• Ernie Diaz

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.”

4 views0 comments

Recent Posts

See All

Let's tick off all China's bad news, before getting to the good news. Good news, that is, for investors looking to diversify their global portfolios. Not so good for Gordon Chang and other patient app

Like Hollywood, the western press is invested in narratives and emotional manipulation. Unlike Hollywood, that press has no compunction about skipping the third act of a story, if it doesn't fit that

Politics makes shortchanged bedfellows. As we've written before and will no doubt write again, the paradigm that China stocks = the VIEs of giant tech companies that make it to New York is keeping ave