Pervasive China's CIA (Central Investment Agency) - Red blogule to go reds go

Last week, to someone asking opinions on the stock market in China, "regarding the event of the last couple of days", I suggested to consider "all 3 words :
  • CHINA : a huge country run like a big corporation. Board members know something about communism but furthermore, they are experts in strategy (hell, this is Sun Tzu's homeland). They know their own weaknesses and plan ahead to correct them. Yet, they cannot contain everything anymore. In the short / medium term, the risk is more social than economical or political (unless a Mao/Putin comes out of the blue and manages to hijack the board).
    => Key issue for long term value for the board : capacity to recycle the ones left behind (a growing caste) and to adapt to network management
  • STOCK : this is the core of capital and this is the most unique variety of communism
    => Key issue for long term value for the board : capacity to control the privatization of the economy beyond the casting of CEOs
  • MARKET : there is the lack of maturity from too many players (regulator, issuers, traders), but also the trend to see abroad (ie Chinese companies listed in Korea, boom in overseas investments, raise in the currency conversion cap for individuals...)
    => Key issue for long term value for the board : capacity to extend its reach without overstretching its controlling abilities

In the long run, the arms purely devoted to that economical imperialism could prove strong. Cynically enough, the best Chinese stocks of tomorrow may not be Chinese today."

Indeed. Yesterday, China's Finance Minister Jin Renqing announced the creation of an investment agency meant to make good use of the country's titanic currency reserves. Starting with a few tens of billions of dollars, this fund is bound to make a dwarf of Singapore's Temasek Holdings.

Let's make it clear : I didn't attend China Corp.'s latest board meeting. I didn't get any stock options.

I'm just glad I was able to guess China's next move on their go game board. Even if I know they already are dozens of moves ahead.

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