Hoping to boost stock market prices, China mandates more dividends and buybacks. 
Increase Dividends or Else
Demanding More Debt
Terrible Policy
Pettis presents a plus side and a minis side. I see it as a foolish mandate and an act of desperation.
Unlike Pettis, I fail to see how forcing companies to use their cash, increase leverage, or take on unwarranted debt hoping to fuel a stock market rally can possibly be a good thing.
If the debt is not serviceable by profits, it will weaken the corporations. How can that rebalance anything?
Technically Speaking
Technically speaking the Shanghai Index appears poised for a big move one way or another after a lengthy consolidation. There are several lower highs and higher lows.
Since the initial move was lower, and triangles are continuation patterns, the expected break is lower, but I don’t know, nor does anyone else.
I do know bad policy, and the action by Chinese regulators is terribly unsound.
Stuki: “China, as a whole, is darned near infinitely better off, with people managing to get by comfortably while consuming only 40% of their income”
I would not be better off, I would be dead.
It is just plain stupid to undervalue freedom of thought, freedom of speech, ability to move, property rights, and capitalism.
“It is just plain stupid to undervalue freedom of thought, freedom of speech, ability to move, property rights, and capitalism.”
It is. Hence why China is preferrable to the land of “fake news” censorship, arbitrary “hate speech” bans, kangaroo court shakedowns and other drivel.
As for ability to move: Where has social, and even geographic, mobility been the greatest since 1971? China or the US? Tale a guess…
Property rights: Do you really believe San Francisco has less real, effective restrictions on building what you want on your own property, than similar sized, or for that matter any sized, Chinese cities? Again, look at the SF vs Shanghai skylines in ’71 vs today….
Ditto using your property; any non real estate as well as real estate kind of property; for productive ends: You reckon patent trolls, smarmy insurance salesmen, ambulance chasing shakedown trash, and other deadweight, useless, good for less than nothing leeches; are better positioned to have the government, yes the government, restrict your use of your own property there, vs here?
And Capitalism: Try starting a Shein competitor in the US. Or an “anything Chinese” competitor…. Previously Western everything, is moving to China in droves; even from Germany post 2008; overwhelmingly because capitalism is more functional there. You can set up shop creating and building stuff with less total interference from run amuck government there than here. It’s not even close.
It’s only if you insist on maintaining ostrich-grade myopia; and focus solely on direct federal government decrees; that there is even a fractional hope of maintaining the illusion that things are somehow less free there than here. At least outside of the narrow sphere of direct criticism of the central government and communist party.
Actual restrictions on freedom, as experienced by those there, are not somehow less totalitarian just because they are initiated by self serving leeches in nominally “private” employ. It’s still the government interfering. If you doubt that, try tossing utter nonsense like 99% of “court summons” in the trash where it belongs, next time some leech-on-the-make tries shaking you down via a kangaroo court, a mandate, a ban or whatnot. You’ll very quickly recognize whose guns are really behind it all.
Again: NONE of that is due to China being some beacon of freedom.Compared with America back in the civilized era, before “progressive movement” nonsense, China is a veritable slave plantation. It’s just that America, anno today, is much worse than even that. And still heading nowhere but exactly the wrong way.
Stock buybacks to increase dividend payments – and compensation for insiders? I heard it somewhere, just can’t put my finger on it.
“Hoping to boost stock market prices, China mandates more dividends and buybacks.”
Reminds me of when congress warned FASB to allow banks to lie about the value of their assets. It jump started the 2009 stock market rally.
I don’t see where MP called it a “good thing”. I think he just believes it will be “a thing” and he is trying to point out who he thinks will be the winners and the losers from it.
He has always, for one unfathomably silly reason or another, bought into the nonsense that China somehow suffers from a lack of some independent entity labelled “demand.” This “demand”, per Keynes-cult dogma, somhow mysteriously exists independent of supply. Hence being something that “policy makers” can somehow “tune”, in order to improve some mythical figure referred to as “the economy.” Which also magically exists somehow independent of just the simple aggregate of individual utility functions and their rational optimisers.
In the real world, sleeping well at night, from knowing you have a lifetime worth of income under the mattress, is a consumer good. One for which demand is great indeed. Sure; there are other consumer goods as well. If those provide more utility than financial safety, then people will spring for them. If not, people won’t. At least not voluntarily. All mucking aorund with mandates, printing, interest rates etc., attempts to do, is change what people voluntarily engages in. In order to favor one connected special interest or bizzaro-cult belief system, or another.
China, as a whole, is darned near infinitely better off, with people managing to get by comfortably while consuming only 40% of their income; than “The West”, where people largely live hand to mouth and at the arbitrary discretion of “creditors,” can ever hope to be. The Chinese are the ones doing it right. “We” are the ones who have been doing nothing but dead, flat out, wrong; for so many decades now; that the idiocy has taken on a life of its own, and is now considered “mainstream” economics.
Chinese poeple will perfectly voluntarily demand more, if only they are able to supply more, such that their incomes get higher. Just as is the case in all healthy economies.
Not saying China’s communist planned economy is healthy per any absolute standards. Nothing communist, nor planned, can ever be. But some weirdly onbsessed over “excessive propensity to save” is absolutely not even remotely one of the problem their economy faces.
One of the best comments I’ve ever read.
Off topic but perhaps of interest to some. A nice little history of events leading up to the Ukrainian war, and up to today. A sad tale, orchestrated by evil people (i.e., neocon central)
link to sonar21.com
Another example of stupid central planners thinking they know best, with their mandate having the exact opposite effect as intended. Typical government boobery.
Who said China’s yuan will be the next reserve currency? Lol
Don’t laugh too hard. Just look at the dumb policies of the US government.
It happens all the time on Twitter, ZH, alternate media sites, and is very prevalent among Bitcoin supporters who openly cheer the demise of the dollar, and also from people like Peter Schiff.
I fully agree with a major move since the price is so close to the tip of the converging lines.
Investing in China is like investing in DEI, Solar, GM, windmills, ATT, Russia, or Africa.
SSEC 1W : the downtrend might be over.
The way of the iron fist didn’t start yesterday. Nothing to see here. Does anyone believe any data that comes out of China, Russia or other places that don’t have open and transparent markets in any way, shape or form ?
The CCP is very corrupt. That government is only interested in maintaining power. It only appears to ‘care’ about the common people in order to avoid revolution.
At least in Russia the fist was softer. After the February 2022 crash at the Moscow Exchange the regulators did not push for buybacks but relaxed buyback rules temporarily letting company boards make the final decision. In the end it was a dividend yield of 10% that kept it afloat.
So much missing. So much hearsay.
I’m company A. My next dividend will be eleventy hundred Yuan. Did I increase that amount to keep the CCP’s SEC happy or what?
Or, I planned to sell a jillian shares of my stock. Instead, I’ll just sell a half-jillian shares. Isn’t that the equivalent of buying back a half jillion shares? So, we’re good, right?
It’s easy to imagine this is simply a reminder to listed companies to make sure to slip a bit more under the table to the CCP’s SEC boys.
This is worse than banning short-selling. Whenever government starts messing with markets disasters are around the corner.
Correct!
Remember what power and government are in China. They manipulate the subtleties of capitalism more or less well. But they are perfectly capable of completely and radically forgetting them, or even completely leaving capitalism, and surviving by taking other paths.
Wow! Does that sound like a whole lot of freedom or what!