CHINA: Markets Are Finally Grasping That China Is A Marxist State.

In China, stocks slumped, and Hong Kong stocks collapsed the most following a CCP Congress since 1994: the US Nasdaq Golden Dragon market went up in a puff of smoke. “Stocks are disconnected to fundamentals,” as Bloomberg quotes somebody who did not see this coming on Friday. But which fundamentals? The Congress spoke about income and wealth distribution, and hammered home Common Prosperity. Either said optimist didn’t see this outcome, or didn’t think it mattered; in either case, why should anyone listen to them? CNY has dipped past 7.30 after a weak fixing, and CNH past 7.33, even as the PBOC has adjusted regulations to allow firms to borrow more from overseas. Remember the “wild” forecast CNY would ultimately sit north of 8?

Yet what happened yesterday is not going to “Truss up” China’s leadership and force a change of policy direction. Read Politburo member Wang Huning: his core belief is that markets exist only to serve a greater state goal, rather than getting to choose the head of state to serve their goals.

Is he a Communist or a Democrat? Or is that a difference these days without distinction?