Deze Economisch Kort is gewijd aan de problemen op de Chinese beurs van Sjanghai: Daniel Lacalle legt uit waar ‘m de kneep zit.

Despite high domestic economic growth and solid global recovery, the Chinese market is down on the year. At the close of this article, the Shanghai CSI 300 is down 5% vs the S&P 500’s +18%, and in the past five years, it has risen 51%, a decent but modest figure compared to the S&P 500’s +103%.

Duur: 3:01 min.

Publlicatie 8 augustus

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Additionally, the Chinese stock market looks optically cheap. At 12.7x estimated Price to Earnings 2021, according to Bloomberg, it is significantly cheaper than most developed economies and many emerging ones. So why do I say “optically”? Because the Chinese stock market valuation includes important discounts that any investor must consider. Political risk and government intervention is a relevant discount factor that cannot be ignored, and the recent crackdown on technology and education is proof of that.

Political and government intervention risks are not exclusive to Chinese stocks but explain a large proportion of the discount in valuation terms. These risks are also evident in the stocks of countries like Russia, but also in the Spanish or Italian market. It is not just regulatory risk, which may exist in numerous sectors globally, but the risk of random, politically driven, and destructive intervention.  When politicians want to take control of private entities, their earnings growth and margins are irrelevant considering the possibility of flowing management with politicians that use the balance sheet of private companies for political purposes. The recent crackdown in China is not about inequality, it is about control. If the government wanted to reduce inequality it would have implemented fiscal measures that would have been more effective than crippling its stock market.

Verder lezen van dit artikel kan hier, op het Blog van Daniel Lacallle

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