Asian Godfathers: Money and Power in Hong Kong and Southeast Asia - Joe Studwell

[schin]

Decent book that talks about moguls and elites in Southeast Asia and Hong Kong and how they acquired their wealth. It does talk about how they leveraged government sway to extend their wealth and how some of their greed caused the Asian Financial Crisis. Nothing new in that respect, but nobody really put it all in one book.

 

There are a few useful tidbits I added to my investment playbook.  For example, interesting points out why low P/E stocks in HK such as Wheelock, Chueng Kong Holdings, CK Hutchison with 10% insider ownership ... seem like you're aligned to the insiders, but they use private JVs to siphon money back to their families. So, essentially, they're the ultimate bear traps.  They're making off their partners, not with their partners.

 

The writing style is academic and a tough slog at times. I probably won't re-read this in the future, but definitely interesting how they used certain transactions to screw the population, government and also, fellow stakeholders.

 

Also, reaffirms my general thesis on banks as conduits of government and all need access to them to get into the billionaires club.

[thepupil]

Good book! Required reading for anyone tempted to buy stocks in Asia.

 

I actually think CK comes out fairly well relative to other more corrupt groups; it does a good job of tearing down the myth that superman came from absolutely nothing, and points to him basically bribing HK officials to get land/concessions/whatever at unfair prices, but in terms of shareholder unfriendly actions/siphoning of economics, CK comes out far better than some of the other HK families and particularly the Indonesian/Philipino/families. It also highlights Jardines as being really poorly managed and well...over the last 5 years that company is completely transformed/done lots of shareholder friendly stuff, replaced CEO w/ PE guy, brougth in lots of non family / professional mgt and is saying "hey we're gonna make money for shareholders now"....

 

so as someone who's making money in these bear traps and watching them sell assets, pay dividends, buy back stock, all from the starting point of being overcapitalized and in a mixed bag of businesses in terms of quality and sporting hugely discounted valuations, I'd point out that a lot can change from a 2013 book that mostly focuses on the 1998 Asian Financial Crisis.  On the other hand, I've looked at some other stuff to try to extend this beyond JArdine / 1 HK and find that governance/OPMI treatment looks bad and more in line with the characterization of How Asia Works. 

 

What i don't see as having changed is these families are still rent seekers who control large swathes of the various countries economies, and collectively hold their countries back from greatness (which felt like the point of the book to me). But from an investment standpoint, I actually think some of these co's are fertile hunting grounds. counter would be that it's just a short term mean reversion of a long term shitty performance and that i'm mistaking a little pop for enduring change (for these types of companies overall. 

[John Hjorth]

Thank you for some good starters posts here from @schin and @thepupil.

 

I'm a little confused, because I see two editions of this book at my web book store [www.saxo.com], both from the same year, 2008, both paperbacks :

 

 

I wonder what the difference among them actually is. Any help would be greatly appreciated, and no, it's not about the the DKK 30.00 in price difference.

[thepupil]

3 minutes ago, John Hjorth said:

Thank you for some good starters posts here from @schin and @thepupil.

 

I'm a little confused, because I see two editions of this book at my web book store [www.saxo.com], both from the same year, 2008, both paperbacks :

 

 

I wonder what the difference among them actually is. Any help would be greatly appreciated, and no, it's not about the the DKK 30.00 in price difference.

 

 I may have caused further confusion too by confusing it with How Asia Works (though everything i wrote about was regarding Asia Godfathers by same author). HAW was published in 2013...Godfathers was before that....How Asia Works is literally sitting on my desk so i was looking at it when i wrote post above. 

 

I don't know anything about the two versions. I read the one on the right...

[John Hjorth]

3 minutes ago, thepupil said:

I may have caused further confusion too by confusing it with How Asia Works (though everything i wrote about was regarding Asia Godfathers by same author). HAW was published in 2013...Godfathers was before that....How Asia Works is literally sitting on my desk so i was looking at it when i wrote post above. 

 

I don't know anything about the two versions. I read the one on the right...

 

Thank you, @thepupil,

 

No matter what happened in your memory, it's very useful information anyway, no matter what. I'm aware of the book by same author 'How Asia works' [,  I typically find books in the directory of the book shop by doing searches by author names], and I may order that as well.

 

Your comments about the age of these books ref. status quo now are certainly important, ref. company inflection points in time.

 

Thank you.

[EgonKuhn]

1 hour ago, John Hjorth said:

Thank you for some good starters posts here from @schin and @thepupil.

 

I'm a little confused, because I see two editions of this book at my web book store [www.saxo.com], both from the same year, 2008, both paperbacks :

 

 

I wonder what the difference among them actually is. Any help would be greatly appreciated, and no, it's not about the the DKK 30.00 in price difference.

 

Left one is ISBN 978-1-86197-711-3 printed by publisher Profile in UK (2008), right one is ISBN 978-0-8021-4391-4 printed by publisher Grove Press in USA (2007). Usually the same content because it's just a licensed reprint.

[John Hjorth]

2 minutes ago, EgonKuhn said:

Left one is ISBN 978-1-86197-711-3 printed by publisher Profile in UK (2008), right one is ISBN 978-0-8021-4391-4 printed by publisher Grove Press in USA (2007). Usually the same content because it's just a licensed reprint.

 

Thank you very much for this, Egon [ @EgonKuhn ] !

[schin]

6 minutes ago, EgonKuhn said:

 

Left one is ISBN 978-1-86197-711-3 printed by publisher Profile in UK (2008), right one is ISBN 978-0-8021-4391-4 printed by publisher Grove Press in USA (2007). Usually the same content because it's just a licensed reprint.

 

@John Hjorth

 

I read the one on the left, but I believe the content is the same.

 

For "How Asia Works" -- this is an interesting comment I found “A good read for anyone who wants to understand what actually determines whether a developing economy will succeed.” —Bill Gates, “Top 5 Books of the Year”

 

It must have been a slow year... LOL.

 

Joe provides an interesting perspective and some behind the scenes details that you normally don't get in the West. 

 

For example, I've been trying to the get autobiography of Morris Chang, Founder of TSMC. I emailed the publisher and see if they will do a translation to no-avail. I've also purchased and bought the Li-Ka Shing book.. which is all PR and marketing.... a lovefest for the richest person in HK. I like how Joe Studwell gives you a different take. I wish there was more written about asian CEOs.

 

[schin]

1 hour ago, John Hjorth said:

Thank you for some good starters posts here from @schin and @thepupil.

 

I'm a little confused, because I see two editions of this book at my web book store [www.saxo.com], both from the same year, 2008, both paperbacks :

 

 

I wonder what the difference among them actually is. Any help would be greatly appreciated, and no, it's not about the the DKK 30.00 in price difference.

 

@John Hjorth - If you like, I do not mind sending you my book.  Just DM your address and I'll ship you my copy. I'll even autograph it for you, but that might depreciate it value more! LOL

[schin]

14 hours ago, thepupil said:

Good book! Required reading for anyone tempted to buy stocks in Asia.

 

I actually think CK comes out fairly well relative to other more corrupt groups; it does a good job of tearing down the myth that superman came from absolutely nothing, and points to him basically bribing HK officials to get land/concessions/whatever at unfair prices, but in terms of shareholder unfriendly actions/siphoning of economics, CK comes out far better than some of the other HK families and particularly the Indonesian/Philipino/families. It also highlights Jardines as being really poorly managed and well...over the last 5 years that company is completely transformed/done lots of shareholder friendly stuff, replaced CEO w/ PE guy, brougth in lots of non family / professional mgt and is saying "hey we're gonna make money for shareholders now"....

 

so as someone who's making money in these bear traps and watching them sell assets, pay dividends, buy back stock, all from the starting point of being overcapitalized and in a mixed bag of businesses in terms of quality and sporting hugely discounted valuations, I'd point out that a lot can change from a 2013 book that mostly focuses on the 1998 Asian Financial Crisis.  On the other hand, I've looked at some other stuff to try to extend this beyond JArdine / 1 HK and find that governance/OPMI treatment looks bad and more in line with the characterization of How Asia Works. 

 

What i don't see as having changed is these families are still rent seekers who control large swathes of the various countries economies, and collectively hold their countries back from greatness (which felt like the point of the book to me). But from an investment standpoint, I actually think some of these co's are fertile hunting grounds. counter would be that it's just a short term mean reversion of a long term shitty performance and that i'm mistaking a little pop for enduring change (for these types of companies overall. 

 

@thepupil - I was trying to make parallels between early democracies in the SE/HK relative to the robber barons in the US.  The early robber barons definitely used a lot of political clout to defend their markets and access new ones. Yet, I think one could have made money aligning themselves with JP Morgan and Rockerfeller companies and do well.  It doesn't seem to be the case in certain SE countries. I have family in HK and I knew there was corruption and "special" deals via preferred land sales... but, never put into context that it was this bad. The glass ceiling is that thick.

 

I'm still trying to reconcile his stance on Singapore and the Lee Kuan Yew family. I've been watching videos of "Harry" since Munger highlighted the Singapore marvel. Now this book is making me re-think some of the angles and motives there. Again.... I am surprised at the marketing of HK and Singapore as global money centers, but Joe's stance on how they came to be -- is very dark and murky.  It's interesting to get a counter-argument. 

 

Again, I would love to see/hear that these bear traps are getting resolved, but I wonder since there's not enough transparency and enforcement/teeth in those markets.... is it really turning for good?

 

Generally, you get that from activist investors and P/Es.. but, Japan (which is not included in the book), HK, Singapore are markets that are very insider base to prevent the spotlight on inefficiencies. It's not even like early Ben Graham investments where they can get 10-20% and vote out the board. The rule of law and their SEC is weak. There's still a huge disadvantage to outside investors. The only markets that Joe mentioned might be investable are S. Korea and Taiwan possibly.  Again, I think both have protected markets. But, Coupang's failure in Japan, Singapore, yet success in Taiwan seem to support that point... but, SE asian investment are really put into a too hard pile me... based on this book.