Another poorly written article. Who bought? Us or them?
In China the lines are often blurry between government and “business”. Just ask the Clintons.
are they propping up the market or buying shares a deep discounts?
I would argue the latter.
The percentages of the stock market are too small to be significant.
However, the profit that these buyers will realize when the market turns around will be significant.
This is a 2008 warren buffett moment chinese style—the sort of thing that only people with deep pockets and long time horizons can do. But they profit handsomely.
The real question is which stocks did the government buyers purchase? Did they buy stocks with big American exposure? Or did they buy stocks with relatively little American exposure.
If they bought stocks with relatively little American exposure —then you know that they were looking for deeply discounted stocks that would in a couple years reap huge profits for the government.
If they bought stocks with large american exposure —then you know they were just propping up the market.
I have been impressed with by how clever the bureaucrats in bejjing have been. so I would guess that the answer would be the former. That they bought stocks with relatively little American exposure.
I assume, because the article is not really clear, that the government-directed traders is referring to Chinese government-directed traders, not U.S. government-directed traders. Mainly because I wouldn’t think the U.S. government has such an entity at its disposal. Of course I could be wrong. 8>)