Category: Thoughts

This letter has been sent to Fund Investors and others likely to have an interest. If you’d like a PDF it’s here. Otherwise a copy is pasted below.

If, and it is an ‘if’, China stocks aren’t perched on a ledge before another big tumble then they’re consolidating in a bear market. If that’s the case, this would be good news. To be clear, a bear market is different from one that’s just gone down. A true bear market is when all hope […]

In February 2016 I wrote on Hong Kong and said then I’d probably not write anything more about the place for some time. Eight-plus years is enough time to have left the subject alone, so I’m back with an update. In that 2016 note I flagged most of what has come to to pass, ex […]

Six months ago today, frustrated by the nuts-cheap valuations of stocks in the Hong Kong market, I wrote a note on the subject (please, revisit it here Acres of Diamonds). The main point was that value often presents itself very simply. There’s rarely a need to scour the world’s obscure market segments or rummage about […]

[As the last W-share listed behemoth to flirt with its listing price flails (Meituan 03690, September 2018, H$69.00, others are well through) brief thoughts on the process of listing companies that once touted poor corporate governance i.e. Weighted Voting Rights, as a virtue. It wasn’t then, it isn’t now.] The decision taken by the Hong […]

Two economies dominate consideration of economic prospects in the next decade. Look around today. Almost every modern convenience was conceived of or perfected in the United States, and almost every device facilitating this convenience was made in China; and this reality of daily life, for most on the planet, is unlikely to change soon. In […]

[The title of this note is a reference to a speech* given by Russell Conwell, founder of Temple University, over six thousand times before his death in 1925. The speech encouraged Philadelphians not to dream of distant riches but find them, via observation and enterprise, in their own backyard. If you substitute ‘Hong Kong’ for […]

Summary Sentiment towards China stocks is improving. A closer look at trend components suggests the momentum is likely to persist. Preamble Throughout this note I’m going to use stock prices as a sentiment-gauge acknowledging they’re far from perfect; but they’re not that bad either. A rough guide to how non-domiciled investors have fallen in, and […]

Just over a year ago JP Morgan issued research, they quickly claimed ‘in error’ (March 2022), that used the word ‘uninvestible*’ to describe Chinese internet stocks. [*I believe the description correct, but I don’t run a bank whose revenues, in part, are hostage to the favorable opinions of many in the sector.] Irrespective of the […]

Preamble China stock investors have had a rum time of it in recent years. Capricious government policies, on both the macro and micro level, have caused multi-year investor pain and fomented a climate of rolling uncertainty. This, in turn, has led to an exodus of liquidity and largely explains the more-than-decade-long cycle of depressed valuation […]

Prophets of China-doom don’t have a bad track record; theirs is an appalling one. Not one major prediction about a China demise, or a terminal illness blighting parts of its economy, made in the last 20-years has been correct. Not one. In short, the surest way to get a forecast about China wrong in recent […]

Alibaba (BABA, 9988 HK) listed in the U.S. on September 19th 2014. Those who secured an allocation at the IPO price paid U$68.00. Others could have bought when the stock opened that day at U$92.70. The majority of today’s holders though paid a long way north of both these prices and now, with the stock […]

I first wrote in April 2021 about the dangers of investing in New Economy Speculative Complex And Related, or NESCAR stocks (Slow Pile Up So Far). I followed that up a year later with an update (Ample Scope for Further Significant Losses); and here’s the last word. This is a short note because potential for […]

Today’s a holiday in Hong Kong so I thought I’d spend some time to catch up with how the New Economy Speculative Complex And Related (NESCAR) sector has been doing. To remind, my go-to indicator is an index compiled by Goldman Sachs in 2021 of highly valued loss making companies which I wrote about in […]

The world’s two largest economies offer different scenarios for stock investors into the second half of 2022; one can now either: a) invest in an uncertain economy where recession may occur; but if it doesn’t an ongoing reckoning of profligate and inflationary government policies, deleterious to corporate earnings growth, will continue. Or, b) invest in […]

My first (and last) contribution on cryptocurrencies was prompted by an inquiry from an unlikely source. My older brother, a recent retiree living in the U.K. wrote to me late in December last year with a simple question “Would I buy cryptocurrencies?” Below is my answer (with some minor edits) which I think covers everything […]

A year ago I took a look at the components of an index of unprofitable new-economy companies Goldman Sachs put together in early 2021. [NESCAR Watch – Slow Pile Up: So Far] I described these stocks then as a window into a much bigger group, the New-Economy Speculative Complex And Related (NESCAR). Since then we […]

The citizens of Pompei weren’t wiped out by the sudden eruption of Mount Vesuvius. They were treated first to an 18-hour rain of pumice during which many fled with belongings and lives preserved. Only after this unpleasant but unequivocal harbinger of something far nastier did the pyroclastic flows, from which no escape was possible, commence […]

The Chinese currency (Rmb) doesn’t free-float against the U.S.-Dollar (U$), it goes where Chinese planners want it to; and recently that’s been up. Two years ago 1-Rmb bought 14.5-U$ cents, today it buys 15.7-U$ cents which is a strengthening of around 8.5%. What’s the fundamental economic rationale for this move? Why have the Chinese authorities […]