China Market situation and outlook

[Auzie]

Do US companies ever trade stock on the Chinese stock market? TSLA trades in Germany and I think it would be very popular as an investment in China, especially as it starts to gain in notoriety and popularity in the coming years. I imagine it would increase demand for the stock and drive its price higher.

China is still a communist country, I am surprised that they do have a stock exchange at all, but they do. According to wiki, Shanghai stock exchange is still not entirely open to foreign investors. Also, China has a preference for listing domestic companies (according to the same source).

I checked my two brokerage platforms for access to world markets. They both give me world wide access to most markets. One gives me access to SSE which is short for Shanghai Stock Exchange, but that is more likely Stockholm Stock Exchange. I do get access to Hong Kong Stock Exchange, if that can be counted as China.

Second brokerage gives me access to Hong Kong, few markets in Tokyo and Singapore only in ASIA. It does seem that SSE is closed to small foreign investors like myself.

I am curious if Chinese citizens have access to brokerages that let them trade on US markets. If they do not have easy access, they are unlikely to become Tesla investors. Imo the communist indoctrination of citizens is not helping with encouraging Chinese to trade on capitalist markets. Internet access is also limited (controlled or regulated), and that may hamper both educational and investment opportunities and attempts. It would surprise me to see a rush of Chinese capital into TSLA but I really wish to be wrong on this.

Talking about a rush of capital, there is a rush of Chinese capital into Sydney real estate market, pushing prices up and squeezing locals out, especially new home owners. Investing in real estate is a bit less sophisticated than investing in shares, I won't even mention other instruments.

 

[Cankooo1]

Actually they have access to almost everything which we have. I spoke with my friends and there are a lot of brokerages even foreign, just some examples:
http://www.aetoscg.com/cn/index.html
http://www.forex.com/uk/cns/index.html
http://www.gwfx.com/
Big Chinese investors are using Hong Kong as gate for foreign markets due to the tax advantages there.

 

[vgrinshpun]

Having read these links, I think I'm starting to see a piece of the delivery ramp up puzzle re China. While China might have 15K or even 20K reservations this year, the delivery target of about 5-8K for China this year I think is a combination of the supply constraints we already know about, and another supply constraint... service centers in China. that is, even if Tesla pushed really hard to expedite production and blow past their 35K 2014 production guidance to 45K, if the demand to soak up that uptick is from China, it seems they'd have to put such a ramp up on hold to avoid delivering 15K cars into a country with only a handful of service centers. Tesla does not want to tarnish what seems to be a stellar perception of the brand by having a huge mismatch between vehicles and service centers. Have to think they are looking for a massive expansion of service centers in the next year so they can let the vehicles flow into China at full steam quite soon.

Indeed they are; during the "reckless growth" presentation given at the Detroit International Auto Show on Jan.14, Jerome Guillen stated that TM plans to double service centers and stores in 2014. I would imagine a good portion of these new stores and service centers will be slated for China.

 

[Auzie]

Actually they have access to almost everything which we have. I spoke with my friends and there are a lot of brokerages even foreign, just some examples:
http://www.aetoscg.com/cn/index.html
http://www.forex.com/uk/cns/index.html
http://www.gwfx.com/
Big Chinese investors are using Hong Kong as gate for foreign markets due to the tax advantages there.

Thank you for your answer Cankoo1.
I checked the links and products that these brokerages offer. Only Aetos seems to offer trading in approx. 20 US listed stocks, TSLA is not on the list.
Perhaps Chinese citizens have access to many other brokerages that give them wider access.

If ordinary Chinese citizens wish to invest in foreign markets, they would have many hurdles to overcome. I see language barrier and easy access to markets as significant hurdles, but you may be in a better position to understand the dynamics of modern Chinese society. :smile:

 

[AlMc]

Actually they have access to almost everything which we have. I spoke with my friends and there are a lot of brokerages even foreign, just some examples:
http://www.aetoscg.com/cn/index.html
http://www.forex.com/uk/cns/index.html
http://www.gwfx.com/
Big Chinese investors are using Hong Kong as gate for foreign markets due to the tax advantages there.

So, to be clear, a citizen of mainland China could invest in TSLA if he/she wished to do so? If true, how hard is it to invest. Can they do it online like most of the rest of the world?

Thank you again to you and your Chinese contacts.

Another question: It appeared that the general populace of China was very happy that Tesla choose not to charge more for their cars in China than they do in the US. In addition, it appears many of the Chinese in the tech fields are making reservations. Culturally, will this mean that since the 'middle class' in China can afford the car that the 'elite class' in China will look at it as too common/not enough of a status symbol and continue to buy overpriced Mercedes and BMWs?

 

[anon]

So, to be clear, a citizen of mainland China could invest in TSLA if he/she wished to do so? If true, how hard is it to invest. Can they do it online like most of the rest of the world?

As far as I am aware, there is no problem with Chinese citizens opening accounts with brokers in other countries. I have a friend who is a Chinese citizen (mainland China, not Hong Kong) and trades with Interactive Brokers. He lives in the UK at the moment, but I know that he has continued trading with IB without any problems during long trips back to China. He has been investing in Tesla on my recommendation.

 

[Cankooo1]

So, to be clear, a citizen of mainland China could invest in TSLA if he/she wished to do so? If true, how hard is it to invest. Can they do it online like most of the rest of the world?

Thank you again to you and your Chinese contacts.

Another question: It appeared that the general populace of China was very happy that Tesla choose not to charge more for their cars in China than they do in the US. In addition, it appears many of the Chinese in the tech fields are making reservations. Culturally, will this mean that since the 'middle class' in China can afford the car that the 'elite class' in China will look at it as too common/not enough of a status symbol and continue to buy overpriced Mercedes and BMWs?

Hi AIMc,
Actually there are no limitations, even Chinese investments and acquiring assets abroad are encouraged by Chinese government.
China is a communist country but in their own way which is completely different than conventional understanding of communism.

With the fair pricing the base Model S is affordable for the middle class in China, but for example there is Performance and Signature editions of Model S which will be much more expensive. Surely if the car is mass adopted the super rich people in china could lose interest, but at the moment I do see availability as much more important factor for super rich.

Consider this:. : How rich person will react to : there is one super cool new car, totally different than everything I have ever seen, but you can’t have it, because all of tech executives in China already ordered it and they will have to wait for a long time to receive it. Anyway there is an option if you buy special top level version which cost more you will be able to receive it before them::smile:

- - - Updated - - -

One more update:
Tesla has posted more job positions in China from 23 few days ago to 90 at the moment.
We can see there 4 more locations with service centers and shops:
China-Chengdu
China-Guangzhou
China-Hangzhou
China-Shenzen

China-Beijing
China-Shanghai

 

[eepic]

- - - Updated - - -

One more update:
Tesla has posted more job positions in China from 23 few days ago to 90 at the moment.
We can see there 4 more locations with service centers and shops:
China-Chengdu
China-Guangzhou
China-Hangzhou
China-Shenzen

China-Beijing
China-Shanghai

^ This. Supports the thesis that demand in China is extremely strong.

In the Canada section apparently the Vancouver Tesla service centre has exploded with activity. Given how much of Vancouver is populated by wealthy folks from China, it could also be a leading indicator it's becoming a luxury status icon in asian culture.

 

[Auzie]

As far as I am aware, there is no problem with Chinese citizens opening accounts with brokers in other countries. I have a friend who is a Chinese citizen (mainland China, not Hong Kong) and trades with Interactive Brokers. He lives in the UK at the moment, but I know that he has continued trading with IB without any problems during long trips back to China. He has been investing in Tesla on my recommendation.

If a small Chinese investor wishes to participate in foreign markets, they need to overcome a language barrier and cultural barrier. Some Chinese citizens may speak and comprehend some English, but without 'immersion' level of language command it might be just too difficult to successfully participate in a field that requires a lot of reading, information collation and quick and accurate assessment of complex reports, all in English.
The lucky ones that get the opportunity to live abroad are in a much better position to overcome these barriers.

Culturally remote languages, like Chinese and English, will have many un-matching phenomena and words that reflect these phenomena. Such words are un-translatable, they require lengthy abstract description. That creates difficulties in understanding.

I would be surprised if average Chinese citizen had correct understanding of how securities markets operate. This will change as the new generations grow up in the melding world, with instant access to the best educational and other opportunities.

 

[Causalien]

If a small Chinese investor wishes to participate in foreign markets, they need to overcome a language barrier and cultural barrier. Some Chinese citizens may speak and comprehend some English, but without 'immersion' level of language command it might be just too difficult to successfully participate in a field that requires a lot of reading, information collation and quick and accurate assessment of complex reports, all in English.
The lucky ones that get the opportunity to live abroad are in a much better position to overcome these barriers.

I would be very surprised if average Chinese citizen had correct understanding of how securities markets operate. This will change as the new generations grow up in the melding world, with instant access to the best educational and other opportunities.

On TOS there are many Chinese traders. Although you'll have to dig to find them since they don't voice their opinion at all. The few that do represent the youngish tech savy crowd. All they have to do is fill out a form with their Chinese passport scan to be able to trade in the USA. There are actually more of them than Canadians.

 

[mountaineer]

I know quite a few people in China bought TSLA when it was in the 30's, including one guy who bought some 200K shares. Additionally, I heard that a fund based in China bought 2 million shares of tsla in April/May last year.

 

[Auzie]

On TOS there are many Chinese traders. Although you'll have to dig to find them since they don't voice their opinion at all. The few that do represent the youngish tech savy crowd. All they have to do is fill out a form with their Chinese passport scan to be able to trade in the USA. There are actually more of them than Canadians.

It would be great to somehow connect with them. Not sure how.

 

[artsci]

I hosted an equity fund manager from China for a day in Baltimore last week. I drove him around in my Tesla. He was very aware of the car, knew many details, and said he planned to buy one soon. He lives in Guangzhou, so it's not only Beijing and Shanghai where the brand awareness has taken hold in a very short time.

 

[Auzie]

I hosted an equity fund manager from China for a day in Baltimore last week. I drove him around in my Tesla. He was very aware of the car, knew many details, and said he planned to buy one soon. He lives in Guangzhou, so it's not only Beijing and Shanghai where the brand awareness has taken hold in a very short time.

Wow I am surprised that there are equity fund managers in China.

I am also saddened to say that I am yet to come across a person in Sydney who has a decent awareness of Tesla Motor Company. If I mention Tesla, most people think that I refer to Nicola Tesla. Some fresh engineers have not even heard of Nicola Tesla. When I start discussion about electric cars, I get back blank stares, a signal to change the subject. Some engineers display some vague curiosity but no passion. One person said that he heard of electric car Tesla, but when I dug a bit deeper, he knew nothing of it. I was bothered by that, but then I thought that perhaps people are not aware of TMC because Tesla is never on news here, so how are they to know. There is no general awareness, at least I do not see it. Maybe there are some small pockets of money managers and car enthusiasts that may be aware, but I do not mix with either of these.

 

[FluxCap]

I hosted an equity fund manager from China for a day in Baltimore last week. I drove him around in my Tesla. He was very aware of the car, knew many details, and said he planned to buy one soon. He lives in Guangzhou, so it's not only Beijing and Shanghai where the brand awareness has taken hold in a very short time.

Art, that's awesome. Thanks for sharing.

 

[maoing]

It looks like the first China delivery will be around 04/22/14. There are several tesla owners in http://club.autohome.com.cn/bbs/forum-c-2357-1.html confirmed this.

 

[FluxCap]

It looks like the first China delivery will be around 04/22/14. There are several tesla owners in http://club.autohome.com.cn/bbs/forum-c-2357-1.html confirmed this.

That's great -- thanks for sharing!

 

[pz1975]

Short article in The Economist about Tesla and its local competition.

Why is Elon Musk laughing? - | GE Look Ahead | The Economist

 

[hummingbird]

Short article in The Economist about Tesla and its local competition.

Why is Elon Musk laughing? - | GE Look Ahead | The Economist

BYD Qin:

BYD Qin - Wikipedia, the free encyclopedia

BYD e6:

BYD e6 - Wikipedia, the free encyclopedia


Buffett and Munger (w/ Sokol) should have looked into Tesla back in 2008.

 

[Robert.Boston]

That article sets up a bizarre definition of a market: "electric vehicles". The Economist would never write an article about whether Skoda or Audi was going to "win" the "gasoline vehicle" market -- the two companies compete for very different customers.