Europe, Take Note: China's Lessons in Authoritarianism
You can apply Elliott wave analysis to more than just the financial markets.
In fact, the new science of social prediction called socionomics has been doing just that -- namely, expanding Elliott wave application to often surprising areas of politics, culture, art and more.
Broadly speaking, socionomists look at stock market trends to predict trends in society. For example, when are authoritarian leaders more likely to come to power?
You've probably heard that it's likely to happen in a "crisis," when people demand safety and quick decision-making. But a crisis can come in many forms, from natural disasters to wars to pandemics. When is authoritarianism most likely to emerge?
You'll find a direct, yet more nuanced answer in this new article by Agenzia Italia. On May 26, it published a new interview with the editor of our monthly Asian-Pacific Financial Forecast, Mark Galasiewski.
Mark looks at the Chinese stock market's historical trends to answer the question above.
This is a lesson not just for China, but for any country or continent.
What follows is a Google translation of the article published by Agenzia Italia written in Italian...
In China there is a relationship between authoritarian maneuvers and stock market trends
Analysis of Elliott Wave International on the Shanghai Composite Index and government behavior. Each 'Bear phase' would fuel Beijing's internal and external aggression. The Hong Kong case is only the latest. But the phenomenon could also concern Europe. And especially Italy
There is a correspondence between the downward phases of the stock markets and the political authoritarianism of the People's Republic of China: the chief analyst of Elliott Wave International for the Asia Pacific region, Mark Galasiewski, said in an interview with AGI. And the trend, according to Galasiewski, does not concern only Chinese policies: "Citizens of other world markets where equity values have marked a significant decline in recent years, such as Europe and Italy in particular - he explains - should be beware of similar erosions of social freedoms in their respective societies ".
Market prices in turn "reflect the social climate, and when it goes down, so do equity values and the prospects for social cohesion".
Returning to Elliott Wave International's focus on China and the current Hong Kong crisis, there is an effective correspondence between the bear market and the more aggressive or authoritarian moves of the Beijing government. The analysis took as reference the Shanghai stock exchange index starting from 2007. According to Galasiewski, lasting downturns are followed by "crackdowns": that of Hong Kong, with the regulatory intervention on national security, " it is only the latest demonstration ".
Following the trend of the Shanghai Composite Index backwards, a first "decisive social change began in 2012 when China began to place military installations on the islands in the South China Sea. The trend - continues the analyst of Elliott Wave International - accelerated in 2013, when the Communist Party consolidated power around the new leader Xi Jinping. " But the Beijing government, Galasiewski notes, "manifested its authentic Orwellian tints in 2017, when the newly formed National Security Council ordered the mass imprisonment of Muslims in Xinjiang re-education camps."
Punctual, a subsequent bear phase of the market followed a further authoritarian turn in 2018, when the National People's Assembly removed the constitutional bond of the double mandate to the president, opening Xi Jinping the way to maintain his position for life.
Currently "China is also behaving aggressively towards India, on the question of the border established with the 1962 war". And now, in a new phase of downside stock values, "China is using the Covid-19 crisis to achieve its authoritarian goals in Hong Kong and other cities, supporting them with a $ 1.4 trillion investment in technologies that will allow to extend the level of surveillance ".
The periods of falling stock markets seem to offer fertile breeding ground for the clashes between authoritarianism and anti-authoritarianism. Not only in Hong Kong, the scholar still points out: "Europe, for example, has not been immune to anti-establishment sentiment following the decline in equity values over the past two decades. From the 'Brexiteers' in the UK to the Yellow Vests in France with the rise of the Five Star Movement in Italy, the negative climate of the bear market in Europe - concluded Galasiewski - has given breath to social movements of all colors to become more rowdy ".
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