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If you think the S&P500 and NASDAQ in recent years merely gives a "reasonable rate of return" you'll realize that there really aren't any other economies with a

by hnfong 3y ago

If you think the S&P500 and NASDAQ in recent years merely gives a "reasonable rate of return" you'll realize that there really aren't any other economies with a "safe financial system". Most markets don't have that level of growth. The Chinese predisposition to invest in real property is much more cultural (and irrational) than what you suggest. The Chinese stock market is actually much more rational in this regard as for quite a while you could buy Chinese real estate stocks with pennies on the dollar, price to book ratios much less than one. Traders know the real estate bubble is going to burst sooner or later and the stock market priced this in. The real estate market which mostly consists of individual buyers didn't quite get the memo until recently. Speaking personally, in Chinese circles, the social pressure buy an expensive apartment is honestly overwhelming, and it's not because people knew that the property market was a good investment, it was just something they thought a respectable person should do once they earned some money. Family members without any financial literacy kept thinking I was an idiot for holding FAANG stocks instead of buying an apartment. AFAICT I'm the only person in my social circle (including people who should have known better) that has avoided the recent property slump (in Hong Kong) by steadfastly refusing to enter the property market at its height a couple years ago. It's nice to not have people nagging me about it now.

bobthepanda 3y ago
I don't disagree with any of that. Most of the other developed countries though have some kind of government or corporate (in the case of Japan) safety net that China lacks. The only example that I'm aware of that lacks either is South Korea, which has extremely high elder poverty rates compared to OECD peers. I guess the word I was looking for to describe the Chinese financial system is 'immature.' It is unfortunately not uncommon for some Chinese firm to get delisted for accounting fraud or some other type of impropriety, so investing in the indexes is a worse idea than it is in many other countries. And then there's all the marketing of dubious financial products that people inevitably lose their savings on and protest; before people swarming the Evergrande HQ demanding their money it was P2P lending and many other scams.

by hnfong 3y ago

bobthepanda 3y ago

I don't disagree with any of that. Most of the other developed countries though have some kind of government or corporate (in the case of Japan) safety net that China lacks. The only example that I'm aware of that lacks either is South Korea, which has extremely high elder poverty rates compared to OECD peers. I guess the word I was looking for to describe the Chinese financial system is 'immature.' It is unfortunately not uncommon for some Chinese firm to get delisted for accounting fraud or some other type of impropriety, so investing in the indexes is a worse idea than it is in many other countries. And then there's all the marketing of dubious financial products that people inevitably lose their savings on and protest; before people swarming the Evergrande HQ demanding their money it was P2P lending and many other scams.