From Boom to Bust: Why China's Stocks Lagged Behind Its Economy and Where to Invest Next
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 23 August 2023
⏱️ 33 minutes
🧾️ Download transcript
Summary
- How badly has China's stock market performed except for one remarkable decade
- What are the economic and governance factors that contributed to the underperformance
- Why it's too soon to write off China despite the structural headwinds
- What are the factors that contribute to economic growth and a robust stock market, and which emerging market countries display those factors
- What are some ETFs to invest in countries with favorable economic tailwinds
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Show Notes
State-Owned Enterprises Going Public: The Case of China by Xiaozu Wang, et al.—SSRN
A Model of China's State Capitalism by Xi Li, et al.—SSRN
Has China given up on state-owned enterprise reform? by Nicholas Borst—The Interpreter
China Regulator’s New Slogan Fuels Buying Spree in State Firms by Bloomberg News—Bloomberg
Investors sour on Beijing’s bid to boost state-owned enterprises by Sun Yu—The Financial Times
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Transcript
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| 0:00.0 | Welcome to Money for the Rest of Us. |
| 0:02.9 | This is a personal financial show on money, how it works, how to invest it, and how to |
| 0:08.2 | live without worrying about it. |
| 0:10.2 | I'm your host David Stein, today is episode 445. |
| 0:14.2 | It's titled From Boom to Bust, Why China Stocks Legged Behind Its Economy, and Where to |
| 0:20.5 | Invest Next. |
| 0:21.5 | We have recently been working on adding cyclically adjusted price-to-earnings ratios or |
| 0:27.0 | Schiller PEs to asset camp, our stock index reporting service. |
| 0:32.3 | As part of the process I've been working on the formulas to add to our database and ended |
| 0:36.4 | up spending some time studying the long-term performance of the Chinese stock market and |
| 0:41.9 | the underlying drivers. |
| 0:43.2 | I was shocked to see how poorly the Chinese stock market has performed since the stock exchange |
| 0:49.7 | was re-established, the original stock exchange in China is the Shanghai Stock Exchange. |
| 0:55.8 | But it was closed for decades from 1949 when the People's Republic of China was founded |
| 1:02.2 | up until November 1990, when it was officially re-established. |
| 1:07.4 | Around the same time, the Shenzhen Stock Exchange opened in December 1990. |
| 1:13.1 | The first Chinese stock index that I'm aware of, or at least have dated to, is the MSCI |
| 1:19.1 | China Index. |
| 1:20.7 | It began on December 31, 1992. |
| 1:25.0 | At the time, getting a 1993, there were 53 publicly listed firms trading on either the |
| 1:32.5 | Shanghai or Shenzhen Stock Exchange. |
| 1:36.5 | When they were re-established in the case of the Shanghai Index, or brand new, the Shenzhen |
... |
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