Sliding in Plain Sight

Foreigners who dwell on the PRC’s long list of no-no’s just don’t get it: when nothing is permitted, everything’s allowed. Crypto banned? Get a VPN, then go on likewise banned platform Telegram and buy. The government knows; just don’t be one of those greedy gazelles too fat and slow to get away.

If that all sounds very authoritarian, consider the wonders it’s doing for the state-subsidized casino known as NASDAQ. “Chinese” online brokerages Futu and UpFintech have swelled to a predominantly mainland 2.5m users, trading U.S. securities. The companies have no China licenses, are registered off shore, and backed by names like Jim Rogers, Tencent, and Xiaomi.

This is the infrastructure behind the number $261b, the value of U.S. equities owned by mainland retail investors in 2020, up 28% YoY. How about the number $28t? That’s total personal investable assets in China, up 34% since 2017, projected to grow another 50% by 2025.

“The lack of quality assets here to invest in is so acute they’ll even take American-made,” jokes Jimmie Jeremejev. “Also, plenty of China’s tech giants are still U.S.-listed. If (and when) the government cracks down on Futu or UpFintech - albeit they’re not even technically operating in the mainland jurisdiction – then Chinese investors will inevitably find another tech-enabled hack to participate in the frothy U.S. market.”