Chinese stocks: Are they investible? Friday stocks lose altitude to Delta
WASHINGTON – As of the noon hour, we find Friday markets looking anemic to negative again. Infected by the new Covid “Delta variant” again? Perhaps. But things continued to feel wobbly this week beneath the surface for reasons we’ll get to in a moment. Adding to investor malaise was new that Goldman now openly wonders if clients and investors should bother putting money into any Chinese stocks at all.
Brilliant, guys. We started advising our readers to eschew this sector, oh, well over a year ago. But that’s why the Goldman guys make the big bucks.
The Goldman “sort of” downgrade
ZeroHedge, our favorite virtual pirate investment news platform, had the skinny on the not-so-surprising Goldman-China move in a Thursday column. The title:
Goldman Downgrades China Stocks After Clients Ask If They Are Even “Uninvestable” Any More
The opening grafs of this story essentially tell us what we need to know, couched in various hedge words and phrases. These are the Wall Street version of Washingtonspeak. Analysts and pundocrats usually use these weasel-worded sentences to provide themselves with “deniable culpability.” I.e., “I’m sorry you took my remarks as they were not intended. I didn’t really say that at all.” (See also: Any CDC pronouncements on the coronavirus.)
Anyhow, let’s get to those ZH paragraphs.
“After a rollercoaster move in Chinese stocks following a regulatory crackdown that has prompted many to wonder if China is doing away with capitalism in capital markets entirely (having declared the entire tech-edu space non-profit overnight), Goldman’s clients have had enough and are justifiably asking the bank if the stock market has become too dangerous.
“In a note from Goldman’s Kinger Lau, the China strategist writes that the word ‘uninvestable’ has featured in many of his recent conversations with clients regarding investing in Chinese stocks. Here Lau counters tentatively that he ‘would be hard-pressed to extrapolate the rather extreme regulations such as non-profit orientation and capital raising restrictions to the whole equity universe.’”
Wall Street-speak and Washingtonspeak
I’d be hard-pressed to understand why you have to hedge your language, Mr Lau. Over the past few months, the wisdom of investing in nearly any Chinese shares became questionable at best. Your first tangible clue showed up over the past year, really. The disaster siren began to sound when the Chicoms, without much in the way of warning, squashed the widely anticipated Ant Financial IPO as well as Alibaba’s famed entrepreneur Jack Ma. (Ant was to spin our from Alibaba [BABA:NYSE]).
Now, according to articles in ZH and even the Wall Street Journal (behind paywall, no link), the long-acknowledged (by the New York Times et. al.) superior version of Chinese Marxist capitalism has apparently begun to slouch much harder toward a purely Marxist creation.
I.e., the state, not the owners or the shareholders, will now start having more of a say on how a given Chinese company is run. And, of course, where such a company’s profits (if any) will go. Anyone living in a Democrat-controlled US city knows the answer to that one.
Wisdom of the Wicked Witch
Like the destruction of Hong Kong, Beijing has already decided to do this. But, as the Wicked Witch of the West famously noted, as she deliberated how to whack Dorothy and Toto:
(Short, repeating clip. Just click on the clip and it stops running. Via getyarn.io)
US Investors: Caveat Emptor when it comes to Chinese stocks
So, over time, we’ll see more and more Chinese companies – and listed Chinese stocks – gradually succumb to state control and all the dubious things that this implies. Particularly when the State’s established religion is the First Church of Karl Marx.
All of which means that yours truly will no longer invest in any Chinese stocks, no matter how rich the alleged term might be. We’re having enough problems controlling our own lives and freedoms right here in the Disunited States. No point in endangering our portfolios even more by keeping even a small percentage of our investments under the gradually creeping control of Chairman Xi. (And we thought we’d won the Cold War, circa 1989-1991.)
Speaking of control issues, how about the CDC’s latest completely FUBAR’d handling of the WuFlu’s latest zig-zagging trajectory?
CDC flip-flops on its previous mask flip-flop
Yes, you guessed it. Americans had begun to have too much fun, and business across most of America (at least across Red States) was getting back to normal too fast. So politics – as usual – dictated yet another ludicrous flip-flop on the part of our now utterly discredited Center for Disease Control (CDC). Based on “science,” of course, just like all the other flip-flops. Time to get those damned proles back under control. Obedience is Phase I. Once again, the Tylers of ZeroHedge have put all the damning evidence in a Friday article on the topic.
Who is running the CDC these days? The FBI? The CIA? The Squad? Covid “advice” has turned into Gaslight City.
Time to get those masks on. Except maybe for infants currently sucking on the bottle. (But then, that mask goes back on.) The whole situation is like that line in “The Maltese Falcon,” when Bogart crisply informs Peter Lorre that “When you’re slapped, you’ll take it and like it.”
Covid gaslighting by politicized CDC ignoramuses continues to endanger the stock market and our country as well
The very notion that the CDC and our Hologram President have kicked the volume on this “advisory” up to 11 on the dial indicates that the Marxists currently running Washington need to get the populace back under control. And perhaps ruin a few thousand more small businesses as well.
All because of the latest of what will be a never-ending series of WuFlu mutations. Just like we’ve experienced with the original flu since, oh, 2017 or so. Real science has already concluded that the so-called Delta edition of the WuFlu:
Spreads more rapidly than the original “novel coronavirus”; and
Is way less dangerous. So what, us worry?
As I’ve stated before, I’m not a doctor and I don’t play one on TV. But as anyone who’s suffered through one year + of asinine lockdowns and asinine, ineffective masking farces will agree, we don’t need any more government-spread bio-terrorism. We don’t need no stinkin’ advisories.
As Yeats observed, things fall apart.
Last year was enough house arrest for most Americans. Today, we simply have another ever-morphing flu to deal with beyond the (patented) original version. So anyone with any sense (and without a compromised immune system) should just get whatever current (and likely free forever) vaccine is available and get on with life and business. Without stupid, ineffective masks.
Nevertheless, when the Federal government, or any Federal agency for that matter, issues any kind of “advisory,” that’s taken as an order by most companies and a lot of individuals who fear government reprisals if they don’t abide by that “advisory.” (Note: This is generally true only under Democrat administrations. They will always unconstitutionally enforce those “advisories.”)
Politics aside – if indeed we can cast politics aside on anything in 2021 – this nonsensical CDC about face has, along with the current China (Stock) Syndrome, cast a pall over stocks Friday, similar to the worse pall we endured this Wednesday past.
Brief rant. Voters take heed
This sad excuse for a government and an administration is disintegrating faster than Comrade Pelosi’s People’s House Chamber. Americans are rapidly losing faith in our government and will be increasingly inclined to ignore the nonsensical crap directives allegedly coming from the White House, the CDC or from Capitol Hill’s very first Dragon Lady. Add to that the likely-to-go-on-forever January 6 Show Trials being staged in the People’s House indefinitely, and the disintegration of this once proud country and our way of life will lead to the anarchy that those highly organized and well-paid Antifa / BLM thugs have wanted all along.
This distinctly plausible scenario will increasingly frighten investors. And it’s this fear, along with other bits of nasty political evidence, that will surely begin to undermine markets for at least the remainder of 2021. The only uncertainty right now is just what form of decline we’ll experience.
It’s not what to do. It’s how to do it. Mr Market is getting tricky
In the meantime, we’re increasingly in a fast-trade environment, one that may actually favor the amateur idiots who flip in and out of the latest meme stocks. Investors who trade on the fundamentals may find their portfolios out in the cold this winter.
We’ll try to provide some short term investing ideas in coming columns. But in the meantime, we’re staying out of Chinese stocks (which don’t offer shareholder voting rights anyway), and we’re watching the asinine political thrashing in Washington with increasing alarm and disgust.
Right now, we’re not wearing masks. And we’re not believing a thing that comes out of the White House, re: the latest exciting mutations of the WuFlu. As for the CDC: It now has less credibility to the Beijing owned and operated “World Health Organization” (WHO).
Meanwhile, keep an eye on your portfolios. Exit positions with decent profits. Be careful where you re-enter the market. (Or just stash your cash in some safe, short-term instruments). And be ready to bail at a moments’ notice. Idiots are now running the country, and we’ll have to take care of ourselves.
Headline image: Reproduced with permission and by arrangement with Comically Incorrect. Altered slightly to fit CDN’s graphic format.