I often write on Quora.com, where I am the most viewed writer on financial matters, with over 298.3 million views in recent years.
In the answers below I focused on the following topics and issues:
- Chinese stocks are plummeting. Will it bring another financial contagion?
- In the UK, what kind of income do you need to afford a 700,000GBP house? Should you even be trying to own a house which costs 700k?
- For expats in their 20s, is Vietnam or China a better place to live than Mainland Europe?
- If Jeff Bezos sells his Amazon shares, would the company stocks crash and burn?
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Chinese stocks are plummeting. Will it bring another financial contagion?
No, that is very unlikely.
The main reasons are:
- They aren’t really plummeting. Yes, they fell about 8%-9% over a two-day period, which is a big fall. However, they are only down about 1.5% over the last month (in the case of Shanghai), and the market is where it was on January 1. Hong Kong’s index is down for the year, but not in an extreme way
- These things happen a lot in China. 2015 was much more extreme. The stock market went up a lot and then down. So, investors expect these moments even more than the US stock market.
- The Chinese markets work in a different way. In the US and many other developed countries, there are speculators and gamblers. Yet, 80% of the money held in the S&P500 is institutional money. A lot of the remaining 20% is held by wealthier people who want to buy and hold. Only a small percentage of money is dominated by “the Reddit crowd” and other speculators. In China, in comparison, “sensible money” tends to go to real estate and foreign stocks. The local stock market, at least in Mainland China, is used for speculation and gambling even.
- Even though China is on MSCI World and MSCI Emerging Markets, it isn’t as open as some other stock markets. Contagion is more difficult in these circumstances.
- Whilst the market itself isn’t falling hard, some individual names are. This includes some names listed on the US stock market. Yet the US gets IPOs from many different foreign markets, and not just China. Hong Kong could benefit from any moves to delist Chinese stocks from US exchanges.
So, I don’t think this will result in contagion for China, the US or any foreign markets.
The bigger challenge isn’t contagion. The challenge for China is having a stock exchange that is more similar to some of the mature ones.
In other words, the kind of stock exchange where institutional and sensible buy and hold money wants to invest.
There is plenty of institutional money that wants to invest in Mainland Chinese stocks, but little compared to the US exchanges.
The aforementioned speculation culture is one of the things that need to be addressed to change this.
In the UK, to afford a house worth £700,000, roughly what income do both spouses need to be earning?
Things have changed now
Many years ago, it was normal to work on multiples of income. Now many lenders consider things in a more holistic way.
This means focusing on:
- Disposable income after expenses
- Job security
- Where the income is sourced from – locally or overseas
- Your credit score
- How long you have lived in the UK if you are a returning expat or non-Brit living in the country
Those are just a few of the factors that are taken into consideration, and the exact requirements also depend on the lender.
On another point, I would change things up a lot. Too many people ask “what is the most (house) I can get”.
The better way to look at it is “what is the least housing for my needs”. Having a comfortable place to stay is great.
Yet I can tell you that high-income, yet broke, people tend to have some things in common.
- Overspending on houses and cars. There are many “house poor” people now. Those with big houses who are struggling:
- Not being liquid. In other words, having wealth struck in a business or property and not in investments like ETFs.
That is one reason why there is now a clear distinction between “liquid net worth”, or investable assets, and total net worth.
Having a million in a combination of ETFs , cash, or any other asset which can be sold within a few days, isn’t the same thing as having it all struck in an illiquid asset that is difficult to sell.
So, I would go lower than 700k, even if you can afford much more.
The main reasons are simple:
- You will learn more in a developing economy like Vietnam or a place which is much different to back home. Even if you go and hate it, you will still learn
- If you can live anywhere in the world, the living costs in some parts of China and most parts of Vietnam are better than the majority of European countries.
- If you are a business owner, you will see more opportunities in mid and lower-income markets. If you set up a legal practice in London, you will be competing against more people. In Vietnam, you might even find some opportunities where you can be the first to get into the market niche you are in. This has become less likely in a place like HCMC, and much less likely than twenty years ago, but it is still easier than London or Amsterdam.
- If you want to learn the language, then being on the ground is best. Mind you, Taiwan also speak Chinese without needing to set foot on the Mainland.
- Believe it or not, Americans who live in Vietnam say they are treated in a very friendly way. I once had a conversation in Jakarta with a US expat who lived in Vietnam. He joked to me that “usually being American is worse overseas than being Canadian. One of the exceptions is Vietnam!”.
However, the reasons against are
- If you are working online, there are many other countries with freer and faster internet.
- If you are looking for a “frontier experience”, there are better options like Cambodia or Burma. Many Chinese firms are moving to places like this in manufacturing and some other industries. In some of these places, you will see an economy that is more similar to China in the 1990s or 2000s.
- The lifestyle in Europe will probably be easier for you.
- These days, you can do business remotely. You don’t have to be in China or Vietnam to get customers locally. I know some people on the ground doing close to zero business, especially if they were dependent on face-to-face communication. Covid killed off that model for a while. I know plenty of others with solid online businesses doing well remotely.
- There are now cheaper, and lower tax, countries in the region. Malaysia, Singapore, and Thailand have 0% income tax on most forms of overseas income. Malaysia and Thailand are probably cheaper as well. There are also plenty of countries in the region that are liberal and more democratic.
- The economy in China is more closed and nationalistic than ever before, in some industries at least. Get this for irony. I know loads of expats in China, in numerous industries, as I lived there for 4.5 years and have visited on about sixty other occasions. In my network, who is making the most money? Typically, those in niche expat areas. Things like lawyers specialized in helping expats. Many can’t speak Chinese. In comparison, people who have learned Chinese and are targeting the mass market, often struggle unless they partner with a local firm, no matter how good their language is. There is a reason Hong Kong and Singapore got so big for expats. They are more open to foreign capital and talent. At least Hong Kong was….
- Many expats who end up in Europe want to settle. That includes many Vietnamese and Chinese. Few expats who end up in China want to settle.
- Expat satisfaction surveys from the likes of InterNations always put Taiwan, Singapore, and Malaysia near the top, and Mainland China nearer to the bottom. Most of the people I know used to like living in China, but things have changed a lot in the last ten years.
- A huge percentage of wealthy Chinese own foreign passports or want to. There are loads of “China pats” in China. In other words, they were born in China, but live (legally speaking) as close to expats on foreign passports. If the smartest people in your country are leaving, or living locally on foreign passports, that says something. In comparison, few Western elites want to emigrate to China. At most, they are interested to spend a few years on the ground.
So, I am not saying don’t go. It might be a great experience. There are merely just as many negatives as positives for expats these days.
The best thing to do, for most people, is come in for a few years. Learn the language and some new business techniques.
Then leave for a place that doesn’t have such a closed culture surrounding things like the internet.
As an aside, if I had to pick one from the list in 2021, I would pick Vietnam and especially HCMC.
If Jeff Bezos sells all his stock in Amazon, will Amazon stock crash? So will this make it impossible for him to sell stock quickly?
Firstly, I doubt he ever would. Get let’s imagine he did. He controls about two or three weeks Amazon’s trading volume, depending on how you calculate it.
It has became harder to calculate after his divorce, because his former wife owns plenty of shares now.
Anyway, there would be little or no effect on Amazon’s share price on those volumes.
What would be more concerning would be the reasons why he is selling, and how the news media reported the news.
Of course, if Bezos came out and admitted he is now bearish on the Amazon stock (incredibly unlikely), then the stocks might decline for some time.
This would be especially damaging if he was selling to buy another tech stock.
In comparison, if he was merely selling to give more to charity or another venture like the space company, I doubt anybody would care.
After all, he has been selling the stocks for years, on a gradual basis.
He has sold a lot this year and the price hasn’t moved that much:
Stocks don’t react to personalities as much as people think. At least quality stocks.
Look at Apple. Many share owners panicked about what would happen once Jobs died.
He died and nothing happened medium-term:
We saw the same speculation about whether Microsoft shares would fall due to Bill Gates’ divorce.
Nothing happened in the end which was predictable.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 298.3 million answers views on Quora.com and a widely sold book on Amazon
In the article below, taken directly from my online Quora answers, I spoke about the following issues and subjects:
- Is it better to pay off a mortgage or invest? I look at the question from both a financial and non-financial standpoint.
- There were very few billionaires in the 1950s and 1960s. Now, there are many. What could explain this?
- If I could get a visa, would I relocate to the United States? I explain why the hassles associated with moving would dissuade me.
To read more click on the link below.