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Sunday Papers

The Sunday Paper – Destructive Isolationism: Tallying the Cost of America’s Trade Policy and Suggestions for Repair and Reform

The author of today’s paper [Technically, more of a monograph] Dan Ciuriak has an axe, clearly. But he presents his argument well and given his many years at the coal-face of international economic policy making is worth taking the time to consider. He pulls no punches, “Starting with the Trump Administration and continuing under the […]

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Sunday Papers

The Sunday Paper – Social Organizations and Political Institutions: Why China and Europe Diverged

The literature on how, and why, China and Europe developed different social and political organizations is large; but, to summarize in the smallest of nutshells, the big theme is centralization in China and fragmentation in Europe. The paper today, from Joel Mokyr of the Northwestern University and Guido Tabellini of the Bocconi University, Milan follows […]

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Sunday Papers

The Sunday Paper – The Impact of High-Pressure Political Reforms on State-Owned Enterprises:  Evidence from China

State Owned Enterprises (SOEs) are not just a China phenomenon. According to the paper in focus this week, from researchers Sung C. Bae (Bowling Green State University), Taek Ho Kwon and Chenyang Liu (both from Chungnam National University), they account for up to 22% of global market capitalization* and 50% of total global GDP. [*Of […]

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Sunday Papers

The Sunday Paper – Financial Reporting and Disclosure Practices in China

Many will be familiar with points touched on in this paper. It may be the first though to take a comparative approach of norms in the U.S. and compare those habits, point by point, with what happens in China today*. [*Actually the China surveys were conducted in 2017 and 2020 but little will have changed […]

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Sunday Papers

The Sunday Paper – Can ChatGPT Forecast Stock Price Movements? Return Predictability and Large Language Models

A lot that’s questionable about the analysis in the paper highlighted today is visible in the chart below. Before I come back to that let me summarize work from Alejandro Lopez-Lira and Yue Hua Tang, both of the University of Florids, which is the subject of this week’s paper. Quantie-folk, for years, have employed models […]

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Sunday Papers

The Sunday Paper – Wealth Destruction on a Massive Scale for Investors? The Wedge between Security and Investor Returns in an Emerging Market

Why don’t I buy IPOs (and you shouldn’t either)? In the case of China stocks it’s because they’re nearly always overpriced and more often than not pre-IPO earnings have been manipulated to assist the over pricing. These are now established facts, not opinions. The paper today, from Ziyi Chen of the Hong Kong University of […]

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Sunday Papers

The Sunday Paper – Minority Shareholder Activism and Corporate Dividend Policy: Evidence from China

Minority Shareholder Activism (MSA) is all the rage. Fans claim it’s making a difference in Japan and no self-respecting institutional manager can make a pitch now without a few paragraphs devoted to the subject. The paper highlighted this week is therefore of interest in this context. In the work Han Han and Zhibin Wang of […]

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Thoughts

Changed Circumstances: China’s Improving Outlook

Just over a year ago JP Morgan issued research, they quickly claimed ‘in error’ (March 2022), that used the word ‘uninvestible*’ to describe Chinese internet stocks. [*I believe the description correct, but I don’t run a bank whose revenues, in part, are hostage to the favorable opinions of many in the sector.] Irrespective of the […]

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Sunday Papers

The Sunday Paper – Operating Loss Subsidies for High-Speed Railway in China: Game Relationships between the Government and China Railway Cooperation*

[*I think the authors mean China Railway Corporation which changed it’s name to simply China Rail in 2019 CRC reorganization. Perhaps I’m just being a little anorak-and-cheese-sandwich-tastic keen? The paper is a preprint though and not yet peer reviewed so I presume this ambiguity will be fixed in the final version.] China’s High Speed Rail […]

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Sunday Papers

The Sunday Paper – Clearing the Way to Renminbi Domination: CIPS, Antitrust, and Currency Competition

Felix Chang of the University of Cincinnati College of Law; Ohio State University (OSU) – Michael E. Moritz College of Law wants discussion on the greater international use of the Rmb to stop conflating CHIPS, SWIFT and CIPS. They are very different things and, to remind: CHIPS or the Clearing House Interbank Payments System is […]

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Sunday Papers

The Sunday Paper – Can Investor Sentiment Predict Value Premium in China?

“Holding value stocks for the long term when sentiment is low will give investors very high returns in the Chinese stock market.” I could stop the summary there. That’s all casual readers need to know. The authors of the paper from which this nugget is extracted, Zhaohui Jiang (et al.), drilled the Shenzhen and Shanghai […]

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Sunday Papers

The Sunday Paper – Assessing Public Support for (Non-)Peaceful Unification with Taiwan: Evidence from a Nationwide Survey in China

We know a lot about how Americans and Taiwanese view the Taiwan question, but until now there’s been no good data on how the women and men on-the-street in China view the same issue. Adam Liu of the Lee Kuan Yu School of Public Policy in Singapore and Xiaojun Li of the NYU Shanghai and […]

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Sunday Papers

The Sunday Paper – Industrial Robots and Firm Innovation: Big Data Evidence from China

Automation marginalizes low skilled workers and leads to societal inequality and attendant problems. This, or some version of it, has been a popular perception since the beginning of the Industrial Revolution. The notion persists because, like so much wrong-thinking, it kind-of sounds right and the discussion has recently been revived by a new generation looking […]

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Sunday Papers

The Sunday Paper – Pandemic State-building: Chinese Administrative Expansion in the Xi Jinping Era

The main point of the analysis highlighted this week from Yutian An and Taisu Zhang, a Phd candidate at Princeton and a Professor of law at Yale Law School, is summed up in the last line of their 60-page monograph: “For better or worse, China has now entered a new administrative paradigm” The researchers take […]

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Thoughts

Quintet of Catalysts: Developing Factors that Should Improve China-Stock-Investors’ Fortunes in 2023

Preamble China stock investors have had a rum time of it in recent years. Capricious government policies, on both the macro and micro level, have caused multi-year investor pain and fomented a climate of rolling uncertainty. This, in turn, has led to an exodus of liquidity and largely explains the more-than-decade-long cycle of depressed valuation […]

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Sunday Papers

The Sunday Paper – The Low-Risk Effect in Equities: Evidence from Industry Data in an Earlier Time

[The Low-Risk-Effect, also known as the Low-Volatility Anomaly has a brief Wiki entry Low-Volatility-Anomaly you may want to visit if the subject is new for you.] Trillions of dollars are invested based on a model we now know, with near certainty, is in large part incorrect. I’m referring to the Capital Asset Pricing Model (CAPM), […]

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Sunday Papers

The Sunday Paper – Getting Rich But Not Giving? Exploring the Mechanisms Impeding Charitable Giving in China

It’s a bit of a mystery as to why, given the increase in prosperity they’ve enjoyed in recent years, Chinese in China haven’t become more charitable? Reza Hasmath of the University of Alberta together with Qian Wei of Stanford University decided to take a closer look using a detailed study from 2012 which, they admit, […]

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Sunday Papers

The Sunday Paper – Artificial Intelligence Analyst and Individual Investor Activities: Empirical Evidence from Mutual Fund Investment

The authors of the paper summarized below admit their analysis could be better. It could have had a wider scope and it would have been better if it’d been conducted over a longer time period; but, as their subject didn’t exist until October 2019 I think we can forgive them. If their work has Swiss-cheese-like […]

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Sunday Papers

The Sunday Paper – What Happens in China Does Not Stay in China

As an in-part follow up to last weeks’ review of the IMF’s annual China report the work today, from the U.S. Federal Reserve last November, takes a closer look at how Chinese economic activity impacts the world*. [*The IMF estimated in their report a 1% change in China’s GDP implied between a 0.25%~0.4% global spillover, […]

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Sunday Papers

The Sunday Paper – The 2023 IMF Annual China Report

The IMF raised its 2023 GDP growth forecast for China to +5.2%* on January 30th and, given we’re only in February, it seems likely there’ll be more favorable revisions to come. [*Some confusion. In the China Report, dated February 3rd and highlighted below, there’s a forecast of +4.2% for 2023 GDP, but in the World […]