Is This Why China’s Stock Market Is Up So Much In 2019?

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Here's how Chinese companies receiving subsidies this year have done in the stock market. Hint: pretty darn good!

Share to linkedin... [+]China’s mainland equity market is up over 33% this year, making it one of the best-performing stock markets in the world. Despite rumors of tariff escalation, a trade war, sanctions against publicly Chinese tech companies like Hikvision and slower economic growth, China’s A-shares are on a tear. Is Beijing rigging Shanghai and Shenzhen’s stock market?

There are a number or reasons for China gains—global investor’s love for tech companies, and China’s relatively cheap value compared to the rest of the emerging market space. Highlighting these two large caps, it seems China is misallocating some capital. SNP is down 16.3% this year and 23.4% over the last 12 months. By comparison, the U.S. energy sector, as measured by the SPDR Energy Select , is up around 5.4%. Brazil oil firm Petrobras is up 12.5%. Russia’s LukOil is up 40.3%.

Shares in state-owned consumer electronics company TCL Corp are up 81.2% this year and 83.5% over the last 12 months. The U.S. will make corporate subsidies a part of the phase two trade negotiations, which are supposed to begin after the phase one deal is signed in January.

 

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Least you appear myopic and irrelevant, try applying your same scrutiny and metrics to Trump's Borrow & Spend, Deficit-Driven, Buyback Enhanced, Outsized Corporate Tax Cuts, Corporate Welfare, Interest Rate Slasher-Film, and even (Recession go to) QUANTITATIVE EASING e-CON-omy!

China is up the same as the S&P. Corporate subsidies are the same as a tax cut. China was cheap to start with. The question is not why China is up so much, but why is the US, as it was expensive to start with

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