Nine Shanghai trends from a YouTuber explaining the puzzle of HK/China's poor recent stock market performance

In recent years, China's stock market has experienced brief rallies that have consistently failed to maintain momentum. This happened to my Hong Kong and China stock portfolios. There was a strong rally starting in November 2022, then it ended disappointingly by end of January 2023. Hang Seng Index and CSI 300 index ended down double-digit in percentage terms last year. I hope the strong rally that started this year in April does not end up in the same way.

The disappointments left me wondering: What's really happening with the Chinese economy? What's happening on the ground?

To gain insight into this complex situation, I found an unexpected source: a YouTuber living in Shanghai, one of China's most prominent first-tier cities. His observations, while seemingly small, offer telling signs that the economy might not be performing as well as hoped.

Here are the nine unusual trends that he observed in Shanghai during 2024, painting a pessimistic picture of significant economic and social changes.

1. Bringing lunch from home

One of the most noticeable changes in Shanghai's urban landscape is the shift in lunchtime habits among white-collar workers. Once bustling with activity, many restaurants near office buildings have now closed their doors. The reason? Employees are increasingly opting to bring lunch from home.

This trend goes beyond mere cost-cutting. While saving money is certainly a factor, many workers also cite health benefits as a reason for this change. The YouTuber observes, "我有一个同事啊，是单身汉，他以前从来不带饭，总觉得做饭麻烦，但是最近啊，他一反常态，告诉我说啊，带饭不仅省钱，而且还更健康。" (I have a colleague, a single man, who never used to bring lunch, always thinking cooking was troublesome. But recently, he's changed his habits, telling me that bringing lunch not only saves money but is also healthier.)

This shift not only impacts individual spending habits but also has broader implications for the food service industry in business districts.

2. The End of Job-Hopping Culture

In previous years, conversations among friends and colleagues in Shanghai often centered around career advancement, with topics like job-hopping and salary increases dominating discussions. Headhunters would regularly reach out with new opportunities, and news of friends landing better-paying positions was common.

However, 2024 has seen a dramatic change in this dynamic. The YouTuber shares, "年初，我们公司的一个业务团队直接被解散，一个月后，我们公司中国区的总裁法人，还有一位工资很高的20多年工龄的老员工，全部都被公司遣散。" (At the beginning of the year, one of our company's business teams was directly dissolved. A month later, our company's China region president and legal representative, along with a high-salaried employee with over 20 years of service, were all laid off by the company.)

Economic uncertainty has shifted the focus from seeking better opportunities to maintaining job stability. When faced with layoffs, remaining employees now express gratitude for their positions rather than resentment towards the company. The prevailing attitude has become one of dedication to current roles, with little appetite for the risks associated with changing jobs.

3. The Surprising Ease of Hailing a Ride

In a city once notorious for its difficult taxi situations, especially during peak hours or bad weather, getting a ride in Shanghai has become surprisingly easy. The YouTuber recounts, "上周五晚上，上海下了大雨，我和朋友啊，在市中心聚会到很晚，通常呢周末晚上在市中心打车，都要等一个多小时，如果是下雨天，就更打不到车了。我抱着试试的心态，打开滴滴打车软件，结果不到两分钟，就有辆宝马接单了，让我很意外。" (Last Friday night, it was raining heavily in Shanghai. My friends and I were out late in the city center. Usually, on weekend nights in the city center, you'd have to wait over an hour for a taxi, especially on rainy days. I opened the Didi ride-hailing app without much hope, but to my surprise, a BMW accepted my order in less than two minutes.)

This ease of access could be attributed to two factors: fewer people using taxi services, or an increase in the number of drivers joining ride-hailing platforms, possibly as a side gig. Either way, it's a clear indicator of declining economic conditions in the city.

4. Lightning-Fast Food Delivery

The food delivery landscape in Shanghai has also seen a significant shift. Where orders once took an hour or more to arrive, deliveries now often reach customers within 15 minutes. This improvement in service speed likely stems from a combination of fewer orders and an increase in delivery personnel, many of whom may have turned to the gig economy due to challenges in other sectors.

The YouTuber notes, "2024年，中国外卖送餐员已经达到了600多万。" (In 2024, the number of food delivery workers in China has reached over 6 million.)

5. The Stagnating Real Estate Market

Perhaps one of the most concerning trends is the dramatic slowdown in Shanghai's second-hand housing market. Despite government efforts to stimulate the market through relaxed lending policies and the removal of purchase restrictions, enthusiasm for buying property remains low.

The numbers tell a stark story: February 2024 saw only 6,800 second-hand home sales in Shanghai, compared to 19,000 in February 2023 - a staggering 64% decrease. This downturn is having real impacts on homeowners, with some seeing the value of their properties drop significantly in just a couple of years.

A personal anecdote illustrates the impact of this property downturn. The YouTuber shares a story about a friend who bought an 8 million RMB apartment in Shanghai two years ago. Recently, a similar apartment next door sold for only 6 million RMB, representing a 2 million RMB loss in value. This significant depreciation is causing potential buyers to hesitate, as they witness others losing substantial amounts of money on their investments.

Interestingly, the YouTuber mentions a conversation with his future mother-in-law, who had previously encouraged him to buy property in Shanghai. In light of the current market conditions, she now expresses relief that he didn't make that purchase, saying, "幸亏你之前没有在上海买房啊，不然可是亏大了。" (It's fortunate you didn't buy a house in Shanghai earlier, otherwise you would have suffered a big loss.)

6. The Vanishing International Presence

Shanghai, once a bustling international metropolis, is seeing a noticeable decrease in its foreign population. The YouTuber reflects, "我刚回国的时候，走在上海的街头，有时间我都分不清楚我到底是在中国还是在国外。" (When I first returned to China, walking on the streets of Shanghai, sometimes I couldn't tell if I was in China or abroad.)

Areas that were once filled with expatriates and international tourists, such as the iconic Bund and Nanjing Road, now see very few foreign faces. This trend extends beyond just tourists. Many long-term foreign residents are leaving the city, and the number of international students has plummeted. For instance, while 15,000 American students came to study in China in 2012, that number has now dropped to a mere 350 per year.

7. The Closing of City Center Malls

The retail landscape in Shanghai is undergoing a significant transformation, with several major shopping malls in the city center closing their doors. Iconic establishments like Isetan Department Store and Pacific Department Store, which were once crowded shopping destinations, now stand empty.

The YouTuber shares, "我上海的朋友说，这些商场是伴随着他们长大的，他们小时候经常会来这些商场玩，现在有时候会怀旧去这些地方逛一逛，看到一个个关门的商店，显得非常的萧条凄凉，总觉得心里很不是滋味。" (My Shanghai friends say these malls grew up with them. They often came to play here as children. Now, they sometimes visit these places out of nostalgia, but seeing one closed shop after another makes them feel desolate and melancholic.)

These closures are more than just a change in the retail environment; they represent a loss of cultural landmarks for many Shanghai residents who grew up visiting these malls. The sight of these once-bustling spaces now standing vacant evokes a sense of nostalgia and concern among locals.

8. The Surge in Loan Solicitation

In a telling sign of the financial sector's challenges, there has been a marked increase in loan solicitation calls to Shanghai residents. The YouTuber states, "2024年的上半年，我接到的贷款电话的数量，比过去5年加起来都要多。" (In the first half of 2024, the number of loan solicitation calls I received was more than the total for the past 5 years.)

This aggressive push by banks to find borrowers suggests a significant drop in loan demand, likely due to economic uncertainty and a shift towards saving rather than borrowing. As a market observer, this trend is particularly concerning because: Reduced loan demand signals decreased business investment and consumer spending, as both companies and individuals become hesitant to take on debt. Bank lending often serves as an early warning system, preceding other visible signs of economic distress by several quarters. Historically, changes in bank lending practices have been one of the most reliable leading economic indicators.

9. The Disappearance of International Travel Talk

Once a status symbol and common topic of conversation among Shanghai's white-collar workers, discussions about international travel have all but disappeared. Social media feeds that were once filled with photos from overseas trips are now notably lacking in such content.

The YouTuber observes, "以前啊上海精致白领的标配是每年要出国旅游两次，现在，上海精致白领的标配变成了国内游。" (Previously, the standard for sophisticated white-collar workers in Shanghai was to travel abroad twice a year. Now, it has become domestic travel.)

Instead, domestic tourism has become the new norm, marking a significant shift in spending habits and aspirations among Shanghai's middle class.

These nine trends observed in Shanghai, one of China's most prosperous cities, paint a concerning picture of the country's economic health. From changes in dining and commuting habits to major shifts in real estate, retail, and travel patterns, we're seeing clear signs of economic strain.

If these recessionary indicators are observable in a top-tier city like Shanghai, it's likely that other parts of China are experiencing even more significant challenges. For investors and businesses with interests in the Chinese market, these trends serve as important signals to watch.

As an investor, I like to have a sense of these ground-level changes to get a more accurate picture of the country's economy beyond official statistics. While official statistics provide one perspective, for a foreign investor like me, these real-life observations offer invaluable insights into the daily realities of life and business in China's most important cities.

You can watch the youtube here. It is in Chinese.