China DreamGoldman Sachs produced an index a while ago of unprofitable ‘Technology’ companies and I thought it’d be a useful lens through which to view the coming-down-to-earth of a group of companies I’m calling the New Economy Speculative Complex And Related, or NESCAR for short. This isn’t just a fun parlor game. It has real implications […]
[The failure to launch yesterday of Baidu’s (9888) Hong Kong IPO is a clear sign all’s not well with the China new-economy speculative complex. With Meituan (3690), Pinduodo (PDD) and NIO (NIO) all now over 30% lower than recent highs and Alibaba (9988) and JD.com (9618) over 20% off their peaks (to finger merely the […]
That large downward corrections (in excess of 50%) in the prices of certain financial assets* will take place in due course is in no doubt. Much has already been written on this subject so I don’t want to waste time on the why or how. Let’s just accept it; it’s most surely going to happen. […]
In 1993 Morgan Stanley’s then Chief Strategist Mr. Barton Biggs returned from a trip to China and declared himself “tuned in, overfed and maximum bullish.” At the time I’d recently given up on Japan and was working in Hong Kong. An old friend called from Tokyo; “Hey, you heard of some guy called Biggs? Says […]
All happy markets are alike; each unhappy market is unhappy in its own way. Having said that, a look back at the big market dislocations of my career (the first being 1987) reveals recurrent commonalities. Turbulence in financial markets can be traced to one of four root causes; let’s call them the Four Horsemen of […]
I’m a fan of Einstein, and who isn’t? One of his most applicable quotes to finance is the one about everything needing to be simple; but not too simple. In recent weeks, and ones to come, we’ve heard and will hear a lot of talk about markets from people who, mostly, haven’t a clue what […]
The world’s worst performing major stock market in 2019, barring any big upset in the next couple of days, will have been Hong Kong. As of last Friday here are the world’s largest market performances for 2019 [Indices exclude dividends in all cases]: #1 S+P-500 +29% #2 Shanghai Stock Exchange Composite +21% #3 Nikkei-225 + […]
I’ve written before about how Hong Kong IPOs (and China stocks in general) consistently disappoint investors so I don’t want to revisit, at length, that theme here. [Shovel Vendors versus Prospectors Oct. 2018, Doggy China Stocks Dec. 2018] Instead, before the press write the inevitable gush about how 2019 has been a record year for […]
Human beings have inherited ticks from their ancestors that were handy when roaming the plains of the Serengeti but are now dangerous if not commonsensically moderated. Two notable examples are dietary preference and risk taking. Our ancestors gained a reproductive advantage from gorging when they could, especially if what was on offer was either sweet […]
You’ve heard by now there’s a United Nations report that documents upwards of 1m Uighurs held in captivity in ‘concentration camps’ in Xinjiang? There is, in fact, no such report. There’s no smoke without fire though and the story is rooted in an event that took place on August 10th last year. China is a […]
I’ve just spent 18-days on the east coast of America. My journey included visits to the towns of Williamsburg, Hudson, Ithaca and Niagara Falls and the cities of New York and Washington D.C. Along the way, I saw Mennonite farmers plowing fields with horses in upstate New York. I got lost in the Hasidic Jewish […]
China’s property markets have been on a three-decade tear; but a combination of spent one-off propellants and the moderating intensity of remaining push-factors suggest more measured progress ahead. ‘Measured’ though, in the context of what for years will remain among the most vigorous economies on the planet, doesn’t capture the still considerable potential these markets […]
[This is a short note because its purpose is to flag an ongoing headache rather than dwell on causes, symptoms or possible cures. I may return to those in due course.] Avoidable Calamity The title of this note should have been the headline for the story that was run by the Financial Times on January […]
I’m not just referring to the last couple of years. In work published* in the Q4 edition of the Financial Analysts Journal you’ll find this observation “.., since 1997 the market with the fastest growing economy [China, out of 43 that made up the MSCI World Country Index] has posted one of the lowest stock […]
China’s stock markets have progressed, in the last three years, not necessarily to investor’s advantage. A look at the performance of broad indices over the period is self explanatory: Shanghai Stock Exchange Composite Index -25% Shenzhen Stock Exchange Composite Index -36% Hang Seng China Enterprises Index -7% Summary Conclusion Presently, nothing good can be said […]
The IPO process in Hong Kong, as I’ll explain in this note, has been a serial value-destroyer in the last couple of years and part, but by no means all, of the problem lies within the industry that greases its wheels. It is investors though that must shoulder the final responsibility for a system that […]
In Brief The short-term macro outlook for Emerging Markets (EM), of which China is the largest, is poor; but stock prices have moved a long way to reflect this. This isn’t a compelling argument for fresh engagement. It is however a strong argument for investors already involved to Hold-Fast. Preamble The macroeconomic outlook for EMs […]
Preamble Investors who bought shares early in today’s China-tech-darlings have done well. If you were in the right stocks, at the right time, heavily weighted your portfolio in that direction and have taken no profits on the way up, you will now be, minted. Congratulations to the lucky few described above. Most investors, however, were […]
“Sometimes, a question is easier to answer if it’s inverted.” Me (channeling Chazza Munger). China stocks rose in 2017, but weren’t in a ‘bull-market’; they were continuing a recovery from a crushing begun in August 2015 that reached its maximum intensity in January 2016. As we head into 2018 it seems reasonable to ask; is […]
I’ve told myself, and others, the real excitement in China today is in the smaller cities; and it is. Therefore, in the last few years I’ve concentrated my travels into the lesser metropolises. Thus, I felt a catch up with vanguards of China’s progress, the cities of Guangzhou and Shanghai, was overdue. Fresh from a […]