Whoever thought demographics had to do with trading global markets through everything from foreign exchange to physical assets.

It may not be considered in regions where free market economies or capital markets have long developed, but it is certainly less free and government-controlled regions of the world that are the conditions for an obedient, standardized population to undoubtedly obey. There is data and information for literally everything.

We look forward to seeing you at the Dubai iFX EXPO in May 2021.

And which entity is most famous for keeping these records accurate in millimeters? Yes, that’s right, the Chinese Communist Party.

In order to maintain absolute control over the population and ensure that the joint efforts of 1.4 billion citizens are passed on to a common cause, the government continues to accurately analyze what lies ahead when considering its current resources (one of which is people and their activities). . .

Therefore, one of the largest real estate companies in China has begun to engage in demographic studies.

The company in question is Evergrande, whose stock price plummeted in 2019. In line with the communist ideology, the Chinese central government announced concerns about the domestic housing market last year, saying, “Housing is not for living, but speculation.

This would be a definite warning for those interested in the APAC market for all asset classes if the government considers its demographic distribution. One major concern is that the Chinese government is considering how too few children will affect the distribution of financial resources in the future.

What will they do? Rather than putting it in the pockets of an aging middle class, limit your capital from already spilling into international markets so you can support yourself later.

Andrew Saks Head of Research and Analysis, ETX Capital
Andrew Saks Head of Research and Analysis, ETX Capital

Are the two dependent on the other’s income? I will not go past them.

Retirement is a Western ideology. Communist countries don’t believe it, their government wants everyone to work, and those over working age are considered a burden to the state. It is harsh and unpleasant for most people with the privilege of living under a free regime, but it is the absolute norm for the subjects of the state.

Over the years, many Chinese FX traders have larger offices than brokerage firms they recommend doing business, set up large trading rooms in newly developed cities in China and regularly trade more than 100,000 lots per month. When asked about dealings with Western retail FX brokers, they almost uniformly explain that they are for long-term investments.

The model has always been the same. You trade the market with a large number of lots and then invest the return on your property. The strategy was always high-risk, so for a month, withdrawing big profits, Schedule Pro in apartment buildings in a new city, and incurring losses, traders waited until the next month and reinvested apartment rentals. Or deal with multipurpose commercial real estate.

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The end result: real estate without mortgage, owned by one trader on a massive scale, then traded huge amounts of rent to maximize it. This is the antidote to the absence of an available pension. But what if you consider that the Chinese government inevitably cracked down on Chinese merchants sending funds for transactions to non-Chinese brokers, and now they are stuck in meek stocks, with no market volatility controlled by the government?

I am pleased to talk to you today on this matter at length with David Belle, an experienced trader who is a well-known voice in the e-trading community in London and also the growth director of TradingView. Therefore, he knows his area of ​​analysis very well.

“China now has a lot of policies compared to other major economies,” Belle said. “The enormous debt load they have built up over the past decades has surprised PBoC,” he said.

“With a record-breaking corporate debt default, the PBoC appears to be simply trying to’manage’ the bankruptcy of a previously bailed company. China’s zombie corporate culture is spurring local politicians with incentives to keep the economic situation stable, and the main way to do this is to ensure stable employment in certain regions.

This means that large corporations can access local bank financing with the OK of local politicians. It’s a balancing act between the two evils that are staining careers due to rising unemployment rates or worsening conditions in the future,” he concludes.

Those who have left the Chinese market and are not suitable to establish a wholly owned subsidiary in China are now trying to do the right thing.

Some brokers have sold parts of the company to large Chinese conglomerates with large government stakes so that they can operate as Chinese companies. It seemed wise at the time, but not now.

Adding demographic measures as a risk management metric is interesting unless it’s a drastic move, but the Chinese government doesn’t make mistakes often.

Those who mourn the loss of traders and IB’s Chinese customer base will probably like those who don’t have access to the market for the first time and have firmly attached to their domestic audience in the free market area, loyal and steady customers. The purpose of serving them well has now become the reference point for the entire retail FX industry.

Andrew Saks is Head of Research and Analysis at ETX Capital.

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