January 17, 2024, 11:41 am EST
The Falling Stars
Hong Kong was once the shining star as the Pearl of the Orient that dominated as the financial center in Asia. Shanghai has also been among the shining stars in China since the 19th century. But both places became falling stars in terms of its stock prices that made a new 52-week low: Hong Kong ETD (EWH) China Large Cap ETF (FXI)
Both places went through tough times in 2018-2019 and 2022. Hong Kong lost its freedom when China decided to take back full control as we could still remember the pictures of millions of people protesting in Hong Kong. Unfortunately, the China Communist Party used force to terminate its independent status. Shanghai suffered even much worse during the COVID-19 period when China shut down the city both civilians and businesses for months in 2022. This event triggered the exodus of international business operated in China, including trade and investment relationship.
Yesterday, China Premier Li Qiang mentioned in the DAVOS World Economic Forum that China’s GDP maintained 5.2% and encouraged international communities to trust and invest in China. But, the stock market performance gave Li a negative answer.
Recently, China decided to give up its market oriented economy that began in 2001 when China joined the World Trade Organization. Thus, the US and European are gradually cutting off the ties with China due to lack of transparency, validation and trust.
In our opinion, the harsh relationship between the US and China would continue from economy to politics and other aspects. This is one of the major reasons that shadows the global economy in 2024.