CHINESE STOCK MARKET NOW BEAR MARKET
Application form to apply & try and get in my Private Stock Group/Financial Fortress
The Chinese stock market is now in a bear market officially. We must talk about if the China bear market can creep into the US stock market and cause a bear market or stock market crash here in 2018. We will also talk about China’s options in regards to the tariffs and trade war with the United States.
Want to join our free STOCKHUB discord chat? Here is the link
This is where you can chat for free with other investors in the stock market about individual stocks or things going on in the market. Enjoy!
*My Instagram is : FinancialEducationJeremy
This is a Jeremy Lefebvre Production
Created by Jeremy Lefebvre
It’s officially bear market time in China. Yes, you heard me right. It is now a bear market in the stock market in China now at this point, okay. We’re going to look through all this. We’re going to talk about what are China’s options out here to kind of get out of that stock market funk.
We’re going to talk about could this spread over the United States? We’re talking about what are China’s options out there as far as things they could do to hopefully spark things up and maybe end some of these trade tensions.
We’re going to get into all this guy’s China is languishing in bear market territory. Amid worrisome trade news, okay, Mainland China markets are languishing in bear market territory as investor concerns over an ongoing trade dispute between Washington and Beijing.
In a slowing economy weigh on sentiment. The benchmark Shanghai Composite quote officially in bear market, referring to a decline of at least 20% from recent highs on Tuesday, the smaller Shenzhen composite moved into bear market.
Tory territory back in February of this year, the Shanghai in the shins in competence are down around 21% and 26% respectively from their 52 week highs as of this afternoon, okay.
Obviously, you know, the trade tensions are a part of the reason why it’s down and also possibly a slowing economy in the in the days ahead, markets are awaiting potential announcements on the Trump administration’s plan to curb Chinese investments in US technology.
Although messaging on those measures from the White House has proven conflicting, the US is set to impose an additional 25% tariff on $34 billion in Chinese imports. On July 6, with duties on another further 16 billion of Chinese goods that are also in the works, guys.
Although the macro economic impacts of those tariffs is seen as a marginal, the trade measures could likely have a substantial knock on effect, given the complicated nature of supply chains.
Okay, apart from trade, the slowing domestic economy has led to some concern among investors with questions lingering about the economic outlook for the country also comes in the back of may economic data, including fixed asset investment growth and retail sales missing expectations.
Declines in the mainland markets also come as a Chinese currency extended as losses against the dollar the People’s Bank of China set the official Yuan midpoint at its lowest level in six months on Wednesday.
All right, guys. So some craziness going on. Right? You we know the Chinese markets are now officially in a bear market. All right. So we’re going to discuss could this go ahead? And could this spread into the United States.
And could we end up in a bear market? The United States we know we kind of been in a in a kind of just flopped the market recently, right? We’ve seen like we’ve been stuck around like the 24,000 point area for quite a while now.
We peaked around I think was around 27 28,000. Back in January, as soon as soon after the tax cuts were announced, then the trade war kind of came on. And that just kind of took down markets and whatnot.
And we’ve kind of been in this area of like, let’s say 24,000 25,000, somewhere between 23 and 25k. All right. So what are China’s options as of right now? Okay, we know there are more tariffs coming from the United States right now against China. Right.
We know, you know, obviously, China has been winning that game for a long time against the United States. So we know more tariffs are coming. So what China’s options right as of right now, right.
They can go ahead and hit us with more, you know, some some more tariffs of the few other things we actually import in that country, right. But the issue with this is, it’s just going to, you know, come back double in their face, okay, whatever they do.
They’re gonna get twice as bad back in their face. And that’s going to hurt them, right? Because what the Navy benefit way more from what they send to our country in the United States from what would then what we send to their country. Okay.
So tariffs, in my opinion, is not really a real option. But they could go against US corporations, okay. They could go against US corporations, and how exactly would they do this? Well, basically, essentially.
What they could do is there are definitely some companies that make a lot of money from China because they sell their products or services in China, right? We can think of the apples of the world right.
We’ve begun McDonald’s in terms of the ton of fast food places in mainland China that have expanded over the years that make a lot of profit from China, Starbucks, that their biggest market as far as growth going forward is China, right.
So they definitely a lot of US corporations that make a lot of money over there. But here’s the issue, right? They could go against they could go up against the big dog, right? They can say I’m Apple.
They’re gonna say Apple, you are the darling of the United States of America. Okay. You’re not just the darling of the United States of America, also the biggest company in the entire world as far as profitability goes, in terms of market cap, okay.
It’s a non state sponsored company, right? So biggest company out there, the creme de la creme of the United States of America. They say well, apple, you’re gonna make 10s of billions of dollars off China this year. Okay.
10s of billions of dollars off chinee China this year in selling products, okay, do an Apple will easily do 10s of billions of dollars in revenue from China this year, okay. So they can look at this.
They can say, well, apple, you know what are united states of america, they’re really trying to attack the United States of America, but they can say, you will keep doing terrorists against us.
We’re gonna go ahead and we’re gonna tax big dogs even more. But the issue is, there’s already a huge VAT tax on Apple, okay? iPhone in mainland China is going to cost you a massively more money than if you just bought it over in Hong Kong. Okay.
If you buy that same iPhone in Hong Kong, it’s massively cheaper than if you bought it on Mainland China. We’re talking about 20 25% difference in price it is a massive difference in price guys.
And so they’re already hit with this huge VAT tax basically, Apple is okay. So if you’re, you’re a resident China, you want Apple products, you have to pay a premium compared to what most people around the world, especially in the United States or even Hong Kong have to pay.
All right, you have to pay up a big a big portion. But the issue with that is Yeah, that might you know, scare the United States of America might say, Whoa, they’re gonna try to take you know.
One of our big companies down and you know, China’s kind of the second biggest market for unite for Apple now. Okay, so they say, Wow, they’re coming out are big company. Here’s the issue.
And here’s where it gets complicated. Apple employs. Indirectly Apple employs a massive, massive amounts of Chinese workers, okay, massive amounts. When you think about all these devices that are made, they’re all made in China, okay.
All these Apple devices, and most electronics in general are made in China. But here’s the thing, Apple has a lot of money and a lot of power nowadays. Okay. Over the past decade, Apple’s business has changed a lot, right.
They got into China, when in a moment they needed China really, because they needed them to produce iPhones and iPads and all these different things in the future, and Macs and all this stuff, for cheaper price, and they get a pretty much around the world.
But nowadays, Apple has so much money, that literally Apple could spend $10 billion on you know, some type of facility, you know, factories and whatnot to put all their devices together in some third world country or not an unnecessarily third world country.
But you know, one of these countries that’s still developing, okay, they could go to certain parts of Africa, they can go to India, India, would gladly welcome them with their arms open, okay.
Apple could run the factory themselves, all right. And they could pay the labor themselves where right now they run through other companies have other companies handle that Apple has so much money, now, they can spend $10 billion.
Build all the facilities train all the employees a massive amount, which they’ve done, some employees over there, train them all spend all their money and probably cost around $10 billion in that same money that wouldn’t even be noticed for Apple, right.
Apple’s you know, they make over $10 billion in a quarter and profit, okay, and a quarter, they make over 10 billion in profit. So there’s number two, build out factories and whatnot, and get all those jobs and get all those people train, that’s like nothing, okay.
And then you got to take into account the amount of cost savings that would that would save them because they pay out, you know, big fees to all these companies who have the workforce out there.
And they get to use their factories and whatnot to put these iPhones and iPads and on Macs and all this stuff together. Right? They can also bring it back to the United States. But as we know, like.
They would have to pay the workers a massively bigger amount of money than they would in China, or excuse me, China, or India, or Africa, or some of these other regions, where they can pay workers two or three or maybe $4 an hour versus an American worker, someone, you might have to pay $20 an hour, okay.
So there’s a massive difference there. But Apple could do that they got enough power now. And they say, okay, apple, you’re China, you want to screw us, you want to tax us even more.
Fine, dude, we’re gonna go to another country, like, we’re gonna go to another country and build a bill or iPhones, okay, and save ourselves a lot of a lot of money, and you’re just gonna, you know, and these workers are going to be out of a job, or you know, have to do something else, basically. Okay.
So that’s how Apple could attack that. That’s a big thing. And that’s a big competitive advantage they have now they got the power, they get the money behind them. They say you want to tax us even more. Okay, we’re hitting the road.
We’re going somewhere else to make these things and whatnot, then you can go ahead and hit us with that, and then see what China says, um, maybe maybe we won’t do that. Right.
So now the question is, can this a span? Can you this bear market that’s going on in China come over to the US? It couldn’t come over the us? We don’t know. Right? No one knows where the stock market’s going.
In the short term. All right. I can tell you it wouldn’t make much sense. Okay. wouldn’t make much sense considering the US economy is picking up and expected to be very strong in the back half of this year. Okay.
So it wouldn’t make much sense for the for, you know, with us to go into a bear market, although it’s possible, people can get freaked out, they can get scared, and they say, oh, trade worries.
Oh, my gosh, this is scaring me so much. And it’s like, dude, we hardly make anything for anybody out there. It’s very, I do agree with Trump in the sense that it’s pretty easy to win a trade war when you’re the one getting your ass kicked.
We’ve been getting our heads kicked all over the place for a long, long time. What do we say I have yet to meet a person in real life in my entire life that like, like makes products or services and whatnot and sells them to China like I’ve yet to meet someone in real life like a companies I own.
Do they do business in China? Yeah. But as far as like meeting people in real life that like sell products to China, like it’s so unrealistic, but in China, it’s super common that you’re going to know somebody that works at a factory or does something that they ship products.
The United States of America, okay? So it’s a very different ballgame. I think China’s in some trouble in terms of, you know, how they’re going to find Yes, I just don’t see a way that they can win this game.
I don’t see a way they can win this game. In the short term, especially, it’s going to be a hard fight for them. Because anything they’re going to do, they’re just going to get a back in their face twice as hard.
So very tough situation for them right now. But needless to say, even a weak economy in China is still phenomenal economy, the growth is is amazing still, okay, so even if things slow down in China.
It’s not the end of the world. So somewhat, they slow down to, let’s say, a 4% GDP growth, that’s still phenomenal. Okay, we would die for 4% plus GDP growth here in the United States of America.
Like that would be insane. It’s like hard to even comprehend what that would feel like if our economy was growing at a 4% plus clip consistently, right? They grow 567 8% you know, pretty historically over the past few decades, right.
So you know, even if their economy slows, it’s gonna slow and probably still be a freaking phenomenal economy, right? But I’m just saying it’s gonna be tough for them to win this war in the short term and as far as where the you know.
The markets go in the short term no one knows. I would just say that probably doesn’t make much sense and let’s say economic data in the United States go weak if also the United States economic data got weak then then that’s fair game and as far as bear market goes.
But as long as your US economic data stays strong, it’s hard to really start a bear market here because what is your gonna say? We got a trade war going on, who cares? Like we don’t ship crap to anybody.
So that’s the bottom line there guys. I hope you really enjoyed this today. Let me know your opinion in that comment section. I would love to hear from you guys. As always, make sure you follow me on Instagram if you have not already. Thank you for watching. Have a great day.