Avoid red-chip stocks $Baba, $JD ? Read & decide.
US stock market continued its rally on Wed, 15 Nov 2023.
Investors are still holding onto the idea that abruptly cooling inflation will put interest rate hikes on ice.
It will be a “clearer” picture, as the latest official reports continue to be released, progressively.
Case in point, the US Retail sales for October 2023 was released Wed, 15 Nov 2023. (see below)
Monthly, October retail sales fell less than Wall Street feared.
Monthly sales fell to -0.1% vs Market expectations of -0.3% vs Sep 2023 readings of +0.9%.
Reiterating that US consumer remains in better shape than many economists have projected.
This marks the “first” decline in retail sales in 7 months, since Mar 2023 (-1.0%) retail sales data released on 14 Apr 2023.
This could be a “win” for the Fed because it signals a slowing in demand as the last FOMC decision of the year approaches.
By the time, the clock chimed 4:00pm:
DJIA: +0.47% (+163.51 to 34,991.21). Dow has risen 4 days straight. Its at its highest since 14 Aug.
S&P 500: +0.16% (+7.18 to 4,502.88).
Nasdaq: +0.07% (+9.45 to 14,103.84). Breached the 14,000 mark.
The other “major” event to me was the eventual meeting between leader of the 2 superpowers, Mr Biden and Mr Xi.
The last time Mr Xi held court with American executives on US soil was a very different 8 years ago, in 2015.
Back then, the most illustrious American CEOs — Mr Bezos, Mr Zuckerberg, Mr Cook all flocked to see the Chinese president, helming an annual 7% GDP growth rate Chinese economy.
Despite being aware of inherent risks when it comes to doing business in the red economy, optimism prevailed, leaning on the hope and belief that China would integrate into a larger global economic system.
Simply put, US could not pass up the Chinese market.
8 years on, that belief is a lot more shaky now, as observed by Stanford professor Herbert Lin.
Ongoing geopolitical issues between the US and Chinese governments may only exacerbate the tensions in the coming years as Mr Xi tries to simultaneously (a) staunch outflow of capital from China, (b) while maintaining rigid political controls.
For the first time, China is experiencing its 1st foreign investment deficit as geopolitics tension spills over into the business realm.
In a recently conducted poll, challenges faced by US companies: (see below)
Top 10 challenges encountered by US companies:
The whole premise of investing time, money and effort to build up a business in a foreign land is so that profits could be plough back to HQ.
If this could not be achieved, its as good as getting precious resources “stuck” / “trapped” in the red economy.
Unfortunately, the outcome of the Biden-Xi meeting did not bring with it the much-needed euphoria to further invigorate the US stock market.
Just about the only agreement between both leaders is the resumption of high-level military communication, between both countries.
Even that is a “work-in-progress” work piece as the latest Chinese defense minister was made redundant in October 2023.
With so much uncertainties hanging over US-China relationship, it has affected Chinese stocks listed in the US. (see above).
I cannot even begin to lament how my investment in $Alibaba(09988)$ is still bleeding after a few rounds of rallies in US stock market.
For retail investors who still believe that there are potentials to be had on Chinese stocks, do go in with eyes wide opened and be prepared to wait for a long-term returns.
There should be nothing in the short to medium term.
Do you think it is prudent to avoid Red Chips stocks?
Do you think the tension between US & China will be resolve by 2024 and Chinese stocks will BOOM again?
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Typical for BABA to sink minus 10% on good news. and two weeks after to raise back.
They need to rebound sooooonnnn!!!
after the meeting hope both markets benefit
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just look at the volume..... ;/