China Enters Its Meme Stock Phase
But this latest rally does little to truly turn the Chinese economy around
(Not intended to be investment advice. Opinions and views expressed are purely those of the author. I do not own any long or short positions in the securities and assets discussed in this article.)
China is in the midst of its 7 day long National Day celebration that ends on Monday, October 7. But this year none of its citizens care — they’re all frothing at the mouth trying to get back into the casino that is the Chinese stock market.
Major Chinese stock indexes are up more than 35% from their lows. Big tech stocks like Alibaba and Tencent are up more than 50% from two months ago. Some smaller more volatile stocks have doubled or even tripled over the past three weeks or so. And just like that, retail investors have been hooked by the latest actions from China’s policy makers.
Prior to the week-long vacation, China’s top leadership unleashed a flood of monetary stimulus — interest rate decreases, mortgage rate decreases, and the one that investors cheered for the loudest, more than $100 billion of government money to be dumped into the Chinese stock market.
Even more critically, the tone of China’s top leaders (the Politburo), when talking about the economy…