Morgan shorted China and suffered huge losses. The central bank stepped in and beat the shorts. Another victory in the financial war
2024-09-28 17:59:13 Source: Talk about the truth
Some foreign media commented that China used an intercontinental missile worth hundreds of millions of dollars to send a sincere invitation to capital from all over the world, asking them to invest in China, because investing money in China is the safest.
After the results of the election for Japan's new prime minister came out yesterday, the Nikkei futures index fell 5%, triggering a circuit breaker. Although it has recovered a lot of losses under the maintenance of funds, this has added a touch of uncertainty to the global economic landscape.
JPMorgan Chase suffers huge losses from shorting China
According to the latest trading data on September 27, JPMorgan Chase has been betting on shorting the Chinese stock market through stock index futures. According to the latest data disclosure, JPMorgan Chase shorted the CSI 500 Index and the CSI 1000 Index respectively, and the total loss reached 1.9 billion yuan as of yesterday.
Since the Federal Reserve raised interest rates, overseas funds' shorting of Chinese A-shares has been called a sure-win business by Wall Street. It is difficult to get large investment institutions like JPMorgan Chase, which are deeply tied to U.S. interests, to change their shorting China strategy, but it is easy to cause them irreparable losses.
In addition to JPMorgan Chase, there are also Wall Street capitals that have made huge profits by going long on China.
According to a report by the Wall Street Journal on September 27, Michael Burry, the prototype of the big short, made a lot of money just by betting half of his fortune on Chinese stocks.
In the second quarter of this year, Scion increased its holdings of Alibaba by 30,000 shares, which is its largest holding. In addition, it also holds a large number of MSCI China ETFs, Baidu and JD.com stocks. This week, these Chinese stocks rose by 17.94%, 17.72%, and 3177% respectively.
With those kinds of gains, he says now is the time to buy everything China.
The recent sudden kindness of Americans does not mean that the United States has suddenly repented. On the one hand, global capital is profit-seeking and risk-averse, and will flow to where money can be made. When RMB assets can obtain high returns, they will naturally buy into China.
The other aspect is the use of force for deterrence.
In the past, the US military power was the anchor of the dollar, not market economy and free trade.
Ever since China has made a big rocket launch, we can clearly see what is the foundation for the stability of the financial system.
The financial war between China and the United States ended with the United States taking the lead in cutting interest rates and surrendering. The Federal Reserve will definitely take big actions in the future.
The global battle for liquidity
After the People's Bank of China cut the reserve requirement ratio and interest rates, the Federal Reserve will certainly not sit idly by.
The PCE core price index released by the United States this week showed that inflation in the United States has cooled significantly, which means that the Federal Reserve is preparing to continue to cut interest rates by 50 basis points in November.
And yesterday, an article published by Nick Timiraos of the Federal Reserve News Agency was also informing the market that even if the Federal Reserve cut interest rates by 50 basis points in September, it does not mean that the US economy will have a soft landing.
At present, the US benchmark interest rate is still as high as 4.25%-4.5%, which is of no help in stimulating the economy and alleviating the difficulties and crisis faced by the US banking industry.
Judging from the recent remarks of Federal Reserve Chairman Powell, it has undoubtedly become the biggest dove.
Judging from the current global financial landscape, the Fed's interest rate cuts are extremely disadvantageous to the Fed. On the one hand, the US dollar index is in danger and can fall below 100 at any time.
In addition, it is still unknown whether the new Japanese prime minister will accept the manipulation of the United States. Japan's future monetary policy is full of great uncertainty.
The world is now speculating on where Japan's national destiny will go next. Will the yen continue to serve as the shadow currency of the dollar, or will it end quantitative easing and take a different path? Everything will have to wait for the shoe to drop.
There is a huge gap in corporate valuations between China and the United States
After China tested its intercontinental ballistic missile, the whole world remained silent except Japan, because among the five permanent members of the Security Council, the tests of the United States, Britain and Russia all ended in failure.
Now everyone understands that it is impossible for the Western world to defeat China by force, which is also an important reason why global capital has been frantically buying Chinese assets recently.
China possesses powerful military force, the most sound industrial system in the world, and has surpassed the West in most areas. However, the valuations of Chinese companies are still so low, which is not logical.
At present, ICBC's price-to-earnings ratio is only 5 times, while JPMorgan Chase's is 10 times;
BYD's valuation is 25 times, while Tesla's is 67 times;
Moutai's price-to-earnings ratio is 15 times, but LV's price-to-earnings ratio has reached 75 times.
In addition, the valuations of other fields, such as photovoltaics, wind power, chemicals, etc., are seriously underestimated.
Under the premise of safety, what else could this be but an opportunity?
In the past, the valuations of Chinese companies were lower than those of Western countries because the United States and the United Kingdom were once financial powers. The United States wanted to trigger risks in China's financial system by raising interest rates, but it failed to do so after two years. Now, it has caused huge losses to Western capital.
A-shares have been rising violently in the past few days, and some Westerners have also panicked. By the time they fully enter the Chinese stock market, the Shanghai Composite Index is estimated to have reached 3,500 points.
On the other hand, looking at the U.S. stock and bond markets, although the Federal Reserve has been sending strong signals of a 50 basis point interest rate cut in November in recent days, U.S. stocks opened high and fell last night, with obvious signs of capital outflow.
And all this has just begun. When the United States collapses, we will see a huge influx of funds into the stock and bond markets.
By then, everyone will just be worried that too much money is entering the Chinese market, which might trigger inflation.
Source: Michael Burry, the "Big Short Prototype", made a profit by betting half of his fortune on Chinese stocks - Wall Street Journal
