China

[rohitc99]

2 hours ago, patience_and_focus said:

It depends on what people want (when given a choice - autocracies don't count). Part of Western bias (in middle east) was assumption of wanting western style democratic states.

 

As for India, I have been told by numerous immigrants that people there are very independent minded in the sense that they don't like being told what to do and there is also huge diversity of language (> 25) and culture (like Europe). That is why it's like herding cats. But all in all people prefer their way / subcultures and are allowed to practice that. That is what matters.

Exactly and also a lot of social issues like casteism as not imposed top down. Does not mean its acceptable or fair, but it a feature of the society and the government has been fighting it for the last 75 years with some success and progress.

 

that said, the level of freedom is very high (maybe too high sometimes). What prem has been pointing out in his letters is not hyperbole, there is a lot change happening in the country. he referenced this video ..worth watching especially from an investing standpoint too

 

India has leapfrogged a lot of western countries from a digital infrastructure standpoint

 

 

[Luke]

Only for german viewers or english subtitles, one of the BEST videos i have seen about china. Frank Sieren lives in Peking for more than 20 years and informs german news agencies about developments there, holds talks about china etc. 

 

 

Edited April 1, 2023 by Luca

[mcliu]

I think our Western mainstream propaganda media's view on China is far too pessimistic compared to the actual data.

 

 

[Aurel]

On 4/1/2023 at 11:57 AM, Luca said:

Only for german viewers or english subtitles, one of the BEST videos i have seen about china. Frank Sieren lives in Peking for more than 20 years and informs german news agencies about developments there, holds talks about china etc. 

 

 

Hey thank you for the link! It's refreashing to hear some real first hand opinion on china. Corresponds very much to my own travel experiences. Not the typical german "we do it right, so they have to follow us!"-twaddel.

Usualy not a Jung & Naiv-Fan. But this is a good one! Bought the book "Zukunft? China!: Wie die neue Supermacht unser Leben, unsere Politik, unsere Wirtschaft verändert "

[Parsad]

8 hours ago, mcliu said:

I think our Western mainstream propaganda media's view on China is far too pessimistic compared to the actual data.

 

 

I think the primary criticism isn't what they are doing right...which has been noted for the last 15 years...but what they are doing wrong, such as arbitrary property rights, political interference in other sovereign nations, human rights abuse, pollution, etc.

 

They aren't alone in this, nor are Western countries any less culpable in similar or dissimilar circumstances.  But it is worth noting what are the pros and cons of investing or dealing with China. 

 

As someone who watched a cash cow disappear overnight because Beijing decided to do something else with no recourse, and someone who has visited China and has enormous respect for what they have done, I think it's important to understand the risks of investing there.  

 

Cheers!

[Luke]

3 hours ago, Aurel said:

Hey thank you for the link! It's refreashing to hear some real first hand opinion on china. Corresponds very much to my own travel experiences. Not the typical german "we do it right, so they have to follow us!"-twaddel.

Usualy not a Jung & Naiv-Fan. But this is a good one! Bought the book "Zukunft? China!: Wie die neue Supermacht unser Leben, unsere Politik, unsere Wirtschaft verändert "

If you want another recommendation that is as interesting as the interview with Frank Sieren: 

 

This is also a bit linked to the content of china: Economic policies and growing the economy. As counterintuitive it might sound to some economists, wage pressures increase economic growth and efficiency innovations. That american business like amazon tries to pay as little as possible might be good for them and shareholders but not for GDP growth and competition that leads to the consumer and society winning. Common prosperity is the term for a market that benefits the society as a whole and not the shareholder. As @Parsad pointed out, the chinese have a different view on how much business is allowed to control. That can mean that shareholders dont come first as it is the case in the US. 

 

If these policies will lead to a better economy and higher prosperity for the general public remains to be seen, i am personally very bullish on china and i think the people in power there are very well educated and have levers the US cant push, therefore all this counter talk and blaming. China is in a position where they can gain more power than the US, also because of their governmental long term control. I think if one would want exposure to chinas growth and developments in Asia, Prosus is the best vehicle for it. Tencent is under scrutiny at times but they know what the CCP wants and the risk of them being targeted severely is low. The idea of the ,,satisfied,, customer is a good one and i think that shareholders will be rewarded to some degree. The low price and long runway will probably more than compensate for the risk of more severe regulation and redistribution of wealth (which will actually benefit tencent in the longterm because of the general GDP growth for china).

 

 

 

Edited April 4, 2023 by Luca

[Luke]

I personally am a fan of Jung and Naiv, their videos are generally of very high quality, they ask critical questions, the people on the show are important politicians and one gets a great overview of their competence. Id say that they are too left in some areas and underappreciate capitalism (if capitalism works) but also invite viewers that give a good counter view (Ulrike Hermann, pro capitalism but also radically green). Cheers to my fellow germans @Aurel!

[Luke]

The Video of Frank Sieren changed my oppinion on china a lot, sad its only in german.

[RetroRanger]

21 minutes ago, Luca said:

The Video of Frank Sieren changed my oppinion on china a lot, sad its only in german.

 

Best guy, luckily i am german. I can recommend his books on China  

[Luke]

26 minutes ago, RetroRanger said:

 

Best guy, luckily i am german. I can recommend his books on China  

 

 

This was a good clip to describe the point of view of africa and african-chinese relations vs germany now

[Castanza]

Country level success above all. Very much an "organism" mindset vs individual. 

Strong family values and work ethic remind me of the US post WWII. This is very much a predictor of country success. 

Country success =/= shareholder success to Parsad's point

 

Two simple docs that capture the amazing feats and accomplishments of China along with the ugly side of China. The second one shows the Urban Village issues and the emphasis on growth at all costs. @Luca thanks for the above interviews. 

 

 

 

 

[Spekulatius]

The growth in China has been there, but for shareholders China has been a dud and there are many reasons why. high GDP growth does not mean good shareholder returns.

[Castanza]

Question for those in the know. How is the shareholder treatment different between China and India? Is India much more favorable? 

[Saluki]

4 minutes ago, Castanza said:

Question for those in the know. How is the shareholder treatment different between China and India? Is India much more favorable? 

 

I own some BABA and have been raked over the coals by the Chinese government, so I'm more comfortable now with India (Fairfax India) Korea (Coupang) or Mexico (Televisa) going forward.  When Jim Rogers mentioned his bullishness on China, he analogized it to the US in the early 1800s.  If you had invested in the US you were buying into the incredible growth. It was lumpy and you had a civil war, the great depression, a genocide of the Indians, several wars with other countries, numerous presidents assassinated, the bankruptcy of the railroads, corrupt politicians and judges, but it was so good that being directionally correct was enough. But I've soured on that outlook because even if he is right, I don't have 200 years to ride out that volatility and if the legal institutions and respect for property rights isn't there, will my ADRs be worth anything to my grandchildren?  If you were a British merchant and had invested in NY Gas Light Company in 1824 and left the shares in a safe that was hidden, when your descendants came upon the shares almost 200 years later, they would be entitled to the shares in ConEd and all the uncashed dividends along the way.  I don't think anyone believes they wouldn't get every penny of it. 

 

As a country with a strong central government that does what it wants, even if it overrides people's rights, it can move quickly and get things done.  But what are the odds that Xi's successors will always act in a way that benefits China and not themselves. A powerful central government only needs one autocratic leader who won't step down to turn it into a dictatorship. The Chinese people have never had a democracy, so would they even notice if the power grab was inch by inch instead of all at once? Maybe a war with Taiwan is what they want to rally everyone behind the rulers and jail anyone who opposes them?  Who knows?  

 

I feel fairly confident that in India you get some of that Asia growth story and some of that Commonwealth legal system respect for property rights that has benefited most of their former colonies (US, Canada, Australia, NZ).  

 

 

[Castanza]

22 minutes ago, Saluki said:

 

I own some BABA and have been raked over the coals by the Chinese government, so I'm more comfortable now with India (Fairfax India) Korea (Coupang) or Mexico (Televisa) going forward.  When Jim Rogers mentioned his bullishness on China, he analogized it to the US in the early 1800s.  If you had invested in the US you were buying into the incredible growth. It was lumpy and you had a civil war, the great depression, a genocide of the Indians, several wars with other countries, numerous presidents assassinated, the bankruptcy of the railroads, corrupt politicians and judges, but it was so good that being directionally correct was enough. But I've soured on that outlook because even if he is right, I don't have 200 years to ride out that volatility and if the legal institutions and respect for property rights isn't there, will my ADRs be worth anything to my grandchildren?  If you were a British merchant and had invested in NY Gas Light Company in 1824 and left the shares in a safe that was hidden, when your descendants came upon the shares almost 200 years later, they would be entitled to the shares in ConEd and all the uncashed dividends along the way.  I don't think anyone believes they wouldn't get every penny of it. 

 

As a country with a strong central government that does what it wants, even if it overrides people's rights, it can move quickly and get things done.  But what are the odds that Xi's successors will always act in a way that benefits China and not themselves. A powerful central government only needs one autocratic leader who won't step down to turn it into a dictatorship. The Chinese people have never had a democracy, so would they even notice if the power grab was inch by inch instead of all at once? Maybe a war with Taiwan is what they want to rally everyone behind the rulers and jail anyone who opposes them?  Who knows?  

 

I feel fairly confident that in India you get some of that Asia growth story and some of that Commonwealth legal system respect for property rights that has benefited most of their former colonies (US, Canada, Australia, NZ).  

 

 

Thanks Saluki, that makes a lot of sense and I tend to agree. China's growth is highly impressive but the lack of property rights and ability to actually truly own anything is a glaring issue. The lack of justice in the judicial system is a tough one. Could be the same in India tbh I don't know. Overall, this has been my main issue with investing in China and why I don't have any positions in Chinese equities. I think the growth story of China continues, but how to profit from that while minimizing risk? Not sure. Tough to balance western bias and the realities of the Chinese political/economical system. Both have a lot of propaganda. 

 

India on the other hand seems a lot more open to western influence. They seem less corrupt from the top down and seem to strike some semblance of middle ground between autocratic and democratic. They seem more open to the outside world where China like to dominate from the inside out. With the insights from Prem and Fairfax I agree that there are some good vehicles for exposure to the Indian economy. 

[tnp20]

It doesnt have to be either or. Both India and China will do well until China's demographics start being a major headwind. The losers will be Europe, Japan and US. China has such a huge lead in EV's ...the German and Japanese auto idustry is on the back foot as they havent pivotted fast enough from ICE. China's demographic issues are starting but the likely pinching impact is not likely to be felt for a decade or so.

 

From a demographics point of view India, Brazil and Indonesia have strong tail wind. China is in unique situation where they are starting to have demographic issues but other factor will carry it forward for at least the forseeable future.

 

I am invested in China but also excited about India. They have the India stack of technology, and massive self sustaining investment in infrastructure. They are liberalizing tax, business rules, divesting and reforming the legal system. The last part has just begun is likely a multi-decade affair. The government is exiting the areas it should not be (divestments, unnecessary labor laws) and finally stepping up in the areas it should act (infrastructure, legal system). India seems to be in a self sustaining cycle. I have not been back to india in many decades but from what I have seen and heard, the progress is remarkable and there is incredible optimism in the population and business leaders - they see an achievable goal to be a developed country by 2047. Lot of things are now positively reinforcing themselves and US see India more in its side than China which will give it additional benefit.

 

China is indeed at the mercy of Xi. This single point has hurt the stock holders over last few years, but I think its premature to rule out the chinese market at least for the next 5-10 years.

 

 

[Castanza]

1 hour ago, tnp20 said:

It doesnt have to be either or. Both India and China will do well until China's demographics start being a major headwind. The losers will be Europe, Japan and US. China has such a huge lead in EV's ...the German and Japanese auto idustry is on the back foot as they havent pivotted fast enough from ICE. China's demographic issues are starting but the likely pinching impact is not likely to be felt for a decade or so.

 

From a demographics point of view India, Brazil and Indonesia have strong tail wind. China is in unique situation where they are starting to have demographic issues but other factor will carry it forward for at least the forseeable future.

 

I am invested in China but also excited about India. They have the India stack of technology, and massive self sustaining investment in infrastructure. They are liberalizing tax, business rules, divesting and reforming the legal system. The last part has just begun is likely a multi-decade affair. The government is exiting the areas it should not be (divestments, unnecessary labor laws) and finally stepping up in the areas it should act (infrastructure, legal system). India seems to be in a self sustaining cycle. I have not been back to india in many decades but from what I have seen and heard, the progress is remarkable and there is incredible optimism in the population and business leaders - they see an achievable goal to be a developed country by 2047. Lot of things are now positively reinforcing themselves and US see India more in its side than China which will give it additional benefit.

 

China is indeed at the mercy of Xi. This single point has hurt the stock holders over last few years, but I think its premature to rule out the chinese market at least for the next 5-10 years.

 

 

 

Well my perspective is more of "this is the capital I have available to invest what do I want to do with it?" I'm pretty stringent with positions and even though investors may do well in BABA or Tencent, I can't justify what I have being used towards that. At least not in the current market conditions where there is an abundance of opportunities with far less risk to worry about. That opinion could change though as the market changes. I'm not opposed to investing in China as a permanent stance. It's simply a lower tier on the priority list if that makes sense. 

[Spekulatius]

the problem with India is that there is no good vehicle to do so. Fairfax India is an lousy way to invest in India with high fees and the closed end structures which leaves the possibility of a creeping takeunder. The individual investor can't invest in individual securities there.

[WayWardCloud]

How about this bad boy?

https://www.ishares.com/us/products/239659/ishares-msci-india-etf

 

[thowed]

If you can't access individual stocks, then there are some excellent Indian & Chinese active funds, but the best ones tend to be under the radar.  Also I know the UK/European market & have little knowledge about the US mutual fund scene.

 

First Sentier have some US presence, have a ton of experience in China and India, great long-term track records and have an excellent radar for dodgy governance.  The flipside is that this quality focus means they tend to underperform in raging bull markets, but then outperform in bear markets.

 

I think China and India are both fascinating and exciting markets to be invested in, but they both have their individual issues.

 

 

 

[Luke]

7 hours ago, Castanza said:

Country level success above all. Very much an "organism" mindset vs individual. 

Strong family values and work ethic remind me of the US post WWII. This is very much a predictor of country success. 

Country success =/= shareholder success to Parsad's point

 

Two simple docs that capture the amazing feats and accomplishments of China along with the ugly side of China. The second one shows the Urban Village issues and the emphasis on growth at all costs. @Luca thanks for the above interviews. 

 

 

 

 

Country success goes over individual shareholder success, to a degree yes. But China understands they cant grow alone so i think that this incredible disregarding of investing in china and the ,,china is uninvestable,, is just false. Growth at all cost is what brings this country forward, not billions in dividends that go to few billionaire shareholders but real growth for common working people.   

6 hours ago, Spekulatius said:

The growth in China has been there, but for shareholders China has been a dud and there are many reasons why. high GDP growth does not mean good shareholder returns.

 

 

 

This story of zero profits is also just false, valuations in china are partly ridiculously cheap, if these come up bar with the US the returns are very decent. And many businesses had stellar returns. High GDP growth will mean good shareholder returns, as long as those businesses dont become predatory!

 

5 hours ago, Castanza said:

Question for those in the know. How is the shareholder treatment different between China and India? Is India much more favorable? 

The individual businesses treat shareholders similiar to US, just look at tencent, there is no difference with dividends buybacks and culture. Whats different is the willingness of the government to regulate and also their ability to regulate. In the US many businesses can engage in predatory practices, pay ridiculous wages to people, abuse them, shatter unions, bought politicians that harm the majority of working people. In China there is from one night to the other immediate action and tough regulation, the american shareholder then comes with ,,socialism,, and ,,no shareholder rights,,. I dont think its true and many regulations are very smart. 

5 hours ago, Saluki said:

 

I own some BABA and have been raked over the coals by the Chinese government, so I'm more comfortable now with India (Fairfax India) Korea (Coupang) or Mexico (Televisa) going forward.  When Jim Rogers mentioned his bullishness on China, he analogized it to the US in the early 1800s.  If you had invested in the US you were buying into the incredible growth. It was lumpy and you had a civil war, the great depression, a genocide of the Indians, several wars with other countries, numerous presidents assassinated, the bankruptcy of the railroads, corrupt politicians and judges, but it was so good that being directionally correct was enough. But I've soured on that outlook because even if he is right, I don't have 200 years to ride out that volatility and if the legal institutions and respect for property rights isn't there, will my ADRs be worth anything to my grandchildren?  If you were a British merchant and had invested in NY Gas Light Company in 1824 and left the shares in a safe that was hidden, when your descendants came upon the shares almost 200 years later, they would be entitled to the shares in ConEd and all the uncashed dividends along the way.  I don't think anyone believes they wouldn't get every penny of it. 

 

As a country with a strong central government that does what it wants, even if it overrides people's rights, it can move quickly and get things done.  But what are the odds that Xi's successors will always act in a way that benefits China and not themselves. A powerful central government only needs one autocratic leader who won't step down to turn it into a dictatorship. The Chinese people have never had a democracy, so would they even notice if the power grab was inch by inch instead of all at once? Maybe a war with Taiwan is what they want to rally everyone behind the rulers and jail anyone who opposes them?  Who knows?  

 

I feel fairly confident that in India you get some of that Asia growth story and some of that Commonwealth legal system respect for property rights that has benefited most of their former colonies (US, Canada, Australia, NZ).  

 

 

If you bought shares in tencent 15 years ago, the story will be the same and also for the future. The only difference is again, the governments ability to regulate markets for the good of the economy. In China practices like FORCED yearly increased wages of 15% in several coastal provinces made many businesses move to the countryside for cheaper labour. The government can pull levers to grow underdeveloped parts much more than the US. They CCP administration has smart people sitting there looking at the US, what works and what doesnt work and then they can immediately start implementing without needing votes and all of that. It gives them an edge, especially in long term planning. China is already a dictatorship and authoritarian, doesnt necessarily have to be bad as long as the leader organizes that his people are taken care off so they dont revolt. The CCP knows this very well and Xi JinPing is someone who takes common prosperity to the heart IMO. 

4 hours ago, Castanza said:

Thanks Saluki, that makes a lot of sense and I tend to agree. China's growth is highly impressive but the lack of property rights and ability to actually truly own anything is a glaring issue. The lack of justice in the judicial system is a tough one. Could be the same in India tbh I don't know. Overall, this has been my main issue with investing in China and why I don't have any positions in Chinese equities. I think the growth story of China continues, but how to profit from that while minimizing risk? Not sure. Tough to balance western bias and the realities of the Chinese political/economical system. Both have a lot of propaganda. 

 

India on the other hand seems a lot more open to western influence. They seem less corrupt from the top down and seem to strike some semblance of middle ground between autocratic and democratic. They seem more open to the outside world where China like to dominate from the inside out. With the insights from Prem and Fairfax I agree that there are some good vehicles for exposure to the Indian economy. 

Is it likely that tencent, JD, Baidu will be businesses that will be better and worth more in 10-20 years. Look at how much china can grow their country. 1.5b people, a government willing to growt the economy as hard as they can, pulling levers in countries all along asia, africa, europe. They invest where they can, and they invest very well. Its a no brainer for me to include some of these names at reasonable position sizes. Guy Spier has Baba and Prosus, Pabrai has Prosus, Munger has Tencent and Baba, there will be many more who own these assets for a reason. 

4 hours ago, tnp20 said:

It doesnt have to be either or. Both India and China will do well until China's demographics start being a major headwind. The losers will be Europe, Japan and US. China has such a huge lead in EV's ...the German and Japanese auto idustry is on the back foot as they havent pivotted fast enough from ICE. China's demographic issues are starting but the likely pinching impact is not likely to be felt for a decade or so.

 

From a demographics point of view India, Brazil and Indonesia have strong tail wind. China is in unique situation where they are starting to have demographic issues but other factor will carry it forward for at least the forseeable future.

 

I am invested in China but also excited about India. They have the India stack of technology, and massive self sustaining investment in infrastructure. They are liberalizing tax, business rules, divesting and reforming the legal system. The last part has just begun is likely a multi-decade affair. The government is exiting the areas it should not be (divestments, unnecessary labor laws) and finally stepping up in the areas it should act (infrastructure, legal system). India seems to be in a self sustaining cycle. I have not been back to india in many decades but from what I have seen and heard, the progress is remarkable and there is incredible optimism in the population and business leaders - they see an achievable goal to be a developed country by 2047. Lot of things are now positively reinforcing themselves and US see India more in its side than China which will give it additional benefit.

 

China is indeed at the mercy of Xi. This single point has hurt the stock holders over last few years, but I think its premature to rule out the chinese market at least for the next 5-10 years.

 

 

India is great, China is great, they will both be bigger economies with more and more influences in the future! 

 

 

 

Edited April 4, 2023 by Luca

[Spekulatius]

After doing 5 min of in depth due diligence, this one seems interesting:

https://fundresearch.fidelity.com/mutual-funds/summary/936793827

 

High expense ratio though (1.51%). 

[adesigar]

My issue with investing in India is the currency keeps losing value almost as fast as the stocks keep going up.  Sensex went from 20k to 60k in the last 15 years. Currency went from 1 USD = 40 Rs to 1 USD = 80 Rs. 

[rohitc99]

58 minutes ago, adesigar said:

My issue with investing in India is the currency keeps losing value almost as fast as the stocks keep going up.  Sensex went from 20k to 60k in the last 15 years. Currency went from 1 USD = 40 Rs to 1 USD = 80 Rs. 

You will have to look beyond the sensex. 5 companies - reliance, HDFC group, infosys, and icici bank account for 40%+ of it.

[rohitc99]

1 hour ago, adesigar said:

My issue with investing in India is the currency keeps losing value almost as fast as the stocks keep going up.  Sensex went from 20k to 60k in the last 15 years. Currency went from 1 USD = 40 Rs to 1 USD = 80 Rs. 

Also you have to assume an average of 3-4% depreciation on the currency on average. Its a unstated policy to continously depreciate the currency to boost exports. After the payments crisis in early 90s, the govt would never want that to happen