Hey everybody I'm Sam and this is Entiversal
and today we're talking about why I
believe there is a great great
opportunity in China right now and
probably for the future for a very very
long time so there's been so much
talking in the media news about your
China communist country regulation
obviously now the trade Wars a slowing
economy and you know all of these disto
but I want to talk on all of these
things I'll touch from them I'll comment
on them but also want to look at the
fundamental numbers because you know
opinions say news they could be a look
at one perspective or another
perspective but numbers don't lie so
first let me start with is China a
communist country and what will a
communist country means
so obviously communist countries like
the socialism so there is much more
power into the state ancient state
controls all the companies and you know
how the people live in that country
there is no freedom there is no free
flow of data and information and also
businesses cannot basically compete and
do a lot of the stuff that's the way in
capitalism right so China it is food
that the Communist Party is ruling in
China and they've been in power since
what 1950s but while ideologically and
in theory their Socialist Party right
but if we actually look into the
politics and how they're ruling the
country we can see a lot of capitalism
stuff actually the private businesses
are contributing much more to the GDP
than state-owned business we can see
that they are encouraging you know
competition inside the country they are
encouraging a lot of all sorts fade and
good communication relationship with
their countries that are around them so
we can see that they're quite open
obvious you can travel to China right
they want to invest a lot in Africa you
basically all around the world so we can
see that they are not really I wouldn't
say they're communists I wouldn't even
say that they're socialists in the way
that we want to understand it all the
when that marks you know described it so
I think they actually ruling the country
much like a very very big conglomerate
company and while obviously there is a
lot of regulation you know the
government has quite big effect and
power over certain businesses they try
to encourage them and to help them we
know that you know they are blocking
some information right we know that they
are not welcoming all kinds of companies
into China right they're blocking of
Facebook does not work in China does not
work in China Google does not work in
China and so on but as we see that's
mainly on the energy side and on the
technological side and it's kind of the
same with us because if US was you know
on the spot of China I doubt that you
know they would let other companies form
you know another country to be the
biggest inside us and I cannot comment
on politics and you know what's right or
wrong but what happens is that they're
supporting give a lot of leverage to
Chinese companies and especially Chinese
technological companies like the video
that they put out about the top five
best stocks and companies in China that
I like is because they support them and
you know obviously like white Tencent is
so big right
why by doing so big they don't let
Facebook in they don't let Google win
and so on from the company's point of
view this is good for them so with that
out of the way you know we talked about
communism and regulation I want to get
into the numbers of the slowing economy
and it is when we see the China GDP
growth and GDP is basically how much the
economic growth in its being slowing we
see but we can also see that the numbers
are crazy like in 2010 they grew 10% 10%
this is the
second biggest economy in the world
after us it's also the second biggest
kind of markets in the world so you know
they are already the second biggest in
the growing at such rates this is this
ridiculous and we can you know compare
that to us and we can see that the
growth in us have nothing on them right
so for example you know this last year
2017 the China economic grew 6.8% vs the
United States economy 2.2 percent that
is what almost triple the amount the
economy in China is growing three times
faster than us obviously more they grow
the slower they they'll start growing
but they're still growing much faster to
us even when comparing how big their
economy is so you know the argument
about following link economy I just
don't believe it it would make sense if
the stock market was pricing this road
fight so if the stock market was three
times more expensive in China than in
u.s. I would say okay yes we have a
problem because you know the stock
market price is pricing in three times
faster growth but when we look at the
numbers of the stock market things look
quiet differently so we can look at this
is the SA P 500 index a quote from
Bloomberg about the pricing of the ASAP
digit of you know kind of 500 biggest
companies in US and represents the US
stock market so we can see that the
trading P is 20 point six seven let's
look at the Shanghai Composite Index
which is basically tracking the Chinese
biggest companies and it's
representative of the Chinese stock
market we can see P of twelve point nine
let me just say that again twenty point
six seven
compared to twelve point eight nine
obviously the price of Chinese companies
compared to how much money they make
is drastically lower which means that
maybe they're undervalued let's then go
and look at the EPS how much on average
Chinese company make per year and that's
207 and we compare that with sa piece
137 at the same time by the way ACP is
higher than the Shanghai Shanghai index
sapa said 2,850 while the Shanghai index
is at 2668 then let's look at the price
to book this is basically what the
market cap of the companies compared to
how much assets they have in a very
broadly speaking for the Chinese market
this is one point 4 or 4s AP for the
American companies as three point four
which means that again American
companies much more expensive is the
same with price sales and we can see it
America price sales of 2.2 against the
Chinese price sales of one point zero
seven let's look at the dividend okay
maybe American companies give more
dividend well we can look at this that
the dividend of Chinese companies is
0.37 or for American companies is 0.23
so even the dividend is lower so
obviously something is not right in we
know we can see that especially the big
Chinese companies are going much faster
than their American counterparts right
like Baidu grows faster than Google like
Alibaba grows faster than Amazon we can
see the valuation so you know by the
numbers we can say that the Chinese
stock market is dramatically less
expensive than the American one and we
can say that obvious American companies
are around the world there is much more
stability you know there is much less
interference from the government and
this is true by
we also said that China wants their
companies to grow and need to want their
companies to be global - which means
that it will do the best to protect them
and also support them now what we can
see though if we look at the Shanghai
index over the years we can see here in
2007 when the economic crisis
I know popped obviously drop drastically
lower then kind of drifting then again
in 2015 there was again stock market
bubble popped and in its down but since
then we can see that you know it has
gone up and now it's again down but we
know that China's GDP has been growing
steadily in all of those years which
means that even though that the moment
the stock market is around where it was
what in 2008 in 2007 the GDP of China is
much bigger all their relationships are
much bigger
how strong their economy and central
bank and overall government it's much
more stable it has much bigger impact on
the overall global trade and economy as
you know ten years ago which means that
probably now it's much cheaper than what
it was and some might say oh you know
it's you under violet we saw though that
by the numbers first of all China is
going much faster than us even though
that it's lower is to three times faster
Kim and the economy is starting to get
very very big it's the second biggest
they wrote is too ridiculously faster
than us at the same time we saw that by
the numbers the stock market is cheaper
so when those two things intersect I
believe we have an amazing opportunity
and I believe that China's stocks
overall at the moment are greatly
undervalued compared to us in even
compared to other markets we can also
see that when the bubble happens in two
fifteen we can see the P ratio going
higher to 25 we saw that at the moment
the P ratio of the Shanghai Composite
Index is twelve point nine which means
that it's almost half of what was in the
bubble so the stock market is two times
cheaper than what it was in the bubble
which means that it's probably not a
bubble now so what I'm saying is why the
stock market has been decreasing in the
last 7 months all of this has been
because of the trade wars and even we
see that the trade walls maybe they have
some kind of very very weak impact on
the China economy but we see that it's
very weak because China now it's so big
that you know it has a lot of leverage
they can sauce different stuff from you
know different places so in my point of
view they are in a very very also strong
position now I cannot judge each u.s.
winning is China winning that's not
feeling my concern because I want them
both to win but the fact is that while
the S&P has been going up and up and up
the Shanghai index has been going down
down down in the same time though we see
that the GDP is not really that affected
we see that the companies themselves
post amazing numbers we can see the vote
is just ridiculous when there is
continuing road where there is already
lower valuations even from before that
and compounding that with decreasing
prices I see a very good under valuation
and you know probably a very good buying
opportunity what I belief is that this
decline has been based on fear it's not
on fundamentals right we don't actually
see the economy slowing we don't see
that cracking but there is a fear that
that might happen
well when others are fearful you need to
be greedy right that's what Warren
Buffett says you might say oh yeah but
the trade was you know
we don't see them being resolved we
don't know what will happen that is for
but what Warren Buffett always says is
that you shouldn't try to time the
market
nobody can time the market right so if
you see something that's undervalued or
it's very good and it's fair valued
better buy it now right if it goes down
lower and the fundamentals are the same
you can cost average and buy one more
thank you for listening please comment
what are your thoughts if I'm missing on
something I would love to hear about
that and also consider checking out my
patreon page which is on page hundred
comm /nt versa where you can find a lot
of cool information you know stock
market investing a mindset technology
and you know you can also support the
channel so I can create more thank you
for listening
and see you next time
For more infomation >> 8/30/18 1:10 PM (601 S Mariposa Ave, Los Angeles, CA 90005, USA) - Duration: 5:12. 
For more infomation >> 8/30/18 1:08 PM (2879 W 6th St, Los Angeles, CA 90057, USA) - Duration: 2:00. 
For more infomation >> 8/30/18 1:03 PM (101 S Rampart Blvd, Los Angeles, CA 90057, USA) - Duration: 5:33. 
For more infomation >> Audio story - Dear Zack - Creepy original tale - Duration: 8:25. 
No comments:
Post a Comment