For decades, China has enjoyed a celebrated status as the world’s manufacturing mecca. Since Bill Clinton signed the NATO expansion of ‘98, a substantial slice of the American industrial sector has relied on the People’s Republic to produce everything from iPhones to outerwear.

Chinese exports soon became essential to the economic health of our country and so many other nations as well. So when Covid-19 hit China first and foremost, inducing lockdown after lockdown after lockdown the past 2.5 years…

The global economy began experiencing product shortage (after product shortage after product shortage) and shipping chaos. Naturally then, many a business has suffered too.

The Straits Times out of Singapore reports:

“Foreign firms saw a drop of 16.1% in their profits during the January-to-May period from a year earlier, a similar contraction to the first four months of the year.

“In contrast, profits across all industrial companies in China gained [1%] in the five-month period.

“For May alone, industrial profits fell 6.5% from a year earlier, narrowing from April’s 8.5% drop, data from the National Bureau of Statistics showed on Monday (June 27).”

With China continuing its strict Covid policies, many businesses around Europe and America are now reassessing their relationship with the global industrial giant. In fact, nearly a quarter of European companies are now considering cutting their ties to the country.  

Strangely though, investors aren’t onboard with that boycott, as it were. Since Mid-March, Chinese markets have enjoyed a 30% upswing, believe it or not. Shares were cheap due to lockdowns and government policies, and so outsiders flocked to these indexes to take advantage.

Many banks and funds are especially funneling big money into this market.

As far as manufacturing goes though, we’re still at a loss, with American companies reporting continuing challenges. In fact, only 31% of manufacturing and services businesses surveyed by the American Chamber of Commerce in Shanghai said that operations had resumed fully.

And most that have are reporting problems in traveling to job sites there.

Obviously, China’s place in the global economy is shifting. Covid truly tested the resilience of this regime and revealed the weaknesses inherent in our over-dependence on it.

Hopefully, then, we take these lessons to heart and operate wisely from here – both as investors and businesses.  

More Non-REIT News to Know About 

A couple of months ago, as we all know, tech billionaire Elon Musk made a move to acquire Twitter (TWTR) for a cool $44 billion. But then new information came to Musk’s attention that the social media service’s user numbers might not be as accurate or authentic as everyone has been led to believe.

Twitter projects that fake accounts represent less than 5% of its 229 million monetizable active users. Musk has estimated the number at around 20%.

As such, he ordered an investigation of user authenticity pending his purchase. This created a contentious back and forth that’s finally resulted in him being given the data he requested.

As per The Wall Street Journal:

“Twitter in recent weeks provided Mr. Musk with historical tweet data and access to its so-called fire hose of tweets, people familiar with the matter said. That fire hose shows the full flood of all tweets – people post hundreds of millions of times a day on the platform, according to the company – in near real-time.”

Yet this data dump hasn’t been nearly as helpful as the billionaire would have wished. The sheer amount of data and esoteric criteria for confirming inactive or unauthentic accounts apparently makes it especially hard to prove much of anything.

“It’s going to be very hard to get the level of assurance that would allow Mr. Musk to establish a defensible position to take a different action,” says Carey O’Connor Kolaja, CEO of identity-verification company Au10Tix Ltd.

It might take a rocket scientist to figure this all out. Or maybe just someone who employs a bunch of them.

The World According to REITs 

So today’s final focus isn’t technically a real estate investment trust (REIT). But it certainly looks like it’s headed in that direction.

The so-far private Arrived Homes is a single-family real estate rental investment platform. It’s accelerating acquisitions as demand from retail investors grows stronger for fractional real estate.

In just the last month, this business purchased approximately $11 million worth of rental properties, representing a 110% year-over-year increase. And investors can buy shares for as little as $100.  

Amazon (AMZN) founder Jeff Bezos already bought into the tune of $37 million last June through Bezos Expeditions. And he made a second investment during the company’s more recent $25 million Series A round.

Other big-name investors include Dara Khosrowshahi, CEO of Uber; and Hadi Partovi, CEO and founder of Code.org.

Arrived Homes has experienced rapid growth in just a short amount of time with its reimagination of how real estate investing is done. So far, it’s funded over 130 single-family homes, hand-picked by its investment team.

REIT or not, I remain curious to see what comes of this up-and-comer… and whether it will have an impact on the REIT world as younger investors enter the market.