2024-02-11 10:47:50 ET
Summary
- China's stock market is experiencing a crash due to its economic slowdown and accelerating financial market crisis.
- The Chinese economy is based on debatable data and relies heavily on building properties and infrastructure that will never be used, which creates immense private debt burdens.
- The CCP's multifaceted efforts to stimulate its economy are failing, indicating the bubble pop can no longer be delayed.
- Over two-thirds of FXI's holdings are exposed to crises in its financial system and consumer discretionary sector, both of which are struggling with the mounting debt deflation spiral.
- Since the CCP may need to sell US debt assets to offset its stimulus efforts, China's deflation crisis could eventually cause inflation in the US.
In my view, the Chinese stock market is one of the most important financial news stories for 2024. In recent months, China has experienced another crash in its precarious stock market as its economy enters a debt-deflation spiral. Surprisingly, this fundamental change has received little attention in most US financial news media, potentially because China's economic tides are believed to have little impact on the US market. However, if we consider the currency market interventions that may occur in China, we can see how bearish events in China may lead to a rebound in some inflation and interest rate issues in the US....
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For further details see:
FXI: China 2024 - The Year Of The Paper Dragon