The Generational Buying Opportunity In Chinese Stocks | Jason Hsu
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- เผยแพร่เมื่อ 15 พ.ค. 2024
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Jason Hsu of Rayliant joins Forward Guidance to share his view on the particulars of the Chinese equity market. Hsu argues that the “brutal” bear market is close to over and makes the bull case for onshore Chinese stocks. Recorded on March 28, 2024.
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Jason Hsu on LinkedIn / jasonchsu
About Rayliant rayliant.com/
Follow VanEck on Twitter / vaneck_us
Follow Jack Farley on Twitter / jackfarley96
Follow Forward Guidance on Twitter / forwardguidance
Follow Blockworks on Twitter / blockworks_
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Timestamps:
00:00 Introduction
00:42 The "Brutal" Bear Market In Chinese Equities
13:00 In China, It's Not The Homebuyers Who Are Indebted... It's The Builders (aka Developers)
19:42 Spillovers Of China's Real Estate Correction
23:52 Impact of Real Estate Issues On China's Banking System
26:50 Beijing's Biggest Fixation: How To Avoid Japanese Real Estate Bust Of 1990s
34:10 Regulatory Scrutiny On Tech And Other Industries Has Been Reduced
38:21 VanEck Ad
39:03 5-10 Years From Now, People Will Look At Now AS Bottom In Chinese Equities
40:06 China's Ambition To Move Up The Value Chain
43:15 Just How Cheap Are Chinese Stocks?
44:10 Who Are The Investors In The Chinese Stock Market?
46:20 Immense Pessimism Has Gripped Chinese Stock Investors
47:28 What Causes Chinese Stocks To Go Up Or Down?
49:17 China's Role In Emerging Market Equity Portfolios
52:02 What Moves Emerging Market (EM) Stocks As A Category?
56:05 Latin American, Middle East, and Africa
57:34 The Role of Diversification and "Quantamental" Analysis
01:04:57 State-Owned Enterprises (SOEs) - What Do Investors Really Own?
01:08:40 Biggest Overweights. (Mexico) and Underweights (India)
01:11:12 Mechanics Of "The Beijing Put"
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets. - บันเทิง
Finally, you can easily access Bitcoin in a low-cost ETF with the VanEck Bitcoin Trust (HODL). Visit vaneck.com/HODLFG to learn more.
What’s this? A belated April‘s fool?
It is a great opportunity to buy stock in Soviet Union 2.0!! What are you waiting for?😂
He is forgetting what happened to the Thai stocks (95% drop) after the Thai government devalued vs the dollar in 1997.
So why did the Thai government devalue? because they had already spent all their dollars and other hard currencies, thus they didn't have any left to defend their pegged currency against people trying to withdraw.
Currently the tide of hard currencies is going out in China. Talked to a PE guy this weekend, and he said all the guys in his circle are avoiding China/HK like the plague. Withdrawing/selling if possible, but absolutely no more investing there for the foreseeable future.
The recipe of tons of dollar debt, falling prices, high youth unemployment, falling wages plus withdrawals of hard currency means at some point China and probably HK will have to print. Either the financial system collapses or they print, so they will print.
You can see the terror in the eyes of the Chinese through their overpaying for physical gold bullion. 100/oz higher in Shanghai vs NY.
I agree with Russell Napier in another episode of Blockworks Macro that "the terminal value of Chinese equities is zero".
Thailand is a very different beast to China.
And if they print, equities go up. That's what monetary inflation does.
Thailand is a very different beast to China.
@@tastypymp1287
If they print, the value of the asset remains unchanged, but more units of the devalued currency is needed to purchase the asset.
Also note, currently I think Chinese investors are not allowed to sell stocks. If that is correct, I am not sure how they buy. Do they only buy newly issued shares?
I would stay away from houses/buildings in China.
They are just looking for somebody to buy their nightmares.
@@1Bob4All The value might remain but the price does not. They can sell stocks but I believe there's restrictions on selling short.
The observation by this gentleman is away from the reality
Just a party shill.
Reading the comments makes me want to believe him. Capitulation is near
no, war is near. thats why the money is leaving.
If you don' t understand how CCP is and wil lcontinue seizing foreign capital. Risk isn;t just that your stock will keep diving, risk is that CCP just decides and what price , when and to whom ypu can sell your shares too, and if you don;t it just means you secede your ownership.They are doing exactly that in Russia right now btw.Wanna buy in Russia too? go ahead.
@@pod11th31True. It is my understanding that the CCP recently forbid the selling of equity/stocks.
Have you heard the same?
@@1Bob4All They forbade short selling , which is borrowing stocks to sell them .Thats the part i heard about.There were other more shocking aspects of their stocks market that were just screaming "SCAm"
CCP is currently propping up the market with tricks. Read the Financial Times.
Good luck with the rug pull.
Jack, quoting Chinese stocks on valuation on the basis of P/E is so misleading. Most of that came from Chinese banks with a P/E of like 5. That's because their books are a black box and is full of hidden bad debts, just look at Evergrande for example. Accounting book shows 2T Liability but actual 2.8T. This is the norm, not exception. Banks are so full of "assets" that cannot be sold, and nobody trust them, and that's why their P/B P/E will always be very very cheap.
the PE on american banks and auto manufacturers is garbage as well. Most american banks aren't even selling at book value lolz
@@davidanalyst671he is not talking about the level of the P/E number, but the trustworthiness of the data behind it. The financial statementd of all public companies in the US are audited and fully transparent. That is not the case in China.
I agree that many people are considering NVDA as the "Stock of the year." However, I'm curious about which stocks could potentially become the next META in terms of growth over the next decade. I've allocated $200k for investment, looking for companies to make additions to boost performance
I think the next big thing will be A.I. For enduring growth akin to META, it's vital to avoid impulsive decisions driven by short-term fluctuations. Prioritize patience and a long-term perspective consider financial advisory for informed buying and selling decisions.
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Glad to have stumbled on this comment, Please who is the consultant that assist you and if you don't mind, how do I get in touch with them?
Her name is 'Mary Kaliope Braun’. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
I appreciate this share. I set up a call with her and I am keen on getting to talk to her particularly. Lady looks really great though even with the exams and other stuff.
I don't doubt that the Chinese market is cheap right now. What I am afraid of is that the same thing would happen to my Chinese assets as happened to my Russian assets. They are all frozen on a bank account and I can neither sell nor buy anything. Given the current track of US politics I'm not sure that there won't be a round of sanctions against Chinese tech that would freeze my investments.
Maybe don't invest in rotten dictatorships?
Fascinating observation! for far too long we've all been listening to Peter Zeihan! Peter's a real dick! The china story isn't over. It's actually maturing. You can see this in their new products. This guy has a very realistic outlook! Thank you guys!
Was this recorded on April 1st?
No, March 28 (Thursday) 2024.
@@BlockworksHQ You should had release it on April 1. Hsu sounds like a joke. His risk analysis on China is not comparable with Taiwan and Japan during the 80's
😂 that was a good one
It was just a joke. Anyway, you should get a decent technician on - Peter Brandt for example. Too many fundamentalists.
In my experience, the Chinese people are excellent judges of value. And there are some very wealthy Chinese. And yet The people who live in China are desperate to get their money out of the country. Meanwhile westerners with a lot of experience in China are also voting with their feet. These people aren't irrational people fleeing the Chinese market. They are rational people fleeing the reach of Xi's government.
"In my experience, the Chinese people are excellent judges of value" Like when the Chinese piled into real estate?
@@GM-zn5tx There isn't an oversupply of housing in China. Compared to the US the market is under supplied. The crisis in China is with developers going broke before delivering finished housing units. Or the apartment was such poor quality it was uninhabitable. The buyers put down a substantial down payment, which the defunct builders squandered. So the buyers are left paying a mortgage on a house they will never be able to use.
So it's not like in the US where speculators were buying up multiple properties to flip. These were housing units typically intended for occupation.
The Chinese people also don't trust the management of the corporations that this guy says are undervalued. They are right to mistrust the management of these corporations, as evidenced by these real estate developers going bust.
@@baarbacoa
Why do think there is not an over-supply of residences in China?
It is my understanding that if the number of planned residences promised were completed, the population would have to triple or quadruple to fill it.
I think the CCP then tried to play this off as "planning for the future".
All the skeptical comments here make me even more bullish on the Chinese stocks. Bulls and bears make a market - nothing wrong with ppl opinion- sure beats two years ago when everyone and their dogs were saying Tesla is more than a car company
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Wouldn’t that be warren Buffets move to invest low??
This was so fascinating- thank you!
I totally agree with this. Each investor can gauge the risk of China invading Taiwan and being locked out of their system when your nation retaliates
Hold people to the financial metric please. "cheap" means anything. Make them define why it's a good deal. Otherwise, Nvidia is cheap.
the vanilla metric is price / earnings ratio. NVDA still cheaper than Chipotle on forward price/earnings. P/E ratio for Blackrock China ETF is ~12.5. Pretty darn cheap.
@@BlockworksHQ Comparing apples and oranges. Something that can go to zero based on decisions of one person should be priced for what it is, a call option.
Brilliant interview, thank you
Agree with the general bullish sentiment, heavily disagree with his allocation. It's the equivalent of buying newly minted shitcoins instead of bitcoin. Maybe one in 20000 will outperform, good luck picking. There's a good middle ground to be found for RAR.
I think Country Garden in China is three or four times larger than Evergrand, at its peek.
So many buildings are only partially built and not habitable.
Completed Chinese buildings are also not habitable -- they intentionally leave them unfinished because of superstition. However, I get what you're saying.
Great interview!!
First time I heard there’s a quant model for sentiment. Lol
RAYC looks good but...
.80% exp ratio...
Is there an AUM bar that if reached will trigger a reduces the rate?
I ask for I'm interested, but alas .. I'm a fee nazi...
Thing is what if the US gvt cancels Chinese stocks one morning, you know, "trading with the ennemy" kind of canceling campaign ? I'm always looking for undervalued stocks but they have to be problem free to begin with. So maybe at another time. I prefer to look at India for now.
Love the ETFs chart, $RAYC is only -43%, instead of -47% and -63% like the other two. I am convinced, take my money already, maybe next year it'll be -40% only.
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We have heard this every month for about 12 months. Now down almost 50% on a large Hang Seng portfolio (I live in Asia) that every month "had now reached the bottom and were about to turn", so not impressed with these guys at all. Talk is cheap.
They also live off asswts under management, not from results ;P 0 risk for themselves, and safe profits just for yapping.
I thought Ray Dalio said China was the place to go 🤔
Dalio has recently been singing a different tune.
dalio said that before China was telling everyone they were going to invade taiwan and start ww3
@calc1657 Cool, so Dalio said buy China when BABA was $300, and now that their stocks are down 80%, he says sell? What a great advisor.
dude forgot to take his red book out of camera view.
“State owned blue chips” 😅
Theyre called red chips look it up
A brilliant mind. A Caltech graduate no less.
Best way to play china is very small amount of OTM call options. Only the amount that u can afford to be have canceled by govt actions.
Dont buy any stocks or etfs or investment in physical assets in china, yr money could be locked up for years.
In the long run ~ 20 year timeframe India will be a much better investment than chna.
With India u get a double gain. Stock market gains plus currency tailwinds. Very likely the Indian Rupee will appreciate 60-70% over next 20 years against the USD.
Tho in the short term I do expect a healthy pullback in Indian equities, that would be the best time to buy.
Pretty cool
smart and no twitter. 👍great host
Beijing is inseperable part of india ❤
Where’s Westin nak?
He has moved on. He has a new channel called AcrossTheSpread. U can also Google acrossthespread and weston nakamura n find his substack blog.
I agree with him 😃👍
Publicly traded securities are in jeopardy of collapse writ large, just like communism was doomed to collapse. Russell Napier has the right idea with closed-end funds being the future.
the law about 2 appartment is maybe only 8 years old. It was to slow speculation because chinese only trust real estate and the people making good money in cities were buying everything and new immigrant had no chance to own. But like every time rules were bend and people allowed to divorce and own 2 or 3 apartments/houses. Also if you bought in a different city it was not regulated by same district..
APRIL FOOLS 😂 foreign investment has fled China by 80%
For your shared investing ideas, what do you think will be the next Apple/Microsoft in terms of growth, considering the current unpredictable market volatility?
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Hi Micheal Weebles, from my little experience, your profit margin is quite stunning for a beginner. How did you do it; what is your biggest holding; do you make use of spreadsheets? Thanks.
This gentleman fails to see the big picture in China and the world.
He lost me when he said buy really good quality for a really good price in reference to China's goods. Their products are cheap, but the quality of everything I've ever gotten from them has been absolute crap with no longevity.
btw. the americans who told the chinese how much steel and plastic to use are the reason everything you have used from china breaks. Because of the americans who ordered the garbage to be built.
This is got to be one of the worst block works interviews they ever put out because the guest is such a low quality CCP shield talking his book it is worthless and extremely misleading. Jack just gives this guy legitimacy by doling softball questions to him.
And we're selling China hard... The demographics suck on China and they're not real big on immigration
“18.6 USD asset managed …. USING OUR STRATEGIES …”
Typical con game. Show me AUM. Show me results of his Quant model. Not fancy/colourful words to mislead … lol
This guest is providing inaccurate information related to real estate and 2nd home purchase. But, the fact that Chinese stocks are at the multi-decade low is most likely spot on, especially considering the amount of RMB that China exports to the world through trade. Beware of scammy low-cap companies, and keep in mind that some of them will become giants. Not many worries are needed about the devaluation of the currency, as the trade in the RMB keeps growing, and it is a relative game against the USD that is already getting diluted rapidly, and the Chinese debt is not denominated in USD.
The sky has no idea what he's talking about. Alibaba has a multiple between 5 and 6
"I'm a contrarian." aka I selectively decide when to bet against people. Means nothing.
Generational Buying Oportunity? Maybe, but only for Chinesse people, you as a foreigner cannot invest directly in China, you invest offshore in a vehicle whose underlying are the stock, but what happpen if China invades Taiwan? You as a foreigner are facing the risk your shares be frozen like it happened in Rusia in 2022
You clearly have no clue. When was the last time China invaded some place militarily full scale
don't invite this guy back, my BS meters went off within the first 5 mins........after almost 50 yrs of growth (high growth during 90-10's), you would think "rule of law" across many mid level admins would be established w/ some iron clad definitions/etc. Instead, it's now worse than it was back in the 2000's.....no rule of law, no capital inflow, very simple...no capital inflow, no meaningful stock appreciation....who would absorb the real estate deflation "pain" within a closed system? Who else, the average Chan/Lee's....
Gonna take a guess that this dude is paid by "someone". Like the US does with some finfluencers
Umm he is the chief investment officer of a firm with 18 Billion of assets using their strategies... don't think he is taking sponsorships lol. And I can guarantee that neither Forward Guidance nor I were paid for this interview or to promote any particular product other than what is very clearly disclosed as a sponsor.
-Jack Farley
Im not saying you are paid by them. Im warning the ppl listening that the other dude might "be wearing two hats"@@BlockworksHQ
@BlockworksHQ I appreciate the broad perspectives you often bring Jack!
If we substituted the region/sector with say, a US-based, popular, novel form of transportation with a heavy dose of tech hype... how might that "something" be seen & valued, today? A few years ago? A decade ago? How would that be viewed by foreigners? Does a Hatian or Guatemalan investor give a rip about some shiny fast meme product & company primarily in the US & West?
ie China/developing cycles/sectors may well lag US by xyz~12mo
Will it Bull?
Will it Bear?
Will it Ponzi?
(not specific to country or sector)
@@BlockworksHQ yea, and who decides that his corp can own onshore chineese stock.Surely his talking points have nothing to do with the fact that they have to be protected by the party, and to operate in China they need to have CCP board members.That is jsut openly required.What else is there?
lol buy Chinese stocks?
These guys are amateurs. I can't take them seriously.