Steve Hou
Head of Research at Silicon Data, AI Compute Markets
Trump's state visit to China is a reasonable reason to be bullish on Chinese stocks, yet surprisingly few are paying attention to an event that anchors the most important bilateral relationship between the two powers. Trump himself is an ideological moderate on China, possibly more so than the Biden administration's China hawks, even as the whole US government has turned hawkish. Unlike the Democrats, he has wiggle room, and China knows it. x.com x.com
Chinese internet stocks could draw renewed attention and a re-rating as President Trump's May visit to China opens a brief honeymoon in US-China relations. Recent geopolitics have left China in a relatively favorable position, the sector sits near a relative bottom, and its largest holdings' fundamentals keep improving. The sector finally moved on Trump's arrival in Beijing. If the talks go well, strength can continue; if they go badly, it will likely fall back and the position would be exited. … Show more
Chinese stocks should benefit from the development raised in a post the author replies to, though which individual name to pick is unclear. x.com
China large caps have one of the worst charts out there, and sooner or later the rest of the world will impose heavy tariffs on China, raising the question of what Beijing does when it gets desperate. x.com
The Trump-Xi meeting could bring lower US tariffs and Chinese help on oil, favouring import-dependent US consumer stocks over crude oil and energy stocks. In one possible swap, the US removes or lowers tariffs while China releases strategic petroleum reserves and pushes Iran toward a deal. That would help Wayfair, RH, Target, Dollar General, Best Buy, Dollar Tree and Walmart. Crude at $103-105 after a parabolic move already looks stretched at big resistance. x.com
Beijing's reported plan to sell hundreds of billions in US bonds to support Chinese stocks makes Chinese equities extremely bullish. The aim is to make China's market look stronger than the US and attract investors worldwide. A massive US bond selloff would put enormous pressure on global markets. x.com
Chinese stocks are uninvestable for long-term investors because the value created goes to the Communist Party, not shareholders. The Chinese index is down 16% since 1991 while the S&P 500 rose 1,570% and the Nasdaq 3,440%, and Alibaba has gained just 27.8% in 12 years since its IPO. When companies grow too strong, the party hits them with megafines, sidelines founders like Jack Ma or blocks game releases as at Tencent, and foreign investors own only VIE contracts, not shares. x.com x.com x.com … Show more
Baidu and Alibaba look primed with Trump visiting China, while JD.com is set up to break its long-term downtrend line. x.com
Chinese equities, including Alibaba and KWEB, look set for a rapid reversal: after months of profit-taking and decade lows in many names while US markets reached highs, this morning's inflow is a positive sign. There is still value in many of these names. x.com
China is following the policy path the US and Europe took over a decade ago, which should drive a sweeping structural bull market in Chinese equities spanning several Kitchin cycles. Per @baoshu88, China is moving away from GDP-only targets, with fiscal discipline narrowing the cumulative deficit for the first time in over two years and new hidden local government debt now banned. Lower macro cyclicality and volatility should pass into equities, steadily compressing Chinese stocks' volatility. … Show more
China-heavy emerging-market funds carry a lasting governance risk: autocratic leadership has little alignment with foreign shareholders. Chinese shares may offer tactical trades, but a permanent rerating is hard until the CCP is gone. x.com x.com x.com
