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To put things into perspective, China’s HY real estate sector entered 2024 down -82% in just 2.5 years. Meanwhile, one of China’s largest property developers, Evergrande, filed Chapter 15 bankruptcy. Real estate demand in China collapsed with the onset of deflation. Currently, China is facing its longest period of DEFLATION since 1999. Not even 2008 came with 5 straight quarters of deflation, as we are seeing now. While everyone is fighting inflation, China is dealing with severe deflation. This is arguably even worse than inflation. On September 26, China began its largest stimulus since 2020:
As we said then, it was “only the beginning.” Immediately after a week of record inflows, Chinese ETFs saw record outflows. The largest China ETF, FXI, saw a record $984 million in withdrawals in 1 week. FXI saw 5 consecutive weekly outflows. Even as hundreds of billions of Dollars of stimulus have begun, Chinese consumer sentiment is terrible. Over the last 3 years, consumer confidence in China is down ~ 50 points. Such a drop in consumer assessment of the Chinese economy has almost never been seen before. As a result, China announced the below stimulus for 2025:
Will this help? One of China’s biggest issues is the rapid decline in consumer sentiment. China home sales fell -6.9% in November, now down in 17 of the last 18 months. Prior to the last 18 months, home sales fell in EVERY month during the 2022 bear market. This is 2008-like behavior. Lastly, foreign firms are also concerned about China, pulling money out of China for the first time in 30+ years. Investors have withdrawn$12.8 billion from China this year, the most since at least 1998. submitted by /u/XGramatik |
Jim Cramer thinks DraftKings (DKNG) is a good buy through the NFL playoffs
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