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mastermind's review
Investment Sector: Emerging Markets Submitted by Mastermind 
, Head of Equity Trading & Strategy
at Magic Works
9 months ago Add Tag |
The problem with Chinese exchanges
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In the U.S I have never heard anyone say that they want to be a government regulator. The government here is inefficient, and the people that work for government agencies are at best unmotivated and at worst incompetent. If you are a bright guy or gal in the U.S and your interest is finance which usually always means making money your goal is probably to end up in a hedge fund or an investment bank. The last place you want to end up is working for the government.
In China things are the other way around. Individuals from well-connected families and good education backgrounds strive for rolls in government whereas the investment industry gets the second tier candidates. In China, it still pays to work for Big Brother.
So we find ourselves in a situation where the world’s fasters growing economy is operating with a less then efficient market. Intra-day trading is almost unheard of in China although the market is very volatile. Short selling was not allowed as of last year. And most importantly, order priorities are loosely enforced, meaning that if you were sitting at a certain price for a long time, someone can place their order after you at the same price level and get a fill before you. These kind of inefficiencies along with constant delays of new systems such as a new futures index that was supposed to be rolled out last November raise questions about trading opportunities in China. American investment firms and hedge funds have long been licking their lips for a taste of the Chinese market, but it seems that until the exchange’s clients have a stronger voice in the country’s policies its going to be business as usual in China.Did you find this article useful?
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