China

[Paarslaars]

https://pracap.com/on-china-why-the-real-risk-is-cny-5-not-9/

[Intelligent_Investor]

Market is probably pricing in the WSJ news this morning that the US is preparing to sanction China

[Malmqky]

6 minutes ago, Intelligent_Investor said:

Market is probably pricing in the WSJ news this morning that the US is preparing to sanction China

 

looks like KWEB is up today? And my Chinese investments are up as well. Can you please clarify what you mean?

[Intelligent_Investor]

China was down the last several weeks, I'm assuming someone probably got wind of the news and was pricing it in

[changegonnacome]

One of the key questions investors have asked themselves re:China is what do you own in the context of the CCP coming in one day, overriding shareholder ownerships principles and compelling these companies to do XYZ that hurts the shareholders returns by making them do something uneconomic....which the story goes is "your fault"....because you bought a company in a communist country that doesn't care about the free market.

 

Well as the US congress, senate and now WH are signing a law to force a US firm with foreign parent into a forced sales process from its overseas parent...the question a Chinese domiciled investor should be asking ( ironically in the context of the above) is can you trust an investment in a firm with a large United States domiciled component cause the US government might come in and force that company to do something uneconomic....like force it to sell a business in a fire sale.

[Hektor]

2 minutes ago, changegonnacome said:

One of the key questions investors have asked themselves re:China is what do you own in the context of the CCP coming in one day, overriding shareholder ownerships principles and compelling these companies to do XYZ that hurts the shareholders returns by making them do something uneconomic....which the story goes is "your fault"....because you bought a company in a communist country that doesn't care about the free market.

 

Well as the US congress, senate and now WH are signing a law to force a US firm with foreign parent into a forced sales process from its overseas parent...the question a Chinese domiciled investor should be asking ( ironically in the context of the above) is can you trust an investment in a firm with a large United States domiciled component cause the US government might come in and force that company to do something uneconomic....like force it to sell a business in a fire sale.

[Hektor]

13 minutes ago, changegonnacome said:

One of the key questions investors have asked themselves re:China is what do you own in the context of the CCP coming in one day, overriding shareholder ownerships principles and compelling these companies to do XYZ that hurts the shareholders returns by making them do something uneconomic....which the story goes is "your fault"....because you bought a company in a communist country that doesn't care about the free market.

 

Well as the US congress, senate and now WH are signing a law to force a US firm with foreign parent into a forced sales process from its overseas parent...the question a Chinese domiciled investor should be asking ( ironically in the context of the above) is can you trust an investment in a firm with a large United States domiciled component cause the US government might come in and force that company to do something uneconomic....like force it to sell a business in a fire sale.

Also important to note that the CEO of TikTok USA, from what I can see, is moving around freely, does not plan to make a career switch into teaching or agriculture.

[crs223]

1 hour ago, changegonnacome said:

One of the key questions investors have asked themselves re:China is what do you own in the context of the CCP coming in one day, overriding shareholder

 

I don’t think this is a question at all.  You’ve seen it play out.

 

CCP kidnapped Alibaba’s founder, took an “golden share”, and levied a $3B fine (about 1% of market cap).  A few years later Alibaba is allowed to pay a dividend and buy back shares.

[crs223]

Among all the hysteria that China doesn't respect ownership rights… here comes Uncle Sam forcing Byte Dance to sell TikTok!

 

[Ulti]

https://www.reuters.com/world/china/chinese-brokerage-cicc-cutting-dealmakers-base-pay-by-25-sources-say-2024-04-28/

 

China's top graft-busting watchdog earlier this year vowed to eliminate ideas of a Western-style "financial elite" and rectify the hedonism of excessive pursuit of "high-end taste".

 

 

 

[Luke]

On 2/6/2024 at 1:54 PM, Luca said:

Its the year of the dragon folks, Xi aims to beat SP 500 this year...;-)

On 2/7/2024 at 9:22 AM, Parsad said:

 

That might be tough.  Cheers!

 

https://finance.yahoo.com/news/china-facing-us-financial-crisis-234945940.html

Edited May 2 by Luca

[Hektor]

https://www.bloomberg.com/news/articles/2024-05-04/france-s-macron-calls-for-reset-of-economic-ties-with-china

 

 

France’s Macron Calls for Reset of Economic Ties With China.
 

Europe wants more economic reciprocity from China, Macron says. French President Emmanuel Macron is calling for an update of the country’s economic ties with China, just as the country’s leader Xi Jinping is expected to travel to France for a State visit.

[Luke]

 

https://www.scmp.com/news/china/diplomacy/article/3261632/xi-jinping-pushes-closer-ties-europe-eu-pressures-china-russia-and-trade?module=top_story&pgtype=homepage

[Parsad]

On the weekend, Buffett talked some about investing in China and elsewhere outside of the U.S.  He said as long as he's there, it is unlikely that Berkshire will invest significant sums outside of the U.S. 

 

Younger management may choose to do so when he's gone, but culturally he has no advantage investing outside of the U.S., nor does he have any real need to since many of Berkshire's investments and businesses have substantial operations outside of the U.S.  

 

After my experiences with China, and considering the size of investments I'm making, Buffett's position is extremely similar to my own thinking.  Cheers!

[Charlie]

On 5/6/2024 at 5:27 PM, Parsad said:

On the weekend, Buffett talked some about investing in China and elsewhere outside of the U.S.  He said as long as he's there, it is unlikely that Berkshire will invest significant sums outside of the U.S. 

 

Younger management may choose to do so when he's gone, but culturally he has no advantage investing outside of the U.S., nor does he have any real need to since many of Berkshire's investments and businesses have substantial operations outside of the U.S.  

 

After my experiences with China, and considering the size of investments I'm making, Buffett's position is extremely similar to my own thinking.  Cheers!

 

+1

Yeah, it is pretty simple.

Why should you invest in a high risk country, when you can invest in a low risk country?

It doesn´t make sense.

 

Edited May 7 by Charlie

[crs223]

46 minutes ago, Charlie said:

Why should you invest in a high risk country, when you can invest in a low risk country?

 

Why would you invest in a high risk bond when you can invest in a low risk bond?

[Charlie]

10 hours ago, crs223 said:

Why would you invest in a high risk bond when you can invest in a low risk bond?

Of course it depends on the risk prospensity of the investor.

Buffett called himself a "No-risk guy". 

 

[Parsad]

12 hours ago, crs223 said:

 

Why would you invest in a high risk bond when you can invest in a low risk bond?

 

If they provide the same return or the return you desire...why would you?  Cheers!

[Gamecock-YT]

https://insideevs.com/features/719015/china-is-ahead-of-west/

 

Quote

So, when automakers, tech companies and regulators push back on China, the sentiments that they’re just protecting our market from unsafe or security-challenged products feel hollow. Instead, it feels like grandstanding, and a tacit admission that they have no intention of trying to do better.

 

Instead of competing, they’d rather just shut out competition entirely. The concerns about cybersecurity don’t address the elephant in the room here: Your product sucks, compared to what China is putting out now. It doesn’t go as far. It’s not as well-made. It’s not as nice. It’s not as connected. 

....

If the U.S. and Europe get what they want—a crackdown on Chinese imports—it doesn’t feel like it would result in better cars. It feels like it would keep buyers of those markets locked to cars that aren’t executed as well. It’s nakedly protectionist because deep down, all of the Western auto executives and some hawkish China pundits understand that Chinese EV and PHEV models are more compelling than what European, other Asian, and American brands have come up with.

 

I’ve seen it with my own two eyes. We’re cooked.

 

Edited May 10 by Gamecock-YT

[mattee2264]

On 5/8/2024 at 9:37 AM, Parsad said:

 

If they provide the same return or the return you desire...why would you?  Cheers!

 

There is your argument right there. 

 

USA has a CAPE of 34x and China has a CAPE of 10x. 

 

In China you are getting about a 700bps equity risk premium. In USA you aren't getting any kind of equity risk premium (expect implicitly through future growth prospects).

 

Of course China is a basket case and no one is suggesting you should put 100% of your portfolio in China. But with that valuation gap there is probably a decent case for a 10-20% allocation via a MSCI China index (diversification is the way to go for a know nothing investor without local market knowledge or political knowledge). Naturally things could get a lot worse but over a 10 year period you can expect a decent return from such depressed valuations. 

[formthirteen]

https://www.rand.org/pubs/research_reports/RR1708.html

 

Quote

Given these instances and others, it is no surprise that the nature of modern warfare as understood by the PLA has drastically changed. In the last two decades, the PLA has increasingly recognized that war is no longer a contest of annihilation between opposing military forces, but rather a clash between opposing operational systems. In this new reality, an enemy can be defeated if its operational system can be rendered ineffective or outright unable to function through the destruction or degradation of key capabilities, weapons, or units that compose the system. As a result, according to PLA publications, modern warfare is now properly characterized as a conflict waged between adversarial operational systems.

 

Quote

This new strategy explicitly recognizes that joint operations taking place in the information age are increasingly non- linear as numerous types of units from multiple services continuously conduct operations throughout the entirety of the battlefield.

Not only are the modes of war fighting (i.e., systems confrontation) and methods of joint operations (i.e., nonlinear) unique to modern-day warfare, so are the battlefields on which conflict is waged. Systems confrontation is waged in the traditional physical domains of land, sea, and air but also in outer space and the nonphysical cyberspace and electromagnetic domains. As a result, specific geographical boundaries or specific strategic directions no longer fully characterize the modern battlefield. Winning wars—or at the very least, not losing wars—requires the ability to “wage comprehensive competition in all domains.”

 

Quote

While achieving dominance in one or a few of the physical domains was sufficient for war-fighting success in the past, systems confrontation requires that “comprehensive dominance” be achieved in all domains. For example, air dominance was perceived as necessary to achieve land or sea dominance in the 20th century. But under systems confrontation, information dominance is thought to be the core precondition to achieving dominance in other domains.

 

It seems the modern Opium War is waged with weapons like TikTok and Fentanyl. Social unrest in the West is partly self-inflicted and boosted by China and its strategy for dominance.

[formthirteen]

Quote

 

U.S. to Announce New Tariffs on Chinese Electric Vehicles

 

The administration could raise tariffs on electric vehicles from China to 100 percent in an attempt to protect American auto manufacturers.

 

 

https://www.nytimes.com/2024/05/10/us/politics/us-biden-china-tariffs-electric-vehicles.html

 

Quote

I was embarrassed. Here I was in China, trying to empathize with Western brands, thinking they were being pushed out of China due to politics and things that were no fault of their own.

 

In reality, it felt like it was the late 1980s again, when American manufacturers felt like they could sell whatever underdeveloped models its accounting department had cooked up to the public, and we’d just have to deal with it.

Now that I’ve seen a glimpse of what’s going on in China, the Western manufacturers, particularly the American ones, don’t seem like they’re trying at all.

 

 

Quote

 

So, when automakers, tech companies and regulators push back on China, the sentiments that they’re just protecting our market from unsafe or security-challenged products feel hollow. Instead, it feels like grandstanding, and a tacit admission that they have no intention of trying to do better.
 

Instead of competing, they’d rather just shut out competition entirely. The concerns about cybersecurity don’t address the elephant in the room here: Your product sucks, compared to what China is putting out now. It doesn’t go as far. It’s not as well-made. It’s not as nice. It’s not as connected.

 

 

Quote

 

If the U.S. and Europe get what they want—a crackdown on Chinese imports—it doesn’t feel like it would result in better cars. It feels like it would keep buyers of those markets locked to cars that aren’t executed as well. It’s nakedly protectionist because deep down, all of the Western auto executives and some hawkish China pundits understand that Chinese EV and PHEV models are more compelling than what European, other Asian, and American brands have come up with.

I’ve seen it with my own two eyes. We’re cooked.

 

 

https://insideevs.com/features/719015/china-is-ahead-of-west/

 

I'm long PAH3.DE. Sold 1211.HK some time ago, a bit too early.

Edited May 12 by formthirteen

[Parsad]

On 5/10/2024 at 1:48 AM, mattee2264 said:

 

There is your argument right there. 

 

USA has a CAPE of 34x and China has a CAPE of 10x. 

 

In China you are getting about a 700bps equity risk premium. In USA you aren't getting any kind of equity risk premium (expect implicitly through future growth prospects).

 

Of course China is a basket case and no one is suggesting you should put 100% of your portfolio in China. But with that valuation gap there is probably a decent case for a 10-20% allocation via a MSCI China index (diversification is the way to go for a know nothing investor without local market knowledge or political knowledge). Naturally things could get a lot worse but over a 10 year period you can expect a decent return from such depressed valuations. 

 

I don't really invest in the broad market except for VOO which I own in my corporate account, as I don't want to generate much in realized capital gains.  I look for individual stocks in the rest of my portfolio and mostly even in the corporate account...so I can always find a couple of good ideas a year in the U.S. regardless of the market's overall valuation and I incur no political/property rights risk.  Cheers!

[Luke]

 

[Luke]

It's interesting to see how some European countries decide to turn so positively to China while others don't. This shows again, that the development and foreign politics goals and rewards of one EU country are different for another (unlike the pro EU parties often suggest). They are getting the choice: Move under the protectionist, war and austerity umbrella of the US, Germany and Co. Or move away from it and towards the Chinese-dominated, Eurasian hemisphere. The Chinese come with a lot of money, willing to build out local infrastructure, business, educational and cultural exchanges, increasing tourism from China and vice versa. So much potential in all of these left-alone countries to grow and develop, Hungary, Serbia, Montenegro, etc. China building out trains, streets, ports...lots of cheap goods from china and cheap too unlike the US belt countries which get more and more expensive services and products+deficits, austerity and inflation, their local populations will be happy. From what I see, China is doing foreign and developmental politics at its finest. 

 

Edited May 13 by Luca