An interesting move by China.....

So...I wonder what changes this will lead to? China is opening its Stock Market to US investors. Is this to be seen as allowing the US to push it's economics on China or is China simply trying to recoup some money by taking US investors out of the US market space?

China Opens stock market to US investors

Shaun Rein, managing director of the China Market Research Group in Shanghai, says the reason China has so far been reluctant to allow U.S. investors into its stock markets has to do with fundamental differences between the Chinese and American economies.

reply to post by Vasa Croe


Good find. I don't have an economic mind, so I didn't even know their markets weren't open to the U.S. This "feels" like a big move, what does it mean in real time and for international cooperation?

Based on another article it appears Deutsche Bank is the lead instigator for this change. I am not up on connections between the US and Deutsche Bank but would guess there are some serious heavy hitters in the market that were able to make this happen.....

A handful of existing ETFs provide exposure to Chinese equities through derivatives, but the Deutsche fund is the first to offer direct exposure to shares.


While Deutsche is the first company to list an ETF of this kind, others are looking to make similar offerings.


U.S.-based KraneShares, for example, is working with Chinese firm Bosera Asset Management on a fund that will track stocks in the MSCI China A-shares index. That grouping includes 450 large and mid-cap companies traded in Shanghai and Shenzhen.

Source

I do also have to wonder why this is not getting more media exposure. I would think this would be a VERY big deal for the US economy and stock trading. Opening up a direct line to China's stock market seems like a pretty big deal.

Wonder if it had to do with the US investigation of Deutsche Bank last year. Maybe they are bending to pressure to allow the US to recoup some losses and possibly get inside info on funding sources?

Source

Regulators including the US Treasury's Office of Foreign Assets Control, the Federal Reserve, the Justice Department and the Manhattan district attorney's office are all involved in the probe of Deutsche Bank and three other European banks, said the attorney, who asked not to be identified because the investigations are confidential.

reply to post by Vasa Croe


Don't go anywhere near the Chinese stock market. The US stock market is a casino but it generally operates.

Price discovery in the Chinese stock market is a total joke due to the lack of corporate transparency and accounting standards.

IMO, the Chinese central bank has witnessed how easily public opinion may be manipulated with the stock market, and they want to have a go.

reply to post by Vasa Croe


I find investing today to be somewhat reminiscent of the old west. Very little in the way of rules/regulations or even effective governing bodies. I look at the financial world today with unease. Something just doesn't smell right on the planet wormulon and I can't put my finger on it.

An interesting analysis from Stratfor:

The reforms slated for the economic sector are similar. They will introduce more market and competitive mechanisms while giving Beijing greater control over the overall structure. Consolidation, efficiency, transparency, reform and restructuring are all words that possess dual meanings -- one regarding more efficient and more flexible systems, the other regarding systems that the center is better able to direct. At a time when China needs radical change, it first needs to change the mechanism through which policies are decided and enacted. The government hopes that by disengaging from constant, restrictive intervention into certain sectors, it will have greater capacity to intervene selectively, focusing on enforcement and compliance rather than dictating every move of state-owned enterprises. There is no guarantee that these reforms will work or that they can be implemented effectively or smoothly. China has seen three decades of economic growth, and in turn three decades of more tightly woven relationships and knitted interests. Unraveling any thread can rapidly degrade the entire structure, unless stronger central replacements are already in place.

www.stratfor.com... dmore&elq=7138b867080c48e6a2ae6b7b47b18514
Read more: China's Inevitable Changes | Stratfor
Follow us: @stratfor on Twitter | Stratfor on Facebook

Although this article is more on the political and policy changes facing China it touches on the economic incentive for doing this.

There's a three part analysis at Stratfor that goes into more detail. I'll see if I can find the links.

www.stratfor.com...

reply to post by InverseLookingGlass


Gave you a star but you are extremely benevolent to the US...

The US stock market is a casino but it generally operates.

First the US stock market is a casino that is run by the mob (aka FED) and the US itself has a stronghold on most of the world economy via IMF, World Bank, WTO, UN etc (well we should include the UK in this but they are more like a kid brother in the game)...

The only significant economy the Anglo-Americans still have is the paper economy and the only jobs are those that keep it all moving around and continually leveraging itself against more paper... like a huge castle of cards...

Hmmmm. Charlie Chan say: Forefathers are brilliant but very difficult to anticipate.

I don't see the big mystery.... Besides the 1%ers they have what 6% upper middle class in urban areas, and 8% in rural areas. With their growth they need investors. I'm pretty sure no I am 100% positive America is where the most potential investors are. $9-12,000 annual income for the middle class in China I don't see any big traders there! The middle class in America is feels downtrodden when they have to buy a preowned Escalade, Tahoe, or Benz or wait one more year to trade in their 3 year old vehicle. We have monopoly money compared to Chinese citizens.

I think that China realizes that if they have big US investors, their pull in the US will protect China's business with the US. The government wouldn't want some of their wealthiest contributors to lose money now.

After reading some more on this I am thinking it has more to do with the Deutsche Bank/US connection than China suddenly being ok with letting the US in on Stock Markets there. Deutsche Bank appears to have a lot more international pull on ALL markets and seems they were the ones that were able to break this open.

Wonder if it has anything to do with them wanting a more controlling interest in a possible global economy in the future. Possibly making an early play at a possible single global market somewhere down the road.

Imagine this scenario.

Your a proud hard working middleclass Chinese family man your making the big bucks now about $12k a year. You have been saving up for the past 3 years. You go and put that down payment on a new car. You show up at home with a FORD FOCUS baseline model. Does it have A.C. a radio, power windows? Who cares! Its brand spanking new and you are the envy of all your neighbors. Your family knows your the hardest working dad on the block.

Your a proud hardworking middle-class American family man well you havent had a raise this quarter and still only making $75k a year. You go an put that down payment on a new car for your 16 year old daughter. You show up at home with the upgraded not the baseline or fully equipped FORD FOCUS. Daughter what is this??? I thought I was getting a Mustang! This doesn't even have a Nav System. You are the worst dad ever. Your neighbors think your car is cheap and wished you park it in the garage because its bringing down the neighborhood.

Maybe an exaggeration but who knows I bet it happens!

China's economy is slowing. I am sure this is an effort to get forward momentum again.

China is having its own banking crisis. Might this move be an attempt to get easy money into the Chinese economy to cover for their own debt problems?

China’s debt-to-GDP ratio, excluding central government and financial debt, widened to 207 percent as credit growth continued to outpace productivity gains, Mike Werner, an analyst at Sanford C. Bernstein & Co. in Hong Kong, wrote in an Oct. 21 note to clients. That’s making investors nervous about bad loans rising at banks, he said.

ketsuko
China is having its own banking crisis. Might this move be an attempt to get easy money into the Chinese economy to cover for their own debt problems?

China’s debt-to-GDP ratio, excluding central government and financial debt, widened to 207 percent as credit growth continued to outpace productivity gains, Mike Werner, an analyst at Sanford C. Bernstein & Co. in Hong Kong, wrote in an Oct. 21 note to clients. That’s making investors nervous about bad loans rising at banks, he said.

Yea I can believe that GM is charging $237k for an $87k Escalade but China says they are concerned they might be being price gouged by some companies and are looking into the matter. Really China checking the MSRP of vehicles doesn't require an investigation. They pay a dollar more for Starbucks ONE DOLLAR MORE THAN WE DO FOR STARBUCKS. Who can afford that!

ketsuko
China is having its own banking crisis. Might this move be an attempt to get easy money into the Chinese economy to cover for their own debt problems?

China’s debt-to-GDP ratio, excluding central government and financial debt, widened to 207 percent as credit growth continued to outpace productivity gains, Mike Werner, an analyst at Sanford C. Bernstein & Co. in Hong Kong, wrote in an Oct. 21 note to clients. That’s making investors nervous about bad loans rising at banks, he said.

Yeah I am wondering about this aspect as well...possibly a move to better the relationship with them by seeing if US money can help bail out China without directly giving them aid. As if we don't have enough problems of our own....

When the entire US economy goes into free fall, and it will, it will take the entire stock market with it!

This is IMHO a very cool little trick. Get hold of investors money in the short term, spend it in China on R&D or brand new upgraded machinery, then when the market free falls you close out the company, 'Oh, so soorrry, business go bang, is no more!'

Restart under a different name. Seems to me it is like 'There is a sucker born every minute in the West!'

Should give you some idea of how long it is until the crash. I quite like it. It has that bit of flare to it.

P