Since November 2020, Shenzhen house prices began to rise, and in December Shanghai house prices rose even more outrageously. In Hong Kong, the influx of capital from mainland China has sent the stock market soaring, with one-day turnover exceeding HK$300 billion on Jan. 19. In the first month of 2021, the Hang Seng Index rose a robust 1,052 points, or 3.9 percent.
At a Time when the Epidemic continues to spread, the economy is sluggish and the Chinese Communist Party‘s control is getting tighter, the Hong Kong stock market is showing a “reverse movement”. Hong Kong’s Guotai Junan International issued a report that Hong Kong stocks are expected to have an “index bull market” in 2021. Hong Kong Guosheng Securities also said that with the accelerated inflow of funds from the south, Hong Kong stocks will continue to lead the world, overseas funds will also flow back to Hong Kong stocks, the bull market opened.
Shanghai house prices break the sky
At the beginning of 2021, the epidemic heated up across the mainland, while the real estate market in first-tier cities saw a counter-trend rise. Hot events such as “one room is hard to find”, jumping 400,000 in one hour and 560,000 per square meter kept rushing to the top.
Several mainland media reported that in early December 2020, an old house in Shanghai’s Xuhui District with a thirty-square-foot school district cost 4.1 million yuan (about $634,900), while in early 2021 the price of the same type of house rose to 5.05 million yuan (about $782,000), an increase of about 1 million yuan (about $150,000) in one month.
According to China’s Sohu News, a 6.4-square-meter school district house in Shanghai’s Jing’an District Education College Affiliated School sold for 3.6 million yuan ($557,500) just two hours after it was listed, or the equivalent of 560,000 yuan ($86,700) per square meter per unit.
Mr. Mike Wu, a financial expert who now lives in the United States and has more than three decades of investment experience in China, said in an interview with the Epoch Times that there is a lot of money due to the epidemic and the government is printing a lot of money. Compared to the high risk of the stock market, the demand for housing in China’s first-tier cities is immediate. Shenzhen, Shanghai, Beijing and Guangzhou (referred to as, Beijng, Guangzhou and Shenzhen), where housing prices have been on the rise recently, have risen despite repeated official macro-regulations to suppress housing prices.
Mr. Mak said, “China’s investment community is facing an asset shortage, the capital market, private investment, plus China’s foreign capital, are looking for quality assets to do investment, compared to the North, Guangzhou and Shenzhen houses are also considered quality assets, not only can increase in value, but also can be rented, living. Last November Shenzhen house prices rose up, and in December Shanghai also rose up.”
“But let go of a month, Shenzhen immediately tightened the policy, Shanghai is also. the evening of January 21, Shanghai real estate regulation introduced new rules, requiring couples to divorce within 3 years after the purchase of a house, according to the total number of sets of Family before the divorce, so that those fake divorces to buy a house also does not work.” Mr. Mai said.
Crazy inflow of funds into Hong Kong net inflow of more than 300 billion Hong Kong dollars
The company’s main business is to provide a wide range of services and services to the public, including the provision of services to the public, the provision of services to the public and the provision of services to the public. 40.67 billion U.S. dollars).
Mainland NetEase reported on Jan. 21 that the Hang Seng Index has been rising and climbing, with a gain of more than 10% so far this year (as of Jan. 21), ranking first among important global indices.
NetEase also said that, in fact, in recent years, southward capital has continued to flow into Hong Kong stocks. In particular, in 2020, the cumulative net buying of Hong Kong stocks by southbound funds amounted to HK$672.1 billion (about US$86.692 billion), a new high since the opening of the Shanghai-Shenzhen-Hong Kong Stock Connect. However, the inflow trend like the current one is rare, and the net buying amount in just 13 trading days this year has exceeded last year’s 30%, close to 2019’s HK$249.3 billion.
In the first month of 2021, Hong Kong Hang Seng Index rose 1,052 points or 3.9%; Hang Seng Technology Index rose 932 points or 11.1% in January.
Grabbing quality Hong Kong stocks
Hong Kong Guotai Junan International published a report that Hong Kong stocks are expected to usher in an “index bull market” in 2021. Hong Kong Guosheng Securities also said that with the accelerated inflow of funds from the south, Hong Kong stocks will continue to lead the world, overseas funds will return to Hong Kong stocks.
On January 20, China’s Securities Times published an article titled “More than 100 billion yuan of funds from the south to Hong Kong stocks for Gold“, which said that in 2018, with the HKEx changing its IPO issuance system, a number of outstanding leading Internet companies, new consumer unicorns, biotechnology and other new economy leaders will be listed in Hong Kong in 2020. These core assets of high quality, which are not available in the A-share market, have attracted Chinese mainland investors.
The most sought after are technology giants, such as Tencent Holdings, Meituan, Alibaba and other technology giants; leading companies such as Industrial and Commercial Bank of China and Construction Bank, which will greatly benefit from the resonant inflow of Chinese southward capital and overseas capital, grabbing chips.
Secondary listing of Chinese stocks
Mr. Mak, a Chinese financial investment expert, analyzed that such a large scale of funds going south must be the Beijing authorities mobilizing funds to prepare for the capital expansion in Hong Kong. He predicted that in 2021, the CCP will continue to suppress the housing market while supporting the stock market and engaging in capital expansion.
Mr. Mak revealed that in October 2020, the CCP emphasized the development of the capital market in the 14th Five-Year Plan and introduced new regulations for stock listings: changing from an approval system to a registration system, with the aim of finding new reservoirs for more printed money and to circle money in the stock market. The CCP is not only trying to drive mainlanders’ savings to the capital market, but also to attract foreign capital, especially from Wall Street in the United States, to the Hong Kong stock market.
Mr. Mak also talked about the CCP’s initiative to let “Chinese stocks” in the U.S. stock market return to Hong Kong for listing: “Nowadays, the CCP wants to expand the stock market, but it is facing asset shortage, and there are few high-quality assets, which are not attractive enough in the stock market. And most of those good assets are already listed in the United States. If we let these companies come back to China to circle the money and get it back, and let the money return to H-shares and A-shares, then the situation will be very different. To use an analogy, the stage is set, not enough good actors to call the seats, had to perform outside, the box office is not high good actors called back to play, of course, the packaging is also very important.”
“Now, China’s southbound capital sweeping the Hong Kong stock market, everyone is grabbing chips for the next round of larger Chinese stocks listed in Hong Kong for the second time.” He said.
Chinese Communist Party packaging state-owned enterprises for listing to circle money
At the same time, Mr. Mak believes that in order to create high-quality assets that can attract big international capital, while overseas Chinese stocks (Chinese concept stocks, which refer to companies registered and listed overseas, but the largest controlling stake is usually more than 30 percent or the actual controller is directly or indirectly affiliated with private enterprises or individuals in mainland China) are returning to Hong Kong, Beijing is also making great efforts to build state-owned enterprises, hoping to make them bigger and stronger; at the same time At the same time, it is engaging in “mixed operations”, i.e., packaging large SOEs as high-quality stock market assets to attract international capital.
For example, he said, China’s largest steel company, China Baowu Iron and Steel Group, plans to “hybridize and list” all of its more than 30 subsidiaries in the next three years.
According to public data from the mainland, Baowu Group is the leading steel company in China. With a registered capital of 52.79 billion yuan ($8.175 billion), assets of more than 860 billion yuan ($133.178 billion), crude steel production of 95.46 million tons in 2019, total operating revenue of 552.2 billion yuan ($85.513 billion) and total profit of 34.53 billion yuan ($5.347 billion), the company ranks first in the world in terms of scale of operation and profitability. the world’s largest.
Within the Baowu Iron & Steel Group, except for the five profitable subsidiaries that are already listed, such as Baosteel, other Baowu Group subsidiaries generate only 20% of the group’s net operating cash flow, but carry 71% of interest-bearing debt.
Mr. Mai reminded shareholders that the next three years, Baowu Iron and Steel Group to the nearly 30 “poor quality” subsidiaries also packaged out in the stock market IPO, the risk is very high.
“As former Chinese Premier Zhu Rongji said back then, the Chinese stock market is an ATM for state-owned enterprises, which is the essence of the mainland stock market. The officials will make a big propaganda at the IPO and the mainland stock market will keep climbing in the first few years, but when the general public starts to enter the market and the square dancing moms also speculate in stocks, it will be dangerous because there is no real economy to support the high stock prices.” He analyzed.
Wall Street turns to China’s H plus A stock market for dollar weakness
An article titled “The Weak Dollar” was published on August 24, 2020 on The Conversation (UK). Analyzing the background and reasons for the weak dollar, the article said, “For the average international investor, currency risk – especially a weaker dollar – has become the most important financial risk this year (2020). Despite the existence of the new crown epidemic (the Chinese Communist virus), it outweighs even investor considerations for specific companies and sectors. For example, for European investors, the U.S. stock market will return about 5% in dollar terms for the first 8 months of 2020. However, switching back to the euro, that return is 0.5% due to the depreciation of the dollar over the past two months.”
In recent years, Wall Street has been bearish on the dollar and bullish on the Chinese Communist Party.
On November 25, 2020, Sina.com and China Business News reported that Goldman Sachs made its latest forecasts for China’s economic growth, policy arrangements, RMB exchange rate and capital markets in 2021 in a media conference call on China’s macroeconomic outlook and capital market dynamics in 2021 on November 25, reiterating that it is “very bullish “The conference was very positive on the RMB trend in 2021.
At the same time, Goldman Sachs still recommends a high allocation to China’s stock market as the Chinese Communist Party authorities prepare for capital expansion. It is a good fit with the Chinese Communist Party.
In June 2020, Stephen Roach, former chairman of Morgan Stanley in Asia, sang down the dollar twice in one week. He even said the yuan was becoming more attractive as an alternative, and Roach repeatedly insisted on the dollar’s collapse into 2021. On Jan. 25, just after Biden took office, Roach also published an op-ed in Bloomberg saying, “The collapse of the dollar has just begun.”
Not long ago, Mr. Mai said, Xi Jinping‘s public reply to Schultz, the former CEO of Starbucks, was aimed not only at Starbucks but also at big global capital, especially big Wall Street capital, and Xi Jinping wanted to attract all Western capital to China.
“This move by Xi Jinping is the calculations behind the CCP, which is not hiding the fact that it is throwing out benefits as bait, and the CCP believes that there will always be people willing to reach out and take it.” Mr. Mai said.
“Beijing wants to attract dollars from Wall Street to the Chinese stock market, and the international predators are thinking about how to exchange the money they make in the Chinese stock market and take it out in dollars. I understand from sources close to the top brass in Beijing that this is something that is being bargained for by both sides.”
Mr. Mak, who has more than 30 years of investment experience in China and has made many high-level Chinese Communist Party contacts, said, “The Chinese Communist Party stock market is a casino, and it’s a casino of doom, so it’s advisable to take it for what it’s worth.”
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