Few days back I bought another stock, the Postal Savings Bank of China (PSBC). I posted trade on my Red Note (Xiaohongshu) and there were readers asking if I could share the logic behind it. Today we will look at the rationale behind this investment.
Economic and Banking Cycle
Every product, every economy has their seasonalities and their cycles. Investing is like love. Just like how you need to meet the right person at the right time for your love to be fruitful, you also need to invest in the right product at the right time for it to yield something. Any other combination would give you less than desired results. And the banking sector is closely tied to the economic cycle.
Generally speaking, an economic cycle consists of 4 stages – growth, peak, recession and trough. Let us quickly look at what each stage entails.
Growth – Low interest rates, rapid growth, supply and demand increases, production increases, employment and wages increase. At this stage, the central banks will generally set low interests in order to spur spending and make the cost of capital low, motivating economic growth.
Peak – Growth hits maximum rate. At this point, inflation may be high and economy may be overheated, with people spending aggressively. At this stage, the central banks may increase the interest rates in order to curb inflation. We have seen the US doing this.
Contraction – Slower growth, employment drops, prices stagnate, demand decreases, oversupply of goods as business did not react in time, prices fall. Banks see more non-performing loans, lending and bank earning drops due to higher interest rates.
Trough or Depression – Supply and demand hitting the bottom, low point for the economy.
China’s Economic Cycle
We now know that the Chinese economy hit a high at about 2019. When Covid exploded fully in 2020, the global economy went into a short slump, followed by mass money printing in the US and a subsequent boom in the crypto and stock markets. However in China, the opposite happened. The property bubble burst, adding salt to the injury of Covid. University graduates had no jobs, workers gone by without salaries and businesses closed down one by one.
China tanked through the bad economy and financial attacks of the US. When China’s economy was bad, the US also started increasing interest rates from March 2022. As a result, China saw a huge capital outflow as people take advantage of the high interests offered by the USD. The RMB went on to depreciate against the USD, fueling even more outflows.
The table above only showed results till Q3 2025.
It was a financial attack against China, and China tanked through it. There are many explanations floating around on what the US was trying to do, one of them being the US tried to get China to open up their markets so that the US could sweep Chinese assets at low cost, which the China managed to block. But whatever it was, the toughest period is already over.
The Counter
Over a prolonged period, the US was unable to sustain paying high interests to people, and they gradually lowered the interest rates. And China allowed the RMB to appreciate against the USD.
This sends a signal to people who put their money overseas – that you used to exchange RMB for USD to capture the high interest rates. Now if you do not change back the USD to RMB, your money will lose their value over time, and all the interests you have earned in the past and more would be lost.
China is now doing to the US what the US did to it.
The Impact
When there is a net capital inflow, the banks benefit. The economy has more money. But China has been careful to let the RMB rise slowly so that the market and the economy has time to react and to adapt. The excess capital and the intentional low interest rates to spur spending should help prop up the economy.
We also ask ourselves this – where will the excess capital go to? In China’s case, it is likely to go into the stock market.
With all the above points being considered, the banking sector should see a brighter future.
Why PSBC?
There are so many banks up for investment in China. Why specifically PSBC? First, we only choose state-owned enterprises, which narrows down the choices a bit. Secondly, it is because it is cheap. There are good quality banks at a more expensive price, and there are slightly slower banks at a cheaper price. For my HK and China stocks, generally I am more conservative, choosing to place my more risky endeavours in US stocks and crypto instead.
When I say cheap, I do not mean it in terms of nominal price, but in terms of its P/B ratio. When a stock is cheap enough, I do not need to worry about future fluctuations. I rather earn less and have a more peaceful time doing other things.
Conclusion
In conclusion, the banking sector in China is expected to do well in the future and choosing to invest in PSBC is simply my own preference and risk tolerance in this particular class and segment of assets.
ๅนพๆฅๅ่ฒทไบ้ตๅฒ้่ก็่ก็ฅจ๏ผๅจๅฐ็ด ๆธไธๅ ฌ้ไบใๆ่ฎ่ ่ฆๆฑๆๅไบซไธๆ็ๅๆใไปๅคฉๅฐฑ็ฐกๅฎๆข่จ่ๅพ็้่ผฏใ
็ถๆฟๅ้่ก้ฑๆ
ๆฏๅ็ขๅ๏ผ็ถๆฟ้ฝๆ่ชๅทฑ็้ฑๆใๆ่ณๅฐฑๅฅฝๅๆๆ๏ผๅชๆๅจๅฐ็ๆ้้่ฆๅฐ็ไบบๆ่ฝ้่ฑ็ตๆใๅ ถไป็ตๅ็็ตๆไธๆ็ๆณใ่้่กๅ็ถๆฟ็้ฑๆๆฏ็ถๅจไธ่ตท็ใ็ฐกๅฎ่ชช๏ผ็ถๆฟ้ฑๆๅๆ4ๅ้ๆฎต – ๅพฉ็ฆ๏ผ็นๆฆฎ๏ผ่กฐ้๏ผ่ญๆขใ
ๅพฉ็ฆ – ไฝๅฉ็๏ผๅฟซ้ๅข้ท๏ผไพๆ้ๆฑ้ฝๅ ๅคง๏ผ็ข่ฝๆๅ๏ผๅฐฑๆฅญ่ๅทฅ่ณไธๆผฒใๅจ้ๅ้ๆฎต๏ผๅคฎ่ก้ๅธธๆ่จญไฝๅฉ็ๆ่ณ้ๆๆฌๅฃไฝ๏ผไฟ้ฒๆถ่ฒปๅ็ถๆฟใ
็นๆฆฎ – ๅข้ท็ๅทฒ้ๅฐ้ซ้ป๏ผ้่นๅฏ่ฝๆ้ซ๏ผ็ถๆฟ้็ฑ๏ผๅคงๅฎถ็็ๆถ่ฒปใๅจ้้ๆฎต๏ผๅคฎ่กๅฏ่ฝๆ่ชฟ้ซๅฉ็ๅฃๅถ้่นใๆๅ่ฆ้็พๅ้ฃ้บผๅใ
่กฐ้ – ๅข้ท็่ฎ็ทฉๆ ข๏ผๅฐฑๆฅญ็ไธ้๏ผ็ฉๅนๅๆปฏ๏ผ้ๆฑๆธๅฐ๏ผๅ ไผๆฅญๆฒๅๆๅๆๅฐ่ด็ข่ฝ้ๅฉ๏ผๆๅพ็ฉๅนไธ่ทใ้่กไธ่ฏ่ฒธๆฌพๅขๅ ๏ผๅ ้ซๅฉๆฏๅฐ่ดๅ่ฒธๅๆถ็ไธๆปใ
่ญๆข – ็ถๆฟไฝ้ปใ
ไธญๅ็็ถๆฟ้ฑๆ
ๆๅ็พๅจ็ฅ้ไธญๅ็็ถๆฟๆฏ2019ๅนด้ๅฐ้ซ้ปใ้จ่2020็ซๆ ็็ผ๏ผๅ จ็็ถๆฟ็ญๆซ็่กฐ้๏ผ้จๅพ็พๅๅคงๅฐ้ขไฟ้ฒไบๅ ๅฏ่ฒจๅนฃๅ่กๅธ็็ๅธใไฝๅจไธญๅ๏ผ็ธๅ็ไบๅป็ผ็ไบใๆจๅธๆณกๆฒซ็็ ด่ฃๆฏ็ตฆ้ญๅๅฐ็ซๆ ็้ๅตไธ้ชไธๅ ้ใๅคงๅญธ็ขๆฅญ็ๆพไธๅฐๅทฅไฝ๏ผๅทฅไบบๆฟไธๅฐ่ชๆฐด๏ผไผๆฅญๅๅๅบไธๅๆฅไธๅๅ้ใ
็พๅจ๏ผไธญๅ็ฌ้ๅปไบ็ถๆฟ็ๆ่ฑ้ฃๆๆ๏ผๆบ้ๅปไบ็พๅ็็ถ่ๆปๆใ็ถไธญๅ็ถๆฟ่กฐ้ๆ๏ผ็พๅ็ๅ ๆฏๅฐ่ดๅคง้่ณ้ๆตๅบไธญๅใไบบๆฐๅนฃ้จๅพๅฐฑไธ็ด่ฒถๅผ๏ผ้ ๆไธๅๆกๆงๅพช็ฐใ้ๆฏไธๅๅฐไธญๅ็็ถ่ๆปๆ๏ผ่ไธญๅๆบ้ไพไบใ็ถฒ็ตกไธๅฐ้ๆปๆๆๅคๅ่งฃ้๏ผๅ ๆฌ็พๅ้ผ่ไธญๅ้ๆพๅธๅ ด๏ผ่ฎ่ณๆฌไฝๅนๆไธญๅ่ณ็ขใไธ้ไธ็ฎกๆ้บผๆจฃ๏ผๆ็ ็ฌ็ๆๆๅทฒ้ไบใ
ๅๆ
้ทๆ้็ๅ ๆฏ่ฎ็พๅๆๅฐๅๅ๏ผ้จๅพ็พๅ้ๅง้ๆฏใ้็ถ็พๅ ้ๅง่ฒถๅผ๏ผไฝไบบๆฐๅนฃ็ๅๅผๅ้ๅไธฆๆฒๆ็ดๆฅ้ไฟ๏ผ่ๆฏไธญๅๅคฎ่ก่ฆ้ฃ้บผๅ็ใ้ๅฐฑ็ผๅบไบไธๅไฟก่๏ผไฝ ๅ้ฃไบไนๅๆ้ขๅผๅบๅป็๏ผๅไธๅผๅไพไธญๅ๏ผ้ฃ้บผไฝ ๅ็้ขๅฐฑๆ่ฒถๅผ๏ผ้ๅป่ณบ็ๅฉๆฏ้ฝๆๅคฑๅป๏ผ็่ณๅคฑๅป็ๆดๅคใ
ไนๅ็พๅๆ้บผๆ็ฉบไธญๅ๏ผไธญๅ็พๅจๅฐฑๆ้บผๅผๅๅปใ
ๅฝฑ้ฟ
็ถ่ณ้ๆฏ็ธฝๆตๅ ฅ็๏ผ้่กๆๅ็ใ็ถๆฟไนๆๆๆดๅค้ขใไฝๆฏไธญๅๅพๅฐๅฟ็่ฎไบบๆฐๅนฃๆ ขๆ ขไธๅ๏ผ่ฎๅธๅ ดๅ็ถๆฟๆ่ถณๅค ๆ้ๆๅฐ๏ผ้ฉๆใๅค้ค็่ณ้ๅๅปๆ็ไฝๅฉ็ๅฐๆไฟ้ฒๆถ่ฒปๅๆ็ถๆฟๆ่ตทไพใๆๅไนๅ่ชๅทฑไธๅๅ้ก๏ผๅค้ค็่ณ้ๆๅปๅช่ฃก๏ผ็ญ๏ผๅคๅๆฏ่กๅธใ
็ถๅไปฅไธๅๆ๏ผ้่กๆฅญ็ๆชไพๆๆดๅ ๅ ๆใ
็บไป้บผ้ธๆ้ตๅฒ้่ก
่กๅธๆๅพๅค้่ก่กๅฏๆ่ณ๏ผ็บไป้บผๅ้ธไธ้ตๅฒ้่กๅข๏ผ็ฌฌไธ๏ผๆๅๅช้ธไบๅไผ๏ผ้ๅฐฑๅปๆไธไบ้ธๆไบใไบ๏ผๅ ็บๅฎ่ถณๅค ไพฟๅฎใๅธๅ ดๆๆดๅฅฝ่ณช้ไฝ่ผ่ฒด็้่ก๏ผไนๆไพฟๅฎไฝๆ้ท้ๅบฆ่ผๆ ข็ใๆๅจๆธฏA่กๅธ็ๆ่ณ้ฝๆฏๅๅไฟๅฎ็๏ผๅ ็บๆๆ้ขจ้ช่ผ้ซ็็พ่กๅ้ขจ้ชๆฅต้ซ็ๅ ๅฏ่ฒจๅนฃใ้่ฃกๆ็ไพฟๅฎไธๆฏๅนๆ ผไธ็ไพฟๅฎ๏ผ่ๆฏๆๅธๆทจ็็ไพฟๅฎใ็ถไธๅ่ก็ฅจ่ถณๅค ไพฟๅฎ๏ผๅฐฑไธ้่ฆๆๅฟๆชไพ็ๆณขๅใไฝ ๅๆ้บผ่ท๏ผไนๅพ้ฃ่ฎๆๆๅพๅคง็่งๆใๆๅฏงๅฏๅฐ่ณบ๏ผไน่ฆ่ฝๅค ๅฎๅฟๅป่็ๆๆฅๅธธ็ๅ ถไปไบ็ฉใ
็ต่ซ
ไธญๅ้่กๆฅญๆชไพๆๆไธ้ฏ็ๅๆฏ๏ผ่ๆ่ณ้ตๅฒ้่กไธ้ๆฏๆๅจๆ่ณไธญ็้ๅ็ดฐๅ็ๅไบบ้ธๆๅ้ขจ้ชๆฅๅๅบฆใ
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$99,999.00
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Price range: $69.00 through $99.00
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