​

Mobius says Yuan could freefall and China has to make trade deal

by

Mark Mobius, partner and co-founder of Mobius Capital Partners, says China markets are very weak. The yuan weakness and tradewar are killing China shares. This can only be solved by China making big concessions to Trump on trade.

If and when the yuan breaks through 7 to the US dollar, then 7.5 is nothing and a freefall is possible.

There are over $640 billion in shares pledged for loans. The falling stocks will be compounded by banks calling the pledged shares for loans.

If the Democrats win the House in the midterms, then the US markets will fall. Democrat control of the House will prevent and further tax reform or tax reductions.

Mobius sees money transferring from China into India. There will still be more correction in India.

The key is the November 30 meeting between Trump and Xi Jinping. There has to be good lower level negotiations before that meeting.

146 thoughts on “Mobius says Yuan could freefall and China has to make trade deal”

  1. Normally I like Mark but here he is drowning. The RMB can’t go into free fall. China needs FDI more than it does exports. FDI no likey devaluation. RMB is a pegged/managed currency and the PBOC has $3trillion to back it up. PBOC won’t let RMB devalue under their guidance target. Mobius must have missed this obvious fact. However, I agree with him about shares pledged as collateral issue. The SSE index is down almost 50% from 2015 highs. The $650 billion is only part of the collateral problem, other assets are pledged. In any case, all this really means is a massive debt-equity swap whereby the state ends up owning most of Chinese private enterprise. Not sure what he means by China-India flows. China FDI into India is just a billion or so, a pittance.

  4. The only trade deal that should be accepted should include the closure of their state owned industries. China’s reputation and world standing has been irreparably damaged by their government coordinated and led theft of IP to give to their state owned industries. Short of that I don’t care if the US ever does business again with them. Give the business to India or Vietnam or some other country that is smart enough not to bite the hand of their biggest export trade partner. Until then 1000% tariffs if that is what it takes works for me.

  5. We learn in middle school that backing down from a bully only gets you more bullying. Fighting a bully is your only option even if you lose. The bully will try and find a less difficult victim.

  6. Is there a list of previous predictions by Mark Mobius, from far enough back to know whether they came true? It would be nice to know if I should believe anything he says.

  7. What happened? Next Big China!Next Big China!Next Big China!What happened? ” The yuan weakness and tradewar are killing China shares. This can only be solved by China making big concessions to Trump on trade.”But! But the NBF Wu Mau China Fluffers on here like Godfree & Joe Wong keep saying that none of this could possibly be true! And them and the Trump-haters keep screaming about how Trump’s tariffs are not working and could never work!What the hell happened, eh?

  8. What I stated is that we did $5.2 trillion in trade. I did not qualify it in anyway. The tariffs while they are on specific items put all $5.2 trillion at risk. I am not saying we will lose all $5.2 trillion in economical activity. But what I am saying in contrast to you is that trade isn’t a trivia part of our economy.

  9. “Never said that. What I said was the the US did $5.2 trillion in trade”You stated it in the context of tariffs, which only apply to goods. Even so, the US does not do $5.2 trillion in foreign trade, with goods or goods & services. I already proved that.

  10. What I stated is that we did $5.2 trillion in trade. I did not qualify it in anyway. The tariffs while they are on specific items put all $5.2 trillion at risk. I am not saying we will lose all $5.2 trillion in economical activity. But what I am saying in contrast to you is that trade isn’t a trivia part of our economy.

  11. “Never said that. What I said was the the US did $5.2 trillion in trade”

    You stated it in the context of tariffs, which only apply to goods.

    Even so, the US does not do $5.2 trillion in foreign trade, with goods or goods & services. I already proved that.

  12. Never said that. What I said was the the US did $5.2 trillion in trade. Never said whether or not it was goods or services. It was in respond to your statement that very little of the US GDP involved trade. Has for importing oil I don’t understand why since natural gas can be substituted for 30% of the oil we burn. And Pluggable Hybrid and EV cars and trucks can reduce our oil usage by 80%.

  13. Never said that. What I said was the the US did $5.2 trillion in trade. Never said whether or not it was goods or services. It was in respond to your statement that very little of the US GDP involved trade.

    Has for importing oil I don’t understand why since natural gas can be substituted for 30% of the oil we burn. And Pluggable Hybrid and EV cars and trucks can reduce our oil usage by 80%.

  17. The US does not do $5.2 trillion in exporting goods that can be tariffed. Not even close.Oh? You suddenly created a magical world where services can now be tariffed? We do engage in more trade of services than goods, but still not even close to $5.2 trillion. Combined goods and services exports has never eclipsed 13%. bit.ly/2OsftWLwww[dot]statista[dot]com/statistics/258779/us-exports-as-a-percentage-of-gdp/Imports of goods since 2016 have drastically dropped since because of collapsing oil imports. We are going to be a net oil exporter soon.

  18. Lets see. The US does $5.2 trillion in trade. The US GDP is $19.39 trillion. So trade is 26% of the US economy. I wouldn’t call that trivial.

  20. The US does not do $5.2 trillion in exporting goods that can be tariffed. Not even close.

    Oh? You suddenly created a magical world where services can now be tariffed? We do engage in more trade of services than goods, but still not even close to $5.2 trillion.

    Combined goods and services exports has never eclipsed 13%.

    bit.ly/2OsftWL
    www[dot]statista[dot]com/statistics/258779/us-exports-as-a-percentage-of-gdp/

    Imports of goods since 2016 have drastically dropped since because of collapsing oil imports. We are going to be a net oil exporter soon.

  23. Better to work with China who never invaded any country that with the US which invaded lots of countries

  24. China will stop to deal with the US and start to sell somewhere else The world is much bigger than the US , stupiid ameritard

  26. So? Trade is not that big of a deal as a percentage of GDP like it is for the nations like Germany and China.

  27. So? Very little of US GDP involves foreign trade. The economy books are all propaganda for the globalist elites.

  28. Free trade is not the center piece of Republican belief. Well, except for the Elites who are mad because they have lost control of the party. To them it is ‘managed trade’.

  31. Free trade is not the center piece of Republican belief. Well, except for the Elites who are mad because they have lost control of the party. To them it is ‘managed trade’.

  32. If you think China is helping them, go educate yourself. They are doing it for their resources, they are giving African countries giant loans that the country can’t afford to ever payback, which they then leverage that debt, to get whatever they want. Their “Belt and Road Initiative” isn’t as good as they like to claim it is. Some countries will definitely benefit from trade with China, other will absorb massive debt & lose some of their independence.

  33. If I could I would give you a link. It is real info from an expert estimate. Real expert not what they use in Russian propaganda.

  34. To call you delusional would be an understatement of epic proportions. “You are mercilessly free of the ravages of intelligence.”

  36. The biggest bully is always the US. And the world will all swing to China’s side if China can show they are strong enough to take on the US.

  38. Trump is the end of this. Free trade is one of the center piece of the Republican belief. They hold this belief because they are paid by their donor class to do so. The situation we find ourselves in did not happen by accident. Many Republicans administration worked to implement it. Right now Trump have the ears of the Republican voters so the other Republican politicians won’t go against him. But he will be gone soon and then everything will go back to normal.

  39. Countries only do it when their economies are failing and when they are forced to do so by the IMF to get the loans they need to keep their government for defaulting. The Chinese are no where near there. Shh, don’t tell anyone but privately own companies also hack and steal IP. By the way the Chinese might steal IP but they also work very hard to put that stolen IP to use. BTW, everything is fair in war. If the Chinese steal our military secrets it is our fault. Out top secret stuff shouldn’t be on PCs connected to the internet. Security information for nuclear power plants are physical and stored in vaults. They are not stored in computers. The control system for our company is not connected to the internet. Its on its own network physically separate from the internet. There is no reason why the military and their contractors can’t implement similar systems. If your PC is connected to the internet then you are not secure.

  40. The evidence is that both partners are doing well. Both economies are growing and both have low unemployment. It would be difficult for us to do better. The FED would never allow it.

  41. The natural reaction to me would be to reduce trading with the US and look else where. You cannot be dependent on someone who appears to be unstable.

  42. If you think China is helping them, go educate yourself. They are doing it for their resources, they are giving African countries giant loans that the country can’t afford to ever payback, which they then leverage that debt, to get whatever they want. Their “Belt and Road Initiative” isn’t as good as they like to claim it is. Some countries will definitely benefit from trade with China, other will absorb massive debt & lose some of their independence.

  43. >Not even a state-owned Chinese bank will lend money to a state-owned Chinese company without equity. If the equity comes from the state, so be it.Hey buddy, trust me I know what equity is The government takes your stuff if your business fails so there is equity, if you try to abscond or flee with the borrowed money they can throw you in jail. >when the share price drops to the point where it breaks the loan covenants, the banks (even state-owned ones) will ask the company to inject more equity Good job claiming to know the Chinese government, then posting complete bullshitThe Chinese government decides how much to lend, and who to lend it to based on reviewing progress, and how valuable the technology and field is, and how much the success of the company will benefit other industries in the company A companies stock price could hit ZERO, and the Chinese government would still be willing to write a check if the conditions are rightThe Chinese government writes checks based on NATIONAL INTEREST and Likelyhood of success not based on how much money I can get in the futureIn the US big banks decide who to lend to and how much to lend to based on stock prices, earnings, assets, potential for growth, marketshare etc…Hence share prices are irrelevant And no they don’t convert to equity because they are not in the business of making profit, they are in the business of increasing national power—————->The state-owned banks distressed loan book to companies is running at over 40% (their definition of NPL is very narrow, kind of like the Italians). Mobius is correct in saying these loans will mostly never get repaid. Good job showing that you don’t know anything about state capitalism once again A company could fail to repay a loan and its no big deal, for example a public transportation company fails to repay a loan but the operation of this subway allows for other businesses to prosper and for people to enjoy a better quality of life due to cheaper fares traveling around Thus despite the government losing money on a loan, they end up collecting even more tax revenue from the companies and people that greatly benefit from having cheap low cost transportation This is state capitalism 101, you look at the entire picture instead of a few bad loans

  47. Trump is the end of this. Free trade is one of the center piece of the Republican belief. They hold this belief because they are paid by their donor class to do so. The situation we find ourselves in did not happen by accident. Many Republicans administration worked to implement it. Right now Trump have the ears of the Republican voters so the other Republican politicians won’t go against him. But he will be gone soon and then everything will go back to normal.

  48. Countries only do it when their economies are failing and when they are forced to do so by the IMF to get the loans they need to keep their government for defaulting. The Chinese are no where near there. Shh, don’t tell anyone but privately own companies also hack and steal IP. By the way the Chinese might steal IP but they also work very hard to put that stolen IP to use.

    BTW, everything is fair in war. If the Chinese steal our military secrets it is our fault. Out top secret stuff shouldn’t be on PCs connected to the internet. Security information for nuclear power plants are physical and stored in vaults. They are not stored in computers. The control system for our company is not connected to the internet. Its on its own network physically separate from the internet. There is no reason why the military and their contractors can’t implement similar systems. If your PC is connected to the internet then you are not secure.

  49. The evidence is that both partners are doing well. Both economies are growing and both have low unemployment. It would be difficult for us to do better. The FED would never allow it.

  51. sorry but you are still wrong. I know very well how things work in China. Do you even know what the word “capital” means? It means equity. Period. Even in China. It doesn’t matter whether the company is state-owned or not (about 30% of the companies are). You don’t seem to understand the difference between debt and equity. Not even a state-owned Chinese bank will lend money to a state-owned Chinese company without equity. If the equity comes from the state, so be it. This covers 30% of Chinese companies, 70% are privately held. For those companies that are listed (and they are almost all minority floated), when the share price drops to the point where it breaks the loan covenants, the banks (even state-owned ones) will ask the company to inject more equity (even if it comes from the state). That is cash, not a loan. Then, the government needs to decide “should we put more money into this company or not?” What is cheaper for the government is to say “ok, we will tell the bank to convert the loan into equity. That way we own more of the company and the bank will get less revenue from lending, so eventually we will probably have to bail them out too”. This pocket-to-pocket happens every day in China. In a downturn the government decides among the state-owned banks and companies who to bail out and in which order. Currently, the pledged listed shares only, are underwater by about $360bn. Now add the 70% of companies who aren’t state-owned and the vast majority who aren’t listed. They have also pledged their capital to loans (otherwise the bank would never lend them money). When they get in trouble, like they are now, the government needs to decide who lives and who dies. For the living, the best way for the government is to tell their banks to convert the loans into equity and THEN bail out the banks with government money (also equity). That is how it works. The state-owned banks distressed loan book to companies is running at over 40% (their definition of NPL is very narrow, kind of like the Italians). Mobius is correct in saying these loans will mostly never get repaid. If so, the government needs to literally inject equity, not lend money – because they can’t pay it back!!! That is how it works in China. I’ve go there a few times a year and work specifically with the SOEs. When you have a system whereby the state owns the equity in nearly all companies, you don’t have a state capitalist system anymore. You have a system that existed in pre-1990’s where there was only the state. That is EXACTLY where China is heading. Back to square one because it can’t operate like a western capital markets system.

  52. Look you seem confusedWe are talking about China not the US, all the stuff you wrote applies to the US In China if a business needs money they go to the Chinese government, the Chinese government gives them a loan. The Chinese government doesn’t buy equity and then trade the equity around nor do they collect dividends, they aren’t trying to make a profit like hedge funds. This is how funding is obtained in China, abscond with the capital and the Chinese government will have your head on a stick The vast bulk of Chinese companies are unlisted and don’t sell equity on markets There are no big institutional investors in China like HSBC, Goldman Saks, Black Rock, Vanguard ETC…. There is only the Chinese government If you combined all the big institutional investors in the US they are the equivalent of the Chinese government. If you added all the capital of the US, the vast bulk of the capital would belong to the big institutional investors, the Fed government would only hold a tiny slice of the pie.In China if you did the same you would get the complete opposite the Chinese government has all the capital. Hence why China is classified as state capitalist Now lets look at some stats around 80% of the trading on the Shanghai exchange is INDIVIDUALS while the opposite is true for the US Big institutional investors are making most of the trades Therefore whatever is going on in the Shanghai exchange has no relation to the Actual economy and it is a glorified casino its individuals speculating and trading amongst each other many of them based on random guessesThe prices on the Shanghai exchange are not equal to the value of a company because the vast bulk of the shares are not on it, and the investors that hold it are not looking to profit. Therefore no price discovery mechanism.

  53. >Not even a state-owned Chinese bank will lend money to a state-owned Chinese company without equity. If the equity comes from the state, so be it.

    Hey buddy, trust me I know what equity is

    The government takes your stuff if your business fails so there is equity, if you try to abscond or flee with the borrowed money they can throw you in jail.
    >when the share price drops to the point where it breaks the loan covenants, the banks (even state-owned ones) will ask the company to inject more equity

    Good job claiming to know the Chinese government, then posting complete bullshit

    The Chinese government decides how much to lend, and who to lend it to based on reviewing progress, and how valuable the technology and field is, and how much the success of the company will benefit other industries in the company

    A companies stock price could hit ZERO, and the Chinese government would still be willing to write a check if the conditions are right

    The Chinese government writes checks based on NATIONAL INTEREST and Likelyhood of success not based on how much money I can get in the future

    In the US big banks decide who to lend to and how much to lend to based on stock prices, earnings, assets, potential for growth, marketshare etc…

    Hence share prices are irrelevant

    And no they don’t convert to equity because they are not in the business of making profit, they are in the business of increasing national power
    —————-
    >The state-owned banks distressed loan book to companies is running at over 40% (their definition of NPL is very narrow, kind of like the Italians). Mobius is correct in saying these loans will mostly never get repaid.

    Good job showing that you don’t know anything about state capitalism once again

    A company could fail to repay a loan and its no big deal, for example a public transportation company fails to repay a loan but the operation of this subway allows for other businesses to prosper and for people to enjoy a better quality of life due to cheaper fares traveling around

    Thus despite the government losing money on a loan, they end up collecting even more tax revenue from the companies and people that greatly benefit from having cheap low cost transportation

    This is state capitalism 101, you look at the entire picture instead of a few bad loans

  54. China is only feelilng the effect of the first 20bill in trade tariffs with another 220bill in the pipe not in effect yet. We are talking of TRILLIONS in trade here so if those above single digit tarrif percentages by trade were spread to 20% it may actually be worse.

  55. Apple phones are made in China Amazon is just a web site that can be copied tomorrow SpaceX has yet to start to produce results Tr again

  56. See my reply aboveUS has already increased the sanctions on CHina at the top and China has “slowed” from 6.7% to 6.5 % You are just parroting Disney Channel, dude.

  57. You are dreaming. With all the tariffs the US si imposing the CHINA GDP growth slowed from 6.7% to 6.5% And the Chinese government has still money to push Stop spreading bullsnort please

  58. if US raises tariffs to 20%, which it could, on all Chinese to US export and even after China responds by huge stimulatory infusions into its economy Chinese GDP growth would slow to 5.2%.

  59. It was stated that if US raises tariffs to 20%, which it could, on all Chinese to US export and even after China responds by huge stimulatory infusions into its economy Chinese GDP growth would slow to 5.2%. So expect China to concede loosing to the US or expect Chinese economy to slow to 5% which would automatically mean US remains the only superpower indefinitely. Either way is fine with me.

  60. sorry but you are still wrong. I know very well how things work in China. Do you even know what the word “capital” means? It means equity. Period. Even in China. It doesn’t matter whether the company is state-owned or not (about 30% of the companies are). You don’t seem to understand the difference between debt and equity. Not even a state-owned Chinese bank will lend money to a state-owned Chinese company without equity. If the equity comes from the state, so be it.

    This covers 30% of Chinese companies, 70% are privately held. For those companies that are listed (and they are almost all minority floated), when the share price drops to the point where it breaks the loan covenants, the banks (even state-owned ones) will ask the company to inject more equity (even if it comes from the state). That is cash, not a loan. Then, the government needs to decide “should we put more money into this company or not?” What is cheaper for the government is to say “ok, we will tell the bank to convert the loan into equity. That way we own more of the company and the bank will get less revenue from lending, so eventually we will probably have to bail them out too”.

    This pocket-to-pocket happens every day in China. In a downturn the government decides among the state-owned banks and companies who to bail out and in which order. Currently, the pledged listed shares only, are underwater by about $360bn. Now add the 70% of companies who aren’t state-owned and the vast majority who aren’t listed. They have also pledged their capital to loans (otherwise the bank would never lend them money). When they get in trouble, like they are now, the government needs to decide who lives and who dies. For the living, the best way for the government is to tell their banks to convert the loans into equity and THEN bail out the banks with government money (also equity). That is how it works.

    The state-owned banks distressed loan book to companies is running at over 40% (their definition of NPL is very narrow, kind of like the Italians). Mobius is correct in saying these loans will mostly never get repaid. If so, the government needs to literally inject equity, not lend money – because they can’t pay it back!!!

    That is how it works in China. I’ve go there a few times a year and work specifically with the SOEs.

    When you have a system whereby the state owns the equity in nearly all companies, you don’t have a state capitalist system anymore. You have a system that existed in pre-1990’s where there was only the state. That is EXACTLY where China is heading. Back to square one because it can’t operate like a western capital markets system.

  61. Not really. State-owned companies get capital (called equity) from the state. Otherwise they wouldn’t be state owned would they? Private companies don’t (unless the state has a minority shareholding). In addition, SOE’s will float a minority of their shares on the exchange – which is called “raising capital” because they INCREASE their capital by doing so and dilute existing shareholders percent ownership. Same goes for private companies. Bank borrowings is NOT capital, it is debt (pls read up on your finance). Capital is ownership, debt is a lien against the company’s assets. Even in China.And exchange “just” a place to trade? No, it is a place to figure out the value of the company. Back to the problem. Shares (equity) are often pledged as collateral for a loan (debt) much like a building, or inventory of rebars. The bank has certain triggers called covenants that says when the collateral is less than x% value of the loan, the bank has the right to take the collateral and everything else (e.g., cash, buildings etc). I guarantee you, that when share prices drop 50%, these covenants are triggered. Ergo, when the SOE banks call the loans on SOE companies, the banks will (most likely) covert their debt into equity and the government will own even more of their companies. And for public firms? Government will own them too. Unlisted firms? government will own them too (cause the debt is usually one of the big SOE banks). This is what Mark means, and I agree.And guess what happens when a company is distressed and doesn’t have enough capital (equity) value to cover running the place (that is funded by debt)? Yep, you need more capital….Of course the vast majority of companies aren’t listed. That is the same everywhere. The US has 30 million companies and only 2,700 listed on the big board. So what? ALL these companies have capital (well, except the bankrupt ones).

  62. Look you seem confused

    We are talking about China not the US, all the stuff you wrote applies to the US

    In China if a business needs money they go to the Chinese government, the Chinese government gives them a loan.

    The Chinese government doesn’t buy equity and then trade the equity around nor do they collect dividends, they aren’t trying to make a profit like hedge funds.

    This is how funding is obtained in China, abscond with the capital and the Chinese government will have your head on a stick

    The vast bulk of Chinese companies are unlisted and don’t sell equity on markets

    There are no big institutional investors in China like HSBC, Goldman Saks, Black Rock, Vanguard ETC….

    There is only the Chinese government

    If you combined all the big institutional investors in the US they are the equivalent of the Chinese government.

    If you added all the capital of the US, the vast bulk of the capital would belong to the big institutional investors, the Fed government would only hold a tiny slice of the pie.

    In China if you did the same you would get the complete opposite the Chinese government has all the capital.

    Hence why China is classified as state capitalist

    Now lets look at some stats

    around 80% of the trading on the Shanghai exchange is INDIVIDUALS while the opposite is true for the US

    Big institutional investors are making most of the trades

    Therefore whatever is going on in the Shanghai exchange has no relation to the Actual economy and it is a glorified casino

    its individuals speculating and trading amongst each other many of them based on random guesses

    The prices on the Shanghai exchange are not equal to the value of a company because the vast bulk of the shares are not on it, and the investors that hold it are not looking to profit. Therefore no price discovery mechanism.

  63. I don’t think that’s true about stealing IP. It’s like a drug that may feel good but it will weaken them. The ability to invent things is what is actually valuable. A thriving economy that produces companies like SpaceX, Apple and Amazon, that is what is truly valuable.

  64. China is only feelilng the effect of the first 20bill in trade tariffs with another 220bill in the pipe not in effect yet. We are talking of TRILLIONS in trade here so if those above single digit tarrif percentages by trade were spread to 20% it may actually be worse.

  67. You are dreaming.
    With all the tariffs the US si imposing the CHINA GDP growth slowed from 6.7% to 6.5%
    And the Chinese government has still money to push
    Stop spreading bullsnort please

  68. Who’s the bully? I see China as a thief and manipulator. It’s bullying it’s neighbors. Finally the world is pushing back on Chinese B.S.

  69. Before writing off China’s challenge to the US, bear in mind that the US faces a tidal wave of entitlements that cannot be pushed down the road for much longer. Medicare “Trust” Fund runs out in 2026 (and that’s optimistic), Social Security “Trust” Fund in 2034.Partly as a result, Trump has ordered a 5 percent cut in 2020 military spending. Don’t expect Xi to show much flexibility when, in 10 or 15 years, China’s military will be capable of controlling the western Pacific.

  70. if US raises tariffs to 20%, which it could, on all Chinese to US export and even after China responds by huge stimulatory infusions into its economy Chinese GDP growth would slow to 5.2%.

  71. It was stated that if US raises tariffs to 20%, which it could, on all Chinese to US export and even after China responds by huge stimulatory infusions into its economy Chinese GDP growth would slow to 5.2%. So expect China to concede loosing to the US or expect Chinese economy to slow to 5% which would automatically mean US remains the only superpower indefinitely. Either way is fine with me.

  72. China has a $15T economy, cude, and they are not going to listen to a guy who has wet dreams onlyThey are growing 2x afst than the US with no debt and they will pass them in less then 5 years

  74. Not really. State-owned companies get capital (called equity) from the state. Otherwise they wouldn’t be state owned would they? Private companies don’t (unless the state has a minority shareholding). In addition, SOE’s will float a minority of their shares on the exchange – which is called “raising capital” because they INCREASE their capital by doing so and dilute existing shareholders percent ownership. Same goes for private companies.

    Bank borrowings is NOT capital, it is debt (pls read up on your finance). Capital is ownership, debt is a lien against the company’s assets. Even in China.

    And exchange “just” a place to trade? No, it is a place to figure out the value of the company.

    Back to the problem. Shares (equity) are often pledged as collateral for a loan (debt) much like a building, or inventory of rebars. The bank has certain triggers called covenants that says when the collateral is less than x% value of the loan, the bank has the right to take the collateral and everything else (e.g., cash, buildings etc). I guarantee you, that when share prices drop 50%, these covenants are triggered. Ergo, when the SOE banks call the loans on SOE companies, the banks will (most likely) covert their debt into equity and the government will own even more of their companies. And for public firms? Government will own them too. Unlisted firms? government will own them too (cause the debt is usually one of the big SOE banks). This is what Mark means, and I agree.

    And guess what happens when a company is distressed and doesn’t have enough capital (equity) value to cover running the place (that is funded by debt)? Yep, you need more capital….

    Of course the vast majority of companies aren’t listed. That is the same everywhere. The US has 30 million companies and only 2,700 listed on the big board. So what? ALL these companies have capital (well, except the bankrupt ones).

  75. I don’t think that’s true about stealing IP. It’s like a drug that may feel good but it will weaken them. The ability to invent things is what is actually valuable. A thriving economy that produces companies like SpaceX, Apple and Amazon, that is what is truly valuable.

  78. Trump is just the beginning, not the end of our response to this garbage. This is already an election issue, and the politicians will have to fall in line as they are already doing if they want to have a job.

  79. So be it. As long as their products are not on our shelves to be bought then what they do at that point is up to them. Every export market they have will follow our lead on this, and then China’s export driven economic model will be a shambles and they’ll lose those millions of jobs anyway. We cannot control what they do, but we can control what we do.

  80. Your dreaming. The Chinese communist party will not do that until they hit a wall that stops them. Why not, it is far cheaper to train hackers than to develop your own technologies. Pennies on the dollar.

  81. It is not cutting off your nose to sell off state owned industries, many countries have done this. Until they do, they will continue to have a huge incentive to steal through government coordinated hacking efforts, because state owned companies are usually not competitive. As far as I am concerned, until they do they should have their imports removed from our markets, whether that is through 1000% tariffs or some other means. I hate thieves, always have, stealing from hard working people should have brutal consequences to teach them not to do it or crush them so they cannot do it any more. A perfect example is the recent report in of jet IP being stolen by Chinese hackers, two Jiangsu Province Ministry of State Security (JSSD) officers Tian Xi and Gu Gen. Lets start hacking them with a government coordinated effort whenever they invent something new, and post it for free on the internet. Seems fair to me.

  82. Umm no Chinese companies don’t raise capital by selling stocks they get capital by going to the Chinese government and they borrow from Chinese banksThe vast majority of the companies in China are unlisted A stock is just a piece of paper that says you own a percentage of a company and are entitled to a percentage of the companies profits.A stock exchange is just a market that allows people to trade these pieces of paper to each otherA state owned company that is on the exchange, what it means is that 60% of the papers are never for sale.

  83. Agreed, that’s never a solution. The solution might be more like talking it out. Like, “Hey, guys, the positions we taken with each other over the previous decades have REALLY screwed the pooch. Let’s come with something more acceptable and beneficial.

  85. Before writing off China’s challenge to the US, bear in mind that the US faces a tidal wave of entitlements that cannot be pushed down the road for much longer. Medicare “Trust” Fund runs out in 2026 (and that’s optimistic), Social Security “Trust” Fund in 2034.

    Partly as a result, Trump has ordered a 5 percent cut in 2020 military spending. Don’t expect Xi to show much flexibility when, in 10 or 15 years, China’s military will be capable of controlling the western Pacific.

  86. China has a $15T economy, cude, and they are not going to listen to a guy who has wet dreams only
    They are growing 2x afst than the US with no debt and they will pass them in less then 5 years

  88. PBOC is the government, they set the capital controls and decide what the RMB should be worth. The mechanics is adjusting the RMB reserves and basically just telling the market what it is by buying or selling RMB (mostly for USD). When Foxconn sells Iphones to Apple, Apply pays USD to Foxconn but Foxconn must exchange it for RMB and park the USD with the PBOC. Foxconn never sees those dollars. So PBOC uses it’s massive USD reserves and ability to decide what the RMB conversion is to control the narrow policy band.

  89. Those other nations already have their own tariffs and non-tariff barriers anyway. What planet have you been on?And they are all more dependent upon the US trade than we are of theirs or they have to buy what we sell (food, oil and $$$$/Treasury Notes)

  91. So if the US proves that tariffs are good and trade is bad then all other countries will follow with their own tariffs and end international trade. So if this is true we should then burn all of the economy books and stop teaching it as a subject.

  93. Asking someone to cut their own throat isn’t a good negotiation technique. They tend to tell you no.

  95. We learn in middle school that backing down from a bully only gets you more bullying. Fighting a bully is your only option even if you lose. The bully will try and find a less difficult victim.

  96. Is there a list of previous predictions by Mark Mobius, from far enough back to know whether they came true? It would be nice to know if I should believe anything he says.

  98. Of course you bring up Enron…because Enron has nothing to do with any of this.But you can’t stand seeing your Favorite Anti-America exposed for being a total joke that it is. Ruins your plan for America to go down, after all.

  100. China has imposed capital controls. So how can PBOC sell RMB for USD except for certain certified transactions (official importers, mostly)? This is the problem with a peg for an not fully convertible currency.

  101. They’ll just use go betweens. Technically, we track where EVERY ship on the ocean is, was and where it is going all the time. We could insert intelligence assets to track what gets offloaded and reloaded to. But I bet setting up that latter would take some time to set up.China can’t give up their SOEs. Not without millions being laid off in the process. They are damned if they do and damned if they don’t.

  102. What happened? Next Big China!Next Big China!Next Big China!What happened? ” The yuan weakness and tradewar are killing China shares. This can only be solved by China making big concessions to Trump on trade.”But! But the NBF Wu Mau China Fluffers on here like Godfree & Joe Wong keep saying that none of this could possibly be true! And them and the Trump-haters keep screaming about how Trump’s tariffs are not working and could never work!What the hell happened, eh?

  105. Trump is just the beginning, not the end of our response to this garbage. This is already an election issue, and the politicians will have to fall in line as they are already doing if they want to have a job.

  106. So be it. As long as their products are not on our shelves to be bought then what they do at that point is up to them. Every export market they have will follow our lead on this, and then China’s export driven economic model will be a shambles and they’ll lose those millions of jobs anyway. We cannot control what they do, but we can control what we do.

  107. Your dreaming. The Chinese communist party will not do that until they hit a wall that stops them. Why not, it is far cheaper to train hackers than to develop your own technologies. Pennies on the dollar.

  108. It is not cutting off your nose to sell off state owned industries, many countries have done this. Until they do, they will continue to have a huge incentive to steal through government coordinated hacking efforts, because state owned companies are usually not competitive. As far as I am concerned, until they do they should have their imports removed from our markets, whether that is through 1000%+ tariffs or some other means. I hate thieves, always have, stealing from hard working people should have brutal consequences to teach them not to do it or crush them so they cannot do it any more.

    A perfect example is the recent report in Engadget.com of jet IP being stolen by Chinese hackers, two Jiangsu Province Ministry of State Security (JSSD) officers Tian Xi and Gu Gen. Lets start hacking them with a government coordinated effort whenever they invent something new, and post it for free on the internet. Seems fair to me.

  109. What? It is highly relevant!Doesn’t matter if 5 companies are on the exchange. Those companies pledged $640 billion of their shares for loans. Share prices down by 50%, guess what that means to the loan collateral? A $320 billion hole. And that is just shares pledged as collateral, never mind fixed assets, investments and who knows what else. Has nothing to do with liquidity, number of companies or anyone’s 401k. For sure, for state-owned companies it’s money from one pocket to another, for private it’s a public ownership takeover. More importantly, it obliterates the need for a stock market. It means the only way to raise capital is from the state. That is a disaster to attract foreign capital. And foreign capital is what China needs to transition from an export machine to domestic consumption. Or, you could argue, China doesn’t need an ability to raise private capital or to to do anything private whatsoever. Just let the state run everything like the “good old days”.

  110. China’s share prices are irrelevant because very few stocks are traded thus the prices on the exchange are not representative of anything Very few Chinese people own and trade stocks, or have their life savings like 401k in stocksThe equivalent would be the crypto market where such a tiny amount of people are in it and trade on it that crypto increasing or decreasing doesn’t tell you anything about the state of the economy I believe only like 300 companies are on the shanghai exchange, while the Nasdaq has like 5000+ and NY stock exchange has similar Half of the companies on the shanghai stock exchange are also state owned

  111. Umm no Chinese companies don’t raise capital by selling stocks they get capital by going to the Chinese government and they borrow from Chinese banks

    The vast majority of the companies in China are unlisted

    A stock is just a piece of paper that says you own a percentage of a company and are entitled to a percentage of the companies profits.

    A stock exchange is just a market that allows people to trade these pieces of paper to each other

    A state owned company that is on the exchange, what it means is that 60% of the papers are never for sale.

  112. Agreed, that’s never a solution. The solution might be more like talking it out. Like, “Hey, guys, the positions we taken with each other over the previous decades have REALLY screwed the pooch. Let’s come with something more acceptable and beneficial.”

  114. The only trade deal that should be accepted should include the closure of their state owned industries. China’s reputation and world standing has been irreparably damaged by their government coordinated and led theft of IP to give to their state owned industries. Short of that I don’t care if the US ever does business again with them. Give the business to India or Vietnam or some other country that is smart enough not to bite the hand of their biggest export trade partner. Until then 1000% tariffs if that is what it takes works for me.

  115. PBOC is the government, they set the capital controls and decide what the RMB should be worth. The mechanics is adjusting the RMB reserves and basically just telling the market what it is by buying or selling RMB (mostly for USD). When Foxconn sells Iphones to Apple, Apply pays USD to Foxconn but Foxconn must exchange it for RMB and park the USD with the PBOC. Foxconn never sees those dollars.

    So PBOC uses it’s massive USD reserves and ability to decide what the RMB conversion is to control the narrow policy band.

  116. Share prices? You mean Enron share prices that were $90 a share and then two weeks later $0.2 a share?Is this hat you mean by share prices? True that you can psh GDP up by government internvention btut this is even more true for the US

  117. Those other nations already have their own tariffs and non-tariff barriers anyway. What planet have you been on?

    And they are all more dependent upon the US trade than we are of theirs or they have to buy what we sell (food, oil and $$$$/Treasury Notes)

  119. So if the US proves that tariffs are good and trade is bad then all other countries will follow with their own tariffs and end international trade. So if this is true we should then burn all of the economy books and stop teaching it as a subject.

  123. We learn in middle school that backing down from a bully only gets you more bullying. Fighting a bully is your only option even if you lose. The bully will try and find a less difficult victim.

  124. Deal – i give you something and you give me something.Extortion – i demand you give me something. If you accept extortion once they will come back again and again like the Mafia does.

  125. Is there a list of previous predictions by Mark Mobius, from far enough back to know whether they came true? It would be nice to know if I should believe anything he says.

  127. Of course you bring up Enron…because Enron has nothing to do with any of this.

    But you can’t stand seeing your Favorite Anti-America exposed for being a total joke that it is. Ruins your plan for America to go down, after all.

  129. China has imposed capital controls. So how can PBOC sell RMB for USD except for certain certified transactions (official importers, mostly)? This is the problem with a peg for an not fully convertible currency.

  130. They’ll just use go betweens. Technically, we track where EVERY ship on the ocean is, was and where it is going all the time. We could insert intelligence assets to track what gets offloaded and reloaded to. But I bet setting up that latter would take some time to set up.

    China can’t give up their SOEs. Not without millions being laid off in the process. They are damned if they do and damned if they don’t.

  131. What happened?

    Next Big China!
    Next Big China!
    Next Big China!

    What happened?

    ” The yuan weakness and tradewar are killing China shares. This can only be solved by China making big concessions to Trump on trade.”

    But! But the NBF Wu Mau China Fluffers on here like Godfree & Joe Wong keep saying that none of this could possibly be true! And them and the Trump-haters keep screaming about how Trump’s tariffs are not working and could never work!

    What the hell happened, eh?

  132. dude, look up share prices in China, specifically non-state owned. GDP (Chinese definition) is unrelated to the stock market. You might be thinking about 1960’s economics textbook theory. Not how things work. You can build massive cities that are unoccupied and huge mountains of steel that no one is buying (GDP “growth”) while the companies doing this go broke (stock market).

  133. Normally I like Mark but here he is drowning. The RMB can’t go into free fall. China needs FDI more than it does exports. FDI no likey devaluation. RMB is a pegged/managed currency and the PBOC has $3trillion to back it up. PBOC won’t let RMB devalue under their guidance target. Mobius must have missed this obvious fact. However, I agree with him about shares pledged as collateral issue. The SSE index is down almost 50% from 2015 highs. The $650 billion is only part of the collateral problem, other assets are pledged. In any case, all this really means is a massive debt-equity swap whereby the state ends up owning most of Chinese private enterprise. Not sure what he means by China-India flows. China FDI into India is just a billion or so, a pittance.

  136. What? It is highly relevant!
    Doesn’t matter if 5 companies are on the exchange. Those companies pledged $640 billion of their shares for loans. Share prices down by 50%, guess what that means to the loan collateral? A $320 billion hole. And that is just shares pledged as collateral, never mind fixed assets, investments and who knows what else. Has nothing to do with liquidity, number of companies or anyone’s 401k.

    For sure, for state-owned companies it’s money from one pocket to another, for private it’s a public ownership takeover. More importantly, it obliterates the need for a stock market. It means the only way to raise capital is from the state. That is a disaster to attract foreign capital. And foreign capital is what China needs to transition from an export machine to domestic consumption. Or, you could argue, China doesn’t need an ability to raise private capital or to to do anything private whatsoever. Just let the state run everything like the “good old days”.

  137. China’s share prices are irrelevant because very few stocks are traded thus the prices on the exchange are not representative of anything

    Very few Chinese people own and trade stocks, or have their life savings like 401k in stocks

    The equivalent would be the crypto market where such a tiny amount of people are in it and trade on it that crypto increasing or decreasing doesn’t tell you anything about the state of the economy

    I believe only like 300 companies are on the shanghai exchange, while the Nasdaq has like 5000+ and NY stock exchange has similar

    Half of the companies on the shanghai stock exchange are also state owned

  140. The only trade deal that should be accepted should include the closure of their state owned industries. China’s reputation and world standing has been irreparably damaged by their government coordinated and led theft of IP to give to their state owned industries. Short of that I don’t care if the US ever does business again with them. Give the business to India or Vietnam or some other country that is smart enough not to bite the hand of their biggest export trade partner. Until then 1000% tariffs if that is what it takes works for me.

  141. Share prices?
    You mean Enron share prices that were $90 a share and then two weeks later $0.2 a share?
    Is this hat you mean by share prices?
    True that you can psh GDP up by government internvention btut this is even more true for the US

  142. dude, look up share prices in China, specifically non-state owned. GDP (Chinese definition) is unrelated to the stock market. You might be thinking about 1960’s economics textbook theory. Not how things work. You can build massive cities that are unoccupied and huge mountains of steel that no one is buying (GDP “growth”) while the companies doing this go broke (stock market).

  143. Normally I like Mark but here he is drowning. The RMB can’t go into free fall. China needs FDI more than it does exports. FDI no likey devaluation. RMB is a pegged/managed currency and the PBOC has $3trillion to back it up. PBOC won’t let RMB devalue under their guidance target. Mobius must have missed this obvious fact.

    However, I agree with him about shares pledged as collateral issue. The SSE index is down almost 50% from 2015 highs. The $650 billion is only part of the collateral problem, other assets are pledged. In any case, all this really means is a massive debt-equity swap whereby the state ends up owning most of Chinese private enterprise.

    Not sure what he means by China-India flows. China FDI into India is just a billion or so, a pittance.

Comments are closed.