Tag: T_Chn

(involution)躺平[def]=barebones ffree #w1r2

Posted on by tiger40490

 

Set in the contemporary China context, This blogposts compares 躺平 to barebones_ffree, and then clarifies the fundamentals of involution vs 躺平, two popular but vague Chinese phrases open to interpretation and widespread misuse. Every writer on the subject has had to clarify them, otherwise they are pretty much meaningless.

https://www.channelnewsasia.com/news/asia/china-lying-lie-flat-low-desire-life-work-15152540 is the first article I read. Target group is young professionals in their 20s to 30s. The bbc1 article says “中产阶级的年轻人”.  (Other articles have different target groups. ) The same 躺平 actions and attitudes will, thanks to social media, gain currency at the _lower_ socioeconomic /strata/, but somewhat involuntary and under crushing force. That’s largely because of economic position. (Remember, micro-economics is all about personal choices.) In 10 years, I don’t know which target groups will be more associated with this phrase, but for the time being the most relevant group consists of highly educated, highly mobile and in-demand professionals in their 20s to 40s, basically the two generation after me. This group is more established, with more resources, so their 躺平 is less involuntary. more resignation than surrender.

處事態度具体内涵包括“不买房、不买车、不工作、维持最低生存标准，拒绝成为他人赚钱的机器和被剥削的奴隶”.  I have omitted those other attitudes drastically different from me. Still, there’s too much to read. In this blogpost, I will pick a few points relevant to me.

— sucessE, successZ
躺平 and 摆烂/bai3lan4 are popular among Chinese graduates and young parents, but actually Applicable across age groups. They are comparable to the broad definitions of successE and related to successZ.

— ffree based on minimalistic spending of the young elite
A 27-year-old architect in Beijing said she started saving as a teenager to achieve financial freedom. Same as me.

“From September 2020, when I saw all my savings had reached 2 million (yuan) (US$300,000), I lay down…” Nana said she turned down a job that paid 20,000 yuan (US$3,000) per month.

 

rental yield: Chn superlow, shops better #3ratios

Posted on by tiger40490

 

See also gross^nett rental yield #careful with U.S.

— Tier 1 China residential valuation is overpriced according to my 3_ratios

  • Ratio_II: average salary
  • Ratio_BB: For a typical household, annual CPI-basket aggregate cost should be  10~15% of their home valuation. Much lower in China top cities
  • Ratio_RR: rental yield

— Ratio_II .. According to a China government survey, in megacities like Beijing, Shanghai and Shenzhen, the housing-price-to-annual-income ratio was above 35 – meaning that the price of an average house is equivalent to roughly 35 years of the average Household income. Household size can be 1 or more.

— Ratio_RR

  • As of 2022, TPY central shophouse $12k/M rental for a $3.8M (asking) price, about 4%. Very good but probably short lease remaining.
  • As of Jan 2020, for a CNY 4,000,000+ Shanghai school district home, rent = CNY 5K, NGRY == 1.5%
  • As of Sep 2016, for a typical CNY 6,000,000 Shanghai home, rent = CNY 7k to 8k/month. NGRY ~= 1.5%.
  • As of Jan 2017, for a CNY 3,000,000+ Shanghai home, rent=CNY4k, NGRY ~= 1.5%.
  • As of 2017, For a incomparable (!) Singapore public housing S$600k home, rent = S$2.5k/month. NGRY = 5%. Note private properties would show much lower NGRY.
  • Zhejiang village shop unit 店铺 — 2,500k investment. Annual gross rent 100k i.e. 4%, much higher than residential
  • BGC — Chun Tih said condo can generate at least 5% net rental yield. https://bgcmegaworld.com/for-foreign-investors/ says 8-11% GRY
  • Thailand — 泰国中心地区的公寓平均年租金回报率在房价的5-8％左右，有的地方可达15%。在旅游胜地芭堤雅，人民币60多万的二线海景公寓能租到4000元人民币/月；人民币100万的房子(better location?)能租到10,000元人民币/月 — 12% NGRY but I think these are the outliers. The typical GRY is much lower.

Conclusion: buy SG and rent out; live on rented in China

This is a sign that Shanghai/Beijing properties are overpriced relative to local living standard (CPI) and wage level. Housing overheat affects rental rate more gradually. In fact, investment and leasing markets can become somewhat decoupled in overheated locations. Owners of expensive houses are often complacent receiving a much lower rental yield than many years ago. See my blog on defying gravity.

  • buying demand is driven by deep-pocketed investors, and hot money from overseas
  • leasing demand is driven by ordinary local wage earners, so if rent rises as fast as valuations, then they will be vacant as ordinary rents can’t afford.

Q: in Manila and Phnom Penh where gross rental yield is around 7-10%, do we have reason to say property price is less overheated?
A: That is only one reason fewer to suspect overheat. Other signs may still point to overheating.

blind_FOMO[def]: TJ.Lin@Chn young techie

Posted on by tiger40490

A powerful concept and pattern, in search of a shorter name.. like blind_FOMO, as a specific form of breakaway.

Opening example: For many big-ticket products, a novice would often buy the market leading branded version (paying a premium), because he doesn’t know his own needs. FOMO is a suitable descriptor.

— the Main example of this blogpost: TianJue is the first to point this out, when I shared with him the paradox of China’s bachelor tech professionals. See latency无底洞

As soon as the bachelor enrolls at a Beijing/Shanghai college, he would face the same decision that some of his cohort has already decided on — “Will I end up working in 一线 city like 北上广深 ?”. If yes, then the home purchase looks inevitable and requires a whole-family effort starting from Year 1. .. Wrong priority.

I asked TJ “if the price is out of reach for my family, then what about renting?” I don’t remember his response, but perhaps 1 in 3 bachelors could realize “…beyond my capacity” and put away the decision. For the remainder, buying is nearly infeasible but question is “Will I regret if I don’t buy, and rent or work in a Tier2 city?” The more peers make the early decision to buy, the more peer pressure on the helpless bachelor to follow the herd instinct. It’s interesting how semi-consciously we filter our peer group and exclude bulk of the local population.

TJ also pointed out that dating game puts huge pressure on the bachelor. In my younger days, I had to work hard over decades to improve my /status/ in the mating competition. When I first had kids, I didn’t believe the opinions of those likes WQ.Luo. I was driven to improve housing, education resources… for my kids, engaging in the arms race with millions of fellow parents. Similarly, the inflation fear was a widespread brainwash. Medical cost inflation fear was driven by my own parents… All of these “struggles” are taught to every young men as part of Chinese enculturation. As a consequence, I felt perhaps $3M would be needed.

Those around me who gave up on ffree were seen as _quitters_. These are the individuals who decided to keep working till retirement age, buy a house of same size as the peers, save as much as the peers, save up for college funding as the peers… all without a ffree goal. They are seen as not trying hard enough.  Clearly my choices are a breakaway from these “quitters”.

TJ then concluded that by my age, I have figured out my real needs and real priorities. I guess that’s a SelfKnowledgeAdvantage

— eg: the ivy-league fixation + SDXQ fixation among the Chinese middle-class in U.S.
Many immigrants seem to assume that schools rated below 8 are unacceptable… Fear of unknown. They follow their peers [i.e. fellow immigrants] and reject these mainstream choices.

Kyle and I discussed our “insider insight“. With this insight, I hope we can live free of the huge financial burden/obligation. In such a case, I would count myself lucky to understand my own needs.

When I told my father that my kids don’t have to enter any college, he said he would be proud of my son if he gets into Community colleges or Polytechnics. Heroic words of wisdom.

— eg: retirement planning .. Many younger Singaporeans seem unsure how much they would need in retirement. Some follow the marketing propaganda, dismiss the CPF-life amount as inadequate, and take on the huge burden of “SGD 1M nest egg”.

TJ pointed out that by my age, I know my own needs.

— eg: safe European cars .. I put a high value on their extra safety level,  exactly because I don’t really understand the risk. TJ.Lin said the probability of preventable harm from dangerous accident is actually very very low.

— eg: if unsure, buy the dominant brand. In the 1990’s you won’t be at fault if you buy IBM, even if it’s not the best choice in hindsight.
My first smartphone was a Samsung… not “better” than the cheaper Vivo, Oppo, Huawei phones I have used.

[22]Chn not rising as a financial superpower #CNY,stockMkt

Posted on by tiger40490

— review of https://www.channelnewsasia.com/commentary/china-yuan-renminbi-currency-flow-us-dollar-finance-2758231

“As of 2022, the yuan is not viewed as a safe haven, Chinese stocks languish and no Chinese city is more than a regional financial center.”

I think HK/Tokyo/SG qualify as more global (rather than regional) financial centers because their currencies do not scare foreign investors.

“About 90 per cent of foreign exchange transactions involve the US dollar, while only 5 per cent use yuan…. Some depict the yuan’s tiny 3% (2.88% as of 2022 https://data.imf.org/regular.aspx?key=41175) share of global central bank reserves as quick progress because it is up from 1% five years ago. But this share is similar to those of far smaller economies like Canada or Australia, and well behind what analysts have been projecting.”

“Foreigners own about 5 per cent of stocks in China (versus 25 to 30 per cent in other emerging markets), and about 3 per cent of bonds in China (compared to around 20 per cent in other developing nations).” I think HKEX is considered outside China.

tech stocks: Chn cmp to U.S.

Posted on by tiger40490

Somehow, I feel CTS (China tech stocks) are not as resilient as the US blue-chip tech stocks [MSFT, IBM, HP, Intel,,]. I feel CTS are subject to more political risks. They don’t pay dividend. No long-term trend.

China banks pay better dividends than China inet. China inet has more growth potential.

Apparently, India’s most visibly competitive companies are largely concentrated in a single sector — IT outsourcing sector.

In contrast, China’s most competitive companies are manufacturers, but rather few are hot stocks. Hot stocks are most inet companies, but they are unsuccessful in globalization, unsuccessful outside the domestic market.

[22]midclass livelihood ]Chn as well-off as SG@@ #w1r4

Posted on by tiger40490

My concept of Chn’s middle class is mostly-urban, white-collar, usually college-educated. A concept confirmed in a book by XS.L (梁晓声 Xiaosheng.Liang).

When I interact with my relatives, ex-classmates, /repatriated/ ex-colleagues, repatriated young graduates (acquaintances) …   I often have a vague, unfounded livelihood assumption that the Chinese middle-class has some advantages + some disadvantages[2] vis-a-vis SG middle-class counterpart, but on balance equally well-off. This assumption has a theoretical cornerstone — the middle-class’s definition. This definition implies that the middle-class in any country is well-off (小康富足) although the numerical criteria depend on location. Those criteria are vastly different in Bayonne vs 天津 vs 建德 vs Cambodia vs Manila due to PPP-FX.

[2] A lot of times, I could feel a strange sense of inferiority. Highly distorted and irrational. This is the same illusion as (not similar-to)

  • my distorted illusion that HwaChong JC and NUS were possibly perceived as inferior to 实验 and Tsinghua.
  • my distorted illusion that 实验 was somehow inferior to 四中, when both high schools produce top graduates on par with each other
  • my distorted illusion that Singapore was a /backwater/ compared to Hongkong or Shanghai

In this blogpost, I want to point out some of the hidden but crucial differences between SG and Chn middle class livelihood. Not a Chn-watcher, I won’t go in-depth. Mostly based on hearsays, but from trusted sources such as serious intellectuals.

  • :(▼healthcare .. different people in Chn and SG give me very different descriptions. I feel well taken care of in SG. XS.L said for many lower middle-class families, a medical event could sink the family to cashflow low ground, and grandpa agreed.
  • 🙁 long-term inflation .. hurts the retirement livelihood. I feel confident about SG esp. the medium term.
  • :(▲precarious .. worry about drop-out from middle-class exclub , as XS.L described. I feel secure. Overall, in SG there is some level of safety net, perhaps not as strong as in the western welfare states.
  • 🙁 full-time nursing .. this cost is relatively affordable in SG (thanks to foreign workers) but very high according to my parents’ earnest market research.
  • 👍 food, transport, outpatient medical .. probably cheaper in Chn.
  • difference: CRBR .. My parents have adequate pension. Not sure about the 20Y prospect for current cohort of middle-class. I feel most of the middle-class in Chn or SG don’t feel very safe about retirement income. However, CPF-life is better than nothing.
  • 🙁 environment .. PAP government has a reputation for tackling long-term environmental challenges
  • 🙁 caring society .. (for the /vulnerable/, but hey folks do drop out of middle-class, as XS.L pointed out.) I feel Singapore is overall a slightly more caring society than the Chinese cities I know. Vague feeling. If I have to be specific, then most of the reasons are related to government services; some nonprofit organizations and individuals also play a part.
  • 👍▼Chn’s economy will keep growing at a speed higher than SG. However, in the foreseeable future, living standard will remain lower than SG. Chn is decelerating more rapidly than SG which has reached maturity decades ago. It remains to be seen if faster growth translates to better livelihood for Chn’s expanding middle-class.
  • — Some differences are not exactly about “livelihood”:
  • 🙁 aspiration for branded degree .. harder to achieve for the Chn middleclass, partly due to lower absolute income. Large portions of the urban middleclass aspire to an overseas education/experience.
  • 👍 gap from median .. Suppose we compare the ratio of middle-class household income to the national median. Somehow, I feel the Chn counterparts “enjoy” a higher ratio than the SG counterparts.  If (a big if) that’s the case then the Chn middle class feel more self-conceived superiority and satisfaction (Shuo.L) than SG middle class would. How important is this self-esteem?

— 🙁 Difference: housing … The most intriguing difference. If a Chn middle class family of 3 could avoid buying a 2BR home [3] in a tier-1 city, then livelihood pressure can be tolerable. I just don’t know how many of the urban middle-class can avoid it. They are drawn into it by some invisible force, unable to free themselves.

[3] XS.L specified 70 sqm 居住面积 for an a stereotypical white-collar young couple planning to have kids, but XS.L didn’t say Tier-1 city.

Tier-1 city’s home price is comparable to, if not above, SG condo (at least 100% above HDB flats) but typical Tier-1 city salary is still lower than SG. The price tag is so large as to require contributions from 3 generations of a middle-class family, as XS.L confirmed. When we compare livelihood, this price tag is the elephant in the room.

I used to feel this peer pressure was exaggerated by the media, but XS.L, my parents, and my Chn bachelor colleagues all confirmed that this peer pressure is both pervasive and entrenched.

A major factor is mate selection, which affects entire families! Girls often demands not only a tier-1 city dowry home, but a 100 sqm [grandpa said, 建筑面积] home. So if you have a bachelor son, can your family avoid “it”?

— personal medical reserve .. This is not a SG^Chn difference per see, but quite relevant.

In the late 2000s, my mom said CNY 400k (si4shi2wan4) was a good-enough medical reserve for each retiree, on top of public health insurance (reimbursement-based). Such insurance has coinsurance, and numerous exclusions such as elective treatments [imported medication, supplements,,].

In early 2022 my dad recalled that consensus figure among retirees of that time — regardless of the medical condition, if CNY 500k is spent over and on top of insurance, and still the life can’t be saved, then it’s reasonable to give up. As such CNY 500k was a reasonable last-resort personal medical reserve, for millions of well-informed Chinese retirees.

Fast forward to 2022, CNY 500k-1000k of family savings is common according to my dad, living in Beijing. I think this improvement in savings reflects (medical++) inflation, rising income, rising wealth esp. in rEstate.

Chn A^B shares #common nlg

Posted on by tiger40490

oth risk .. This knowledge is like general knowledge, not for interview, not for personal investment, but can help my education effort for my kids.

https://www.ubs.com/global/en/asset-management/insights/china/2019/stock-connect-china-a-shares-faqs-equity-investing.html is a FAQ. https://research.ftserussell.com/products/downloads/Guide_to_Chinese_Share_Classes.pdf is a pdf showing a table.

China A-shares trade on the two Chinese stock exchanges, the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE). Historically, China A-shares were only available for purchase by mainland citizens due to China’s restrictions on foreign investment.

Gary believed China ADR stocks are correlated with China index much more than SP500.

— Chn A-share ETF .. I think the exchange fee and broker commission on both entry and exit is likely higher than the FSM fee.

Also need to find out how to use interactive brokers…

— currency and other defining features
China A-shares are only quoted in RMB, while B-shares are quoted in foreign currencies, and are more widely available to foreign investors. On the Shanghai Exchange, B-shares trade in U.S. dollars. On the Shenzhen Exchange, B-shares trade in Hong Kong dollars.

Some companies opt to have their stock listed on both the A-shares and B-shares market. Due to the limited access of Chinese investors to B-shares, the stock of the same company often trades at much higher valuations on the A-shares market than on the B-shares market.

— retail vs institutional investors
China A-share markets are dominated by retail investors. Therefore, China’s A-share markets can be volatile.

SSE and SZSE are both more retail-driven than HKEX.

— issuing entity .. A/B/H shares can be issued by the same entity. I think N shares too (on New York exchanges including OTC), but am not 100% sure.

Most of my China stocks are N-shares including the OTC  stocks.

Due to access control, I think the onshore market has some kind of correlation among the stocks, driven by China retail investor[1] herd instinct. The H-shares and N-shares have correlation among them, driven by the investors [2] on these (more open) markets. [1] and [2] are probably two distinct groups.

There’s also some correlation between 2 market segments.

— indices.. There are many indices for the various market segments. JustEtf.com compares index performance figures over 1Y (or 3Y). You can see the indices are quite different.

best China index? You can collect the count of tracking ETFs for each index. The most popular index is MSCI China.

Gary singled out FTSE A50.

CNY^CNH #common nlg

Posted on by tiger40490

[i = Impressive knowledge pearl ]

  • [i] the “H” in cnH initially referred to Hongkong
  • For many years until 2010, China government constrained the onshore USD/cnY within a narrow range, essentially pegged. Nowadays the range is wider but still more controlled than the offshore version.
  • [i] in 2010 cnH was officially launched under the auspices of PBOC and HKMA. I would say, that at that juncture, FX trading in USD/cnH switched from underground, unofficial to official.
  • Compared to cnY, the cnH is traded in offshore markets (HK/SG/LDN….), is more market-driven, less controlled (by government). Greater volatility is seen in cnH.
  • The offshore USD/cnH rate is almost always slightly higher than the onshore USD/cnY, but the spread is usually within 1%

Like all central banks, PBOC can and do influence the strength of cnY in popular paris like USD/cnY, EUR/cnY. I think PBOC has an easier job of influencing its own currency than other central banks do, thanks to capital control in China. PBOC can also influence the offshre cnH but by design cnH is less controlled.