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01-01-2022, 04:10 PM
Hi Weijian,
That is a good point you made. Fishing in China markets should start from top down and not at the company or industry level. There is a need to understand what the incumbent government is planning to do and what it must do to prevent the collapse of a country. The financials of its GLCs and private companies are not of concern to them. If GLCs underperform or kaput, they will be supported and evolve to be zombie companies. If private companies speak out against the government or go into the "bad books" of policy makers (such as their tuition industry), the market value of these companies can be wiped out.
This is the difficulty in investing in a free market in a communist country.
That is a good point you made. Fishing in China markets should start from top down and not at the company or industry level. There is a need to understand what the incumbent government is planning to do and what it must do to prevent the collapse of a country. The financials of its GLCs and private companies are not of concern to them. If GLCs underperform or kaput, they will be supported and evolve to be zombie companies. If private companies speak out against the government or go into the "bad books" of policy makers (such as their tuition industry), the market value of these companies can be wiped out.
This is the difficulty in investing in a free market in a communist country.