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On the other hand, the Shanghai stock index has been basically flat for years, despite Chinese companies rapidly growing and dominating industry after industry.
by matthewdgreen 1y ago
On the other hand, the Shanghai stock index has been basically flat for years, despite Chinese companies rapidly growing and dominating industry after industry. Our companies have been very good at returning value to shareholders, while Chinese companies have been re-investing. There’s a very real possibility that we may come to deeply regret it.
- kccqzy 1y agoBecause China is starting from a position of weakness and catching up, it is by definition easier for them to find high ROI projects to spend money on. Just wait 10–20 years when China is thoroughly technically ahead of us, and Chinese companies will be more like American ones.
- matthewdgreen 1y agoChina is massively investing in the entire energy generation sector, renewables, advanced nuclear, batteries, EVs, full self driving. This is the future we were supposed to be investing in, but we’re losing it. Maybe we got some share buybacks instead.
- K0balt 1y agoMy concern is that America will become a sprawling no man’s land as the economy contracts to 20 percent of its present size. Rapid collapse is unpredictable and seems like a bad idea for a country with such a huge military presence.
- ben_w 1y agoRapid collapse is indeed unpredictable, and always bad; but the military is heavily dependent on the economy, so it starting huge probably won't make a huge difference. Especially if the US happens to do the collapsing at around the same time the rest of the globe moves away from oil etc., given how dependent the existing military equipment stockpiles are on petrochemicals.
- rjmunro 1y agoThe share buybacks enable and encourage investors to move their money to invest in other things for the future. That's usually a better idea than e.g. Intel, who know nothing about other wind farms, building their own.
- matthewdgreen 1y agoThis is the thing we tell ourselves because we like share buybacks. The question is whether the numbers actually tell this story.
- ben_w 1y agoThe investors are quite capable of taking the money from those US stock buy-backs and investing them in Chinese growth sectors. I mean, I'm basically doing that. That said, I'm an unsophisticated retail investor, and if I understand right all people like me combined only add up to about 20% of the market.
- throwaway2037 1y agoI would not read too much into the lackluster performance of Chinese stock markets. Something is weird about a place with a fast growing economy, but the stock market performance is so poor.