ENGİN CİVAN

ENGİN CİVAN

International Finance Advisor / engincivan.tr@gmail.com

A First Signal from China

24 Kasım 2020 - 15:42

We’ve all become a bit distracted, with the American Presidential Election, the resignation of Treasury Minister Berat Albayrak, the National Soccer Team, and the ongoing Covid crisis consuming our attention.

Meanwhile important developments are under way in the world.

As in my most recent article, I’m going to offer a detailed analysis of critical events that will impact your daily life.

If you’ll permit, I’d like to take you to China.

Firstly, let’s introduce the major actors because it’s hard to understand the greater game without understanding the players.

Today I will introduce ‘Jack Ma’ as the star and leading man in the drama.

Born in 1964, Ma is China’s second richest business person and the world’s 20th richest billionaire.

His personal fortune is estimated to be 50 billion dollars.

He’s the founder of Ali Baba, China’s largest ecommerce firm.

Our drama’s supporting role is played by Mr. Wang Qishan whose role is law enforcement. (It’s up to you to decide if he’s a good or bad cop.)

He’s not only China’s vice-president but also President Xi’s childhood friend.

Currently a member of the Chinese Communist Party’s Politburo, he’s previously served as the General Manager of China’s Construction Bank and as Beijing’s Mayor.

He’s the architect of President Xi’s 2013 anti-corruption campaign.

In case you’re unaware the Chinese Communist Party made President Xi President for Life last year.

This made Mr. Wang, as VP, China’s “de facto” day to day manager.

A FIREWORKS FILLED SYMPOSIUM

There’s a firm called ‘Ant’ which was founded by our hero Jack Ma.

Ma spun the firm off from Ali Baba 10 years ago. It specializes in micro loans to ordinary folk and small business owners via digital technology.

Now hold onto your hats…

Ant has 730 million clients!

Maybe you need funds for a computer, or for a meal with your friend, maybe for a school book, no matter whatever your need your chances of receiving the money is excellent.

Address: Ant (=the sociable little insect)

The Ant platform is an outstanding application of financial technology.

Jack Ma is the business person that made Ali Baba an Amazon competitor, a feat which makes him this centuries leading entrepreneur. Of course, he’s not one to let a relationship with 730 million customers go to waste.

Ma, rolls up his sleeves immediately to cash in on the opportunity.

He decides to make a simultaneous offering of shares in Ant on both the Hong Kong and Shanghai stock exchanges. (He’ll organize an IPO!)

The value of shares offered to the public: 37 billion dollars!

Even larger than the value of shares offered in the “Aramco IPO” by Saudi Prince Salman, the largest prior quantity of shares proffered.

By comparison in the Ant instance the quantity offered to advance public registrants is three times larger.

There’s no doubt that the shares will sell out!

Meanwhile…

The prior week a “finance symposium” is held in Shanghai.

The meetings opening remarks are made by our VP Mr. Wang.

The next speaker to the podium after the VP is Jack Ma and his words have the impact of an exploding hand grenade.

Jack Ma launches into a critique of the banks. He states that the banks make no effort to relate to their clients but instead operate on the ‘money lender’ model.
 

Without pausing to catch his breath Ma fires off an additional criticism of international banking rules.

A brief digression for the curious!

(While the 2008 financial crisis was raging, some leverage related rules were tightened by the International Settlements Bank in the city of Basel, the bank to the world’s central banks. The goal: improve resistance to financial crises. Known as the “Basel 3 rules” they placed tighter restrictions on credit to capital leverage ratios.)

It’s these rules which Jack Ma criticizes calling both domestic and international regulators “A Geezer Club”.
 

A ‘ONE MINUTE’ MOMENT FOR MR. MA

Our hero, the second fiddle VP Mr. Wang takes offense at the comments and complains to President Xi. On Monday morning Mr. Ma and friends are hauled before the authorities to explain themselves. The supply of capital is frozen due to a risky configuration and the 37 billion dollar capital offering is shelved.

According to some naughty economic correspondents this was the most expensive talk of Jack Ma’s life.

Dear readers, the incident that I’ve attempted to explain to the best of my ability was not one that was solely limited in impact to China.
 

There are serious debates regarding contemporary capitalism’s soul and nature.

Yes, Chinese guided Poliboro capitalism is growing.

The United States, the other super power, became super rich especially as a result of the digital revolution. There’s growing resentment of such super billionaires as Bezos, Gates, and Zuckerberg.

Election engendered mayhem may have caused a deafening ruckus but the politicians will soon be cross examining the billionaires.

The basis for the politician’s inquiry will be the monopoly power exerted by Amazon, Microsoft, and Facebook.
 

There’s a definite possibility that all those big firms will be broken up!
 
To sum up, the long simmering global clash between the nation-state and the mega billionaires has fallen off the public agenda due to Covid; but China having brought Covid under control has given the first signal.

In the months and years ahead this clash, like a submarine running out of oxygen, will come to the surface from time to time.

Don’t worry we’ll all be watching together.

Our Tags: #Virus #Bitcoin #CovidVaccin, #CapitalMovements #Climatechange etc. etc.

I’d like to point out they are all different strains of produce sold by the same grocer.

Translation: Deniz Mehmed