Today I posted my one-hundred-ninety-seventh YouTube video: What will Xi do now?
Sunday, Xi Jinping was officially elevated to his third term as President of China. While his title is official “President,” the position is truthfully more like Mao’s “Supreme Leader” with little room for dissent from the left and the pledge that XiJinping thought is the path to China’s future. However, one day following his installation, Xi received a slap in the face from the markets- Chinese stocks traded in Hong Kong (by mostly foreign investors) plunged. China Large-Cap ETF (NYSEARCA: FXI) was down almost 10% on Monday, with Alibaba (NYSE: BABA) down nearly 12.5%. Meituan (OTCMKTS: MPNG) down 15.25%, and Tencent (OTCMKTS: TCEHY) off 14%. Foreign investors sold on a belief that now there’s no end to Xi’s no-Covid policy (which has essentially cut Chinese economic growth in half.) Whatever fears they had were echoed by Monday’s economic report of just 3.9% year-over-year growth in China’s GDP–a far cry from the government’s target of 5.5%. The question is, what will Xi do about it? He may very likely take an approach that brushes off foreign investors and sticks to his policies. Now that the National Congress is over he also can be expected to retaliate against U.S. restrictions on advanced technology sales. And then, of course, there’s Taiwan where “reunifying” Taiwan with the People’s Republic would be a guarantee of Xi’s legacy. The Biden administration has stated it expects Xi to take action soon and Xi, himself, made it a focus of his “acceptance speech.” With all this potentially coming in the next few weeks, I don’t think this is a time to stock up on Chinese stocks.
Here’s the link:
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