The last to be exposed was Hsbc, the increasingly Chinese Anglo-Chinese bank. The Communist Party Congress in China opens on Sunday and HSBC has published a very positive report on perspectives of the Chinese Stock Exchange: stock valuations are heavily discounted, we read, conditioned by the Covid-19 containment measures. But the economy will soon restart, he assures himself, thanks to the stimuli that will be introduced into the system which, unlike the West, does not have major inflation problems.
Communist Party Congress opens in China: managers positive on stock market prospects
More or less similar judgments have arrived in recent days from other managers. From Comgest to Ubs, to name a few, the queue of those who recommend placing a chip on them is getting longer markets in Greater China, waiting for the Fed and the ECB to loosen their grip on Western markets. Moreover, notes Davis Soh of RBC, the law of large numbers plays in favor of the entry of Chinese A shares shares in the indices of major international funds, Msci leads. An obvious evolution after the launch of Stock Connect, the program that connected international investors with China's onshore markets Shanghai and Shenzhen through Hong Kong.
The slowdown in the economy belies the managers' optimism
It is a pity that this time, and it is not the only time, the wishes of the managers are not reflected in the markets. On the contrary. On the eve of the opening Sunday of Centenary Congress of the Communist Party the Hong Kong Stock Exchange suffers a ten-year decline, confirming the difficulties of the price list/showcase of technology made in China. It's better, but not too much, at theCsi 300 index of Shanghai and Shenzhen, weighed down by the problems of the real estate sector as well as the war against Covid, or rather by slowdown in the economy which this year will stop well below the 5,5%, already promised at the end of the summer, a disappointing figure for the second largest economy on the planet.
Three thorns for Xi Jinping: the Evergrande crisis in China
In short, the predictions have been abundantly denied. In economics, but not only. In recent months, experts have tried in vain to identify a key to understanding the choices of the giant in order to get out of the trap of crisis of Evergrande, with a sector that accounts for 30% of GDP. But so far the interventions have been modest: suffers the bond market as well as local finance which depended almost only on building permits; the protest of the thousands and thousands of small owners who have paid advances for housing left half finished is rising. In at least 320 cases, citizens have refused to pay the installments for an apartment they will probably never live in. Not even the approach of Congress has made it possible to find a solution to this and other problems that now seem to be gangrenous.
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Xi Jinping and the Communist Party Congress: the Covid epidemic is always lurking
Forty-eight hours after the opening of the assembly, he writes Le Monde, it is not yet clear whether or not the 2.296 delegates to Congress will wear an anti-Covid mask. Logic would like that yes, China remains as requested by President Xi Jingping, the country of zero tolerance. But the goal of defeating the epidemic before Congress has failed spectacularly. And China must observe with bitterness that the countries that have adopted Western-style techniques and therapies, such as Vietnam (+7,2% GDP in September), have largely taken advantage of Xi's turnaround which, in contradiction with what Deng Xiao Ping onwards, reduced the thrust of private individuals to the advantage of state giants.
President Xi towards the third term but the knots are coming home to roost
It is unlikely that this, like other nodes, will complicate the rise to the empyrean of President Xi who has started at one triumphal confirmation at the top of the Communist Party in China for his third term. But, under the official paint, as always, the real news will be hidden in the details, i.e. in the renewal of offices and careers of the immense apparatus of the second economic power in the world. Between Shanghai, Shenzhen and Beijing, for example, there is deep concern about the latter in these hours White House blitz. Joe Biden has decided to cancel the citizenship and/or revoke the residence permit (as well as the right to buy real estate in the USA) to those who intend to transfer the licensing on a large selection of chips developed with the contribution of American research: a good way to hitting thousands of Chinese technicians who boast a degree and a Ph.D in the States and do not intend to give up double relations. A particular case, of course, but which well underlines the growing gap between the red nomenklatura and the generation of Jack Ma, the China Champion of Alibaba and Tencent.
These and a thousand other questions will be at the center of discussions between the delegates in Tien An Men Square. Even if only one thing seems certain: very little of the real debate will filter outside. After all, the story has just begun, as evidenced by the immense Party museum built in front of the Olympic stadium: the first floor is dedicated to the victory of the revolution from 1921 to 1949; the second to the life of the People's Republic from Mao onwards. But the third floor, 147 square meters, is empty for now: it will be up to Xi, the new emperor, to fill it with contents.
