Good news for the China BullsAhh, so the Chinese government is really in hot soup now ! They announced moving forward, they will not be publishing the youth unemployment data anymore. Read here
Remember 2 years ago, when the people of China got so stressed and went to the streets to protest and call President Xi to step down ? Read here
Could we see history repeats itself if the youth continues not able to find jobs in the market ? Parents are stressed so are the educators. Imagine spending time , money and all the stress studying and after graduation, the available jobs in the market are either mismatched or totally way below the salary they are asking for. They have become "full-time children" or cleaners
Mind you, there will be another 11 million graduates entering the job market this year, exacerbating the already crippled job market ! President Xi message to the young people is to endure hardships, a bitter pill to swallow considering they are born in a very different era from their parents/grand-parents.
Could the government have gone overboard in the cleaning up of the tech sectors, education sector, property market, etc in the pursuit of common prosperity ?
I suspect something big is brewing and the government cannot afford two things - riots in the streets and social unrest. The covid-19 experience has shown them when enough is enough and the abrupt turn of policy changes by the government on reopening the economy could be what we are all awaiting for. Yes, a massive trillion dollars stimulus package to boost the economy.
The pressures are mounting - locals and international. The government is on a time bomb and the more they procrastinate, the worse the problems will become. Missing the 5% GDP mark is not as BIG a matter as the potential unrest that is brewing beneath.
From the weekly chart, we can see both the HSI and GXC (use as proxy of China market) are in a channel pattern. If Oct 2022 is not the bottom, then we could see the stock prices revisiting this level again to form a double bottom before we see an upside. This of course will wipe out more investors who are already bleeding from the stock market and have lost faith !
That , I think will likely be the worst scenario for the Chinese market. Thus, from a risk/reward perspective, entering the market now or coming weeks may prove to be a good long term strategy.
How long will it takes ? Nobody knows , it could be months or years before we see a recovery. One thing for sure, the government cannot sit still and do nothing when the recent measures they introduced are not lifting the consumers confidence and the deflationary atmosphere looms at large, delaying their buying interest. These hardcore squirrel savers will definitely save even more than before after experiencing the Covid-19 saga and wants to prepare for rainy days. Buying a house (unless it is for staying) or upgrading to a new EV automobile are not a necessity at this juncture.
Only time will tells..........we are living in the best of times.........we are living in the worst of times..........
