brobro777 Posted January 18, 2024 Posted January 18, 2024 Nikkei makes decades new highs while Hang Seng makes decades new lows I never imagined this but here we are
Parsad Posted January 22, 2024 Posted January 22, 2024 https://finance.yahoo.com/news/china-stock-selloff-worsens-hong-050429499.html Cheers!
Parsad Posted January 22, 2024 Posted January 22, 2024 12 minutes ago, Luca said: Opportunity or deflationary/stagnant market?! Cheers!
Luke Posted January 22, 2024 Posted January 22, 2024 19 minutes ago, Parsad said: Opportunity or deflationary/stagnant market?! Cheers! Do you need growth for below 10x earnings?
forest81 Posted January 22, 2024 Posted January 22, 2024 Thinking of buying a china basket. What do you think?? Baidu x 9 pe Baba x 7 JD.Com x 7 Tencent x 15 PDD x 26 There are some seriously good companies there. Thinking of holding for 10+ years. Only danger for me is political risk/ war risk.
Luke Posted January 22, 2024 Posted January 22, 2024 (edited) 56 minutes ago, forest81 said: Thinking of buying a china basket. What do you think?? Baidu x 9 pe Baba x 7 JD.Com x 7 Tencent x 15 PDD x 26 There are some seriously good companies there. Thinking of holding for 10+ years. Only danger for me is political risk/ war risk. I bought at higher prices and still think these companies are very very cheap. BUT uncertainty is as high as it gets with China/West relations, sanctions, possible war, crazy government/shady leadership etc. IF China makes the recovery and government stays solid+relations with west dont go worst case, these stocks should do super well from here IMO. Edited January 22, 2024 by Luca
Joseywales Posted January 22, 2024 Posted January 22, 2024 3 hours ago, forest81 said: Thinking of buying a china basket. What do you think?? Baidu x 9 pe Baba x 7 JD.Com x 7 Tencent x 15 PDD x 26 There are some seriously good companies there. Thinking of holding for 10+ years. Only danger for me is political risk/ war risk. I think position sizing is key. There is a very real chance it could blow up or stagnate 10+years and you have to remember opportunity cost. I'm choosing to keep my Chinese equities 3%-5% of my total portfolio.
Luke Posted January 22, 2024 Posted January 22, 2024 (edited) 2 minutes ago, Joseywales said: I think position sizing is key. There is a very real chance it could blow up or stagnate 10+years and you have to remember opportunity cost. I'm choosing to keep my Chinese equities 3%-5% of my total portfolio. Stagnate meaning they blow the 10% of their marketcap in earnings that are coming in every year away with 0 return or let the cash accumulate on the balance sheet and the market starts discounting the cash while they do 0 buybacks or dividends? Wdym with stagnate? Edited January 22, 2024 by Luca
Luke Posted January 22, 2024 Posted January 22, 2024 Tencent as an example earns 25b every year, in 10 years they will have 350b+ in cash on the balance sheet without doing anything but getting some interest. Current marketcap is 330bish. Historically they earn some 30% CAGR a year on investment cash and 60%+ on cash invested into the core business. EVEN if they can not find ANYTHING, they will do buybacks+dividends as they are doing right now. The cash they earn every year compared to the marketcap is way more than what nvidia or any other big tech will ever earn over the next 10 years. Now will they find opportunities for the cash? Will the US block every tech investment globally? Will nobody want to do anything with china and the investment power of the second largest economy? Honestly i don't care if they invest in hippie dippie europe/us or with the saudis and africa as long as these businesses grow. There is very very very low risk except some imaginary boom world war case that for the sake of humanity hopefully wont happen. Everybody takes their odds but fundamentals have to matter at some point and the market can only stay as delusional as when these high quality business chugg along and the classical conditioning subsides ;D
Joseywales Posted January 22, 2024 Posted January 22, 2024 10 minutes ago, Luca said: Stagnate meaning they blow the 10% of their marketcap in earnings that are coming in every year away with 0 return or let the cash accumulate on the balance sheet and the market starts discounting the cash while they do 0 buybacks or dividends? Wdym with stagnate? I was leaning towards the return on your investment. It's very clear the message set by the CCP and these powerhouse Chinese companies that they do not care about their international shareholders. While I do think that Tencent's management is a step above the rest and these companies will weather the upcoming storm of headwinds it's very much apparent that institutional investors do not want to touch Chinese equities with a 10 foot pole and there's a chance these equities can stay very cheap and undervalued for a very long time. FYI - I own a decent amount of Baba and JD and a few microcaps as far as Chinese equities. 1
Luke Posted January 22, 2024 Posted January 22, 2024 I would continuing loading the boat here, Xi is not anti investment and anti money, he doesn't like to see low quality real estate speculators that fill their pockets while common man and society suffers. The health of the society and flourishing matters more than IRR of private equity, doesnt mean they will stop developing and going back to an agrarian society. Chose your fighter!
Luke Posted January 22, 2024 Posted January 22, 2024 Frankly my china exposure is high already (25%+) so i might only add again if it gets ridiculous (5x earnings)
Luke Posted January 22, 2024 Posted January 22, 2024 3 minutes ago, Joseywales said: I was leaning towards the return on your investment. It's very clear the message set by the CCP and these powerhouse Chinese companies that they do not care about their international shareholders. While I do think that Tencent's management is a step above the rest and these companies will weather the upcoming storm of headwinds it's very much apparent that institutional investors do not want to touch Chinese equities with a 10 foot pole and there's a chance these equities can stay very cheap and undervalued for a very long time. FYI - I own a decent amount of Baba and JD and a few microcaps as far as Chinese equities. I dont even think they "dont care". Regulators just did their job and there are many understandable things happening. But obviously businesses come after the common prosperity so we have to deal with that in asia.
ICUMD Posted January 23, 2024 Posted January 23, 2024 Ultimately, capitalism is the only model that works to bring prosperity. India has now realized it. China will need to get back to it if they want to resurrect their economy. Outside this model, there is only 'uncommon prosperity'. China will need to resort to stimulus and open their markets if they want any hope of making economic progress. Maybe they will take another year or two, but I don't see any way out. Also, they will need to be more open and friendly to FDI. I doubt they will want to be left behind as it's neighbors rise economically around them.
Castanza Posted January 23, 2024 Posted January 23, 2024 44 minutes ago, ICUMD said: Ultimately, capitalism is the only model that works to bring prosperity. India has now realized it. China will need to get back to it if they want to resurrect their economy. Outside this model, there is only 'uncommon prosperity'. China will need to resort to stimulus and open their markets if they want any hope of making economic progress. Maybe they will take another year or two, but I don't see any way out. Also, they will need to be more open and friendly to FDI. I doubt they will want to be left behind as it's neighbors rise economically around them. Although I agree that Capitalism is the way I think you’re a bit short sighted to think China is just going to disappear. China has been around for 3500+ years. The US and other capitalist nations have barely been around for 200 years. The jury is out on how this goes long term for capitalism. I’m seeing a few cracks in the US and to me they seem to be a result of capitalism and growth/success culture at all costs. Short term, so far it does wonders. But if survivability and endurance is your game, there are other models out there that have clearly worked for a long time. I think over the next 100-200 years it will become apparent whether unfettered individual growth/success is a recipe for the long term survival l of a nation.
Spekulatius Posted January 23, 2024 Posted January 23, 2024 7 hours ago, Luca said: I would continuing loading the boat here, Xi is not anti investment and anti money, he doesn't like to see low quality real estate speculators that fill their pockets while common man and society suffers. The health of the society and flourishing matters more than IRR of private equity, doesnt mean they will stop developing and going back to an agrarian society. Chose your fighter! A good part of the real estate boom occurred under his watch. He has been in power since 2013 after all. RE was a way for the CCP to make their GDP growth numbers and that’s why they kept encouraging RE and now it’s way too big and those investors in RE are likely screwed. Xi now wants to deflate RE slowly as to not implode the economy. I think Xi is the worst leader China had since Mao. Anyways, I think the big companies like Alibaba, Tencent etc can do well despite all this, provided they are going to be left alone by the CCP, but that does not seem quite likely either.
Gamecock-YT Posted January 23, 2024 Posted January 23, 2024 these snowball derivatives kind of sound a bit like portfolio insurance from the 80s.
Thrifty3000 Posted January 23, 2024 Posted January 23, 2024 9 hours ago, Luca said: Stagnate meaning they blow the 10% of their marketcap in earnings that are coming in every year away with 0 return or let the cash accumulate on the balance sheet and the market starts discounting the cash while they do 0 buybacks or dividends? Wdym with stagnate? Don't forget about the big risks of doing business with strapped-for-cash commies: 1) Big bro takes the free cash from the company for the good of the many. 2) When there's no free cash left big bro takes control of the company and appoints his buddies to all the paying jobs. Eventually Atlas Shrugs and the capital either fights or flees.
Parsad Posted January 23, 2024 Posted January 23, 2024 18 hours ago, Luca said: Do you need growth for below 10x earnings? If it is going to take 10 years to double my money...then yes. Cheers!
Parsad Posted January 23, 2024 Posted January 23, 2024 13 hours ago, Luca said: I bought at higher prices and still think these companies are very very cheap. BUT uncertainty is as high as it gets with China/West relations, sanctions, possible war, crazy government/shady leadership etc. IF China makes the recovery and government stays solid+relations with west dont go worst case, these stocks should do super well from here IMO. War, U.S. issues, Taiwan invasion...these seem like remote problems...unless Trump wins. My biggest issue is that China has always had two sets of books for their companies and the government. One that they show to the world and one that is the true balance sheet. I'm wondering if the fire power to manage credit issues/loan losses on the true balance sheet is just not there. After such a stock market rout, they are pulling money from state-owned companies with foreign accounts and in total only about $600B total in stabilization funds. https://finance.yahoo.com/news/china-weighs-stock-market-rescue-015731696.html https://finance.yahoo.com/news/china-premier-calls-better-measures-131418550.html Are they biding their time, trying to spread the massive real estate losses over a decade or two? Are they on the cusp of having no other way to deal with these bad loans? And the economy is clearly contracting, so what levers can they really pull? Cheers!
Parsad Posted January 23, 2024 Posted January 23, 2024 4 hours ago, ICUMD said: Ultimately, capitalism is the only model that works to bring prosperity. India has now realized it. China will need to get back to it if they want to resurrect their economy. Outside this model, there is only 'uncommon prosperity'. China will need to resort to stimulus and open their markets if they want any hope of making economic progress. Maybe they will take another year or two, but I don't see any way out. Also, they will need to be more open and friendly to FDI. I doubt they will want to be left behind as it's neighbors rise economically around them. +1! Cheers!
ICUMD Posted January 23, 2024 Posted January 23, 2024 China (CCP) has really undermined confidence in their financial system. Ironically, taking out Jack Ma at the knees has brought their whole economy to their knees. I suspect it will take way more than 300 billion to resurrect. It will be costly for the CCP. However, if they don't, the risk is revolt by Chinese citizens whom they have really screwed. CCP is running scared at this prospect. Second prospect that will cause distress would be a Trump win. Fixing their economic troubles is their #1 priority. I doubt invading Taiwan is a consideration with this financial backdrop.
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