too much of a China hand to find much new in this types of items. You have to know your audience and where the majority land on their expertise, I'll still tag along for the ride.
Hope this is helpful.
Thanks! This kind of detailed feedback is very helpful!
Something I read got me to come back and review this article, and that in turn got me thinking that it would be nice if you had a 6 month or 1 year follow up on some of open issues, like in point 3 what happened Iron Head Brother, were criminal charges pressed, has there been any attempt to regularize the useful function of investigating bad corporate behavior or has everything reverted to the old back door norms. Too few media like newspapers have this sort of continuity which might be a niche market for you, although it could just be me.
Will keep an eye on it
I have to share a joke that involves a dark room and economics: There was a man who ended up in a department store when the lights went out. His friend asked him, “What did you get?” the man shook his head: “Nothing! I was in the piano department!”