Hello everyone. Today I’ll be hosting an Ask Me Anything thread for paid subscribers.
Join the community by becoming a paid subscriber by clicking the button below, and ask about any questions you might have, including:
What has changed to the stocks discussed previously?
How is the spread of Omicron going to play out?
How might a new Chinese credit cycle affect companies throughout the region?
Why does the portfolio look like the way it does?
Why am I focused on specific stocks and not others?
Paid subscribers - feel free to ask anything. I’ll answer your questions during the entire Friday. If you want to join in, I’d love you to subscribe. Paid subscribers can join the conversation and our growing community.
Disclaimer: Asian Century Stocks uses information sources believed to be reliable, but their accuracy cannot be guaranteed. Asian Century Stocks is not regulated under the Financial Advisers Act. The information contained in this publication is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. It is for entertainment purposes only. You are advised to discuss your investment options with your financial advisers and to understand whether any investment is suitable for your specific needs. The opinions expressed in the below discussion are those of the publisher and are subject to change without notice. I may, from time to time, have positions in the securities covered in the articles on this website.
Hi Jacob! Sure, let me through the numbers for Swire Pacific. I wrote a little bit about Hong Kong conglomerates here (see below link). Is Swire Pacific a bet on Cathay Pacific recovering?
HK is becoming more and more tarred with the "uninvestible" brush these days, although this might be true for the very long term, in particular if China decides to truly turn inwards again; but that's not where we are today and in the near and intermediate future, as far as I can see.
Hi Michael, I am a big fun and a new subscriber. Lots of questions, I ´ll start with one regarding pandemic outlook and how you see it playing out in SEA. I am in Europe and see the travel market being ready for a take off (let's hope we do not see another variant). Do you see something similar in SEA soon? If yes, any reopening plays that you would recommend?
Hi Giannis! Welcome. I definitely see similar trends, although with a lag compared to Europe. Asian borders have been the most closed of any region globally, as I wrote about in this thematic last spring:
• Japan's borders are still closed but Omicron is spreading quickly with 100k cases per day
• Singapore is also experiencing a significant Omicron wave. Vaccinated travel lanes will open up gradually.
• Expect HK / China's borders to remain closed at least until National Congress at the end of 2022.
So it's a mixed picture, and I expect the likes of Fraport and Flughafen Wien to recover much faster than their Southeast Asian peers. A few related stocks include:
• Gateway services providers SATS, Macroasia and Cardig Aero Services.
• Airports Malaysia Airports, Shanghai Airport, Guangzhou
• Hospitality: Ichigo Hotel REIT, Nagacorp, Bloomberry Resorts
Hi Alan! No problem at all, feel free to ask me anything anytime.
If by articles you mean deep-dives, I'm proud of, I'd say Subaru, MAP Aktif and Bloomberry Resorts. Because I did my own work, and I feel like I truly added value to readers with these reports. Nobody were really paying attention.
But there's a difference between the originality of an idea, or how exhaustive a report is and what's going to make you money. The Sanrio report wasn't anything special, but the new management team has does wonders for shareholders. Same with CNOOC, where my analysis was standard fare but where the stock continues to be completely mispriced, in my view.
I do like MAP Aktif and Bloomberry Resorts. In the latter case, I don't like the new president and I fear that the Philippines might one day return to martial law. I. Subaru's case, it's really a bet on the yen so that one I'd probably trade (long as long as the weak yen continues to cause margin expansion above analyst estimates).
I should also mention that I make many mistakes... I should have bought more VTech for example, but didn't. I should have bought Subaru as well. Perhaps time to go through the portfolio line by and line yet another time and think through the allocation.
Thanks for the reply Michael. Heartily agree that its not the great write outs that make the most money, sometimes, reversion to the mean for some large and unexciting stocks could do it as well.
I have a "dumb things I have done" column for each year to add on to the things that I should have or shouldn't have done. And it gets longer each year , always work in progress for the portfolio.
The key thing to look out for is that many of the most popular ETFs follow indices that are very tech heavy. MSCI China used to have 50% tech companies, for example. More diversified indices tend to have lower volatility.
Sampoerna looks fascinating from several perspectives. I've invested in BAT Malaysia, and for some reason the black market seems difficult to stamp out across both Malaysia and Indonesia. In terms of Indonesia, they raised excise taxes, +23% in 2020 and another +16% in 2021 if I'm not mistaken. It's hard to say how much of Sampoerna's current weakness is due to COVID-19 down-trading, how much due to higher excise taxes and how much due to growth of an illicit market. I feel that there are parallels with Malaysia, and that makes me somewhat uncomfortable. But let me dig deeper later this spring, and hopefully I'll be able to answer your question better.
In the meantime, here is my write-up on the Asian tobacco sector from August last year:
Haha, great question. I think the time has come. It's absolutely astounding that the price hasn't moved yet. People are probably on the fence, just like I have been.
Hi Michael, what’s ur thought on 7532 Pan pacific int holdings. Now that it came down quite a bit and the mgmt seems to find SG a broken slot machine that keeps on giving. Esp long term view.
It's one of my favourite businesses in Japan. As a customer, I just love what they're doing. Just one of those unique businesses that you'll want to hold for long periods of time. I've always felt the valuation multiple has been a bit high. But like you say, the price has come off and I still think they could expand multiple-fold overseas. I'm seriously considering doing a deep-dive on the company in the next few months. Stay tuned!
Looking at Baba and many other stocks, do you think that the Chinese government could damage their stock market even further without any significant reaction from their people and the financial industry? Doesn't the Chinese pension system depend also on the performance of the Chinese/HK stock market?
Friends in China tell me that Xi is incredibly popular among the masses, but disliked by the entrepreneurial class. People are being disgruntled in private, but it's hard to quantify how popular or unpopular he is given the lack of data.
Note that the vast majority of software stocks are listed as ADRs or in Hong Kong. And many of the larger private property developers are actually listed in Hong Kong. Chinese pensions are probably more invested in the A-share market than overseas. It seems to me that the major losers so far have been foreign investors rather than domestic.
While people like Jack Ma are surely dissatisfied with the way the crackdown has taken place, maintaining the status quo might have been even more dangerous for Xi's faction within the party. Through these crackdowns, on Alibaba and Evergrande for example, Xi has probably managed to weaken his opponents in the Jiang and Wen camps, more than anything.
Great question. So if we stick to HK-based companies and not just HK-listed ones, I think Cafe de Coral is worth significantly more than the current share price. The brand name is excellent. Omicron will run through the population, reaching some type of herd immunity I believe. People will go back to restaurants like night follows day and restrictions will be lifted. It might taken another year, but eventually the business will recover.
Hi Michael, thanks for your answer to my previous question. I have another, although I fear you may not like this question as much! I am very curious, outside of Asia what stocks are you personally interested or invested in? Excluding Haier D-shares :)
In terms of stocks outside of Asia, I really don't spend much time researching those. So instead of discussing where I see value, I prefer to guide you towards Substacks that specialise in those regions:
Hi Michael, thanks for the AMA! I'm currently a student in SG who's relatively new to investing and have really enjoyed your reports/monday links. I have a few questions if you don't mind sharing:
1. What is your idea generation process like and how do you filter ideas quickly before deciding to deep dive into one
2. When it comes to corporate governance of SEA-companies, what are some of the key things you look at?
3. What are some of the well-performing value-oriented funds/investors based in SG/SEA (can have global mandate)? Understand that you have published about funds through the "borrowing ideas from funds" posts but seems like most of the funds are mostly non-SG/SEA-based (aside from Apollo Asia, Arisaig, AG (SG-office))
4. What are some books you would recommend reading?
1. When it comes to investing on my own, I'm looking for stocks that are worth more than the price at which they're trading. I'll often dig deeper into those and then decide to write full reports about them. How to filter quickly? Stable share count, high ROIC and steady earnings growth is a good start. Combined with an attractive valuation multiple within 3-5 years.
2. Corporate governance sucks generally but just avoid the ones that dilute shareholders all the time or just accumulate cash on the balance sheet (low dividend payout despite a mature business, say). I love companies that repurchase shares. It's almost always a positive sign in terms of corporate governance.
3. The problem writing about fund holdings in SEA is that there's no requirements for funds to disclose what they own. Only mutual funds are compelled to disclose what they own. That's not the case in the US, and in HK all shareholdings > 5% have to be disclosed. But in terms of Asian value investors, Flowering Tree, Pangolin Asia come to mind... Santa Lucia is another one I know from before
4. Money Masters of Our Time by John Train is the OG of value investing books. Even Buffett recommended it! So it must be good.
Michael thanks for the answer - would you mind extrapolating a bit on the hurdles of the fund set ups? I am currently doing likewise - managing own money + writing research - but am wondering if it makes sense to go institutional instead
Well, ok so in Singapore you do need two professionals, each with at least 5 years of relevant experience. So if you're hiring somebody else, expect at least US$100k in additional expenses. Then you'll have administrator, custody, audit, office rent, etc. It adds up to well above US$200k just for the manager, so with normal fees I'd imagine that you won't break even unless you reach at least US$20 million in AUM.
While you could go with a hedge fund hotel, they're not cheap either. And I've seen so many fail scaling up to the levels needed for institutional investors to start paying attention. Starting a fund in Europe or here is mostly for those who have established track records and/or significant amount of personal wealth that they're willing to put on the line.
Hi Michael, do you invest in companies where the IR material and Annual Reports are in a language that you do not speak? I am aware that we can use Google Translate on PDF's, however the translation results are often nonsensical, especially from Chinese and Japanese. How do you perform your research in such cases ?
I speak and read Chinese, so I'm comfortable with Chinese and Taiwanese companies in terms of the language.
I have invested in Korean and Japanese companies. And frankly, I can never get as comfortable with them as with companies that report in English. I always have this nagging feeling that other shareholders are better informed than me.
So the language is one of the reasons that I love stocks in Southeast Asia (ex-Vietnam). Most companies report in English, and the reporting is often much better than you'd expect. Certainly better than in the Chinese A-share market or in Korea.
Hi Michael, a few broad Qs: Why did you decide to start ACS vs running a fund or at least working in one? how do you see it grow/develop? what are your targets for it?
My first job at age 15 was as a journalist for a city newspaper. I enjoy writing, and I enjoy running my own gig.
There are significant hurdles starting a fund here in the region in terms of AUM. It can be done, but the hurdles are daunting. So I figured that the second-best option is to write on Substack while managing my own money. So far, I'm very happy I made this decision.
I'm very close to being able to support myself and my family with the income from just the Substack now. That was one of my primary goals. Longer-term though, I'm keen to compound my personal capital and to find great ideas - to learn about those unique companies that can really make a difference. I've found that having free reins with the current set-up has enabled me to dig deeper into stocks that most fund managers would find too "icky" to touch.
Hi Michael, in November you wrote about 'Six contrarian bets in Hong Kong'. Given the current Omicron outbreak in Hong Kong, I would be interested to know if your thoughts on these bets have changed, and if so how?
Hi Giles! Great question. The timing on that essay was just horrendous - five days before Omicron become worldwide news. So in fact, the situation has actually changed materially.
The number of Omicron cases seems was doubling every four days in Hong Kong. That would suggest herd immunity within 2 months.
It seems that Hong Kong's COVID policies are set by Beijing. And we know that Beijing has a zero-tolerance policy to COVID, which implies temporary lockdowns wherever new cases emerge.
My personal view is that this cat-and-mouse game will continue until Xi secures a third term at the National Congress at the end of 2022.
Long-term, I'm definitely positive. Omicron cannot be evaded. It's just that Hong Kong's re-opening will lag that of the Philippines, Japan Malaysia, Indonesia, etc. And any reopening of borders will happen between Hong Kong and the mainland first. It is Beijing's highest priority for Hong Kong to become more tightly integrated into the mainland.
It would natural to me that the companies mentioned in my article will benefit materially once the HK-Mainland border opens up, presumably after National Congress later this year.
Hi Bernard, thanks! I took a lot of inspiration from your AMAs actually, even borrowed some of the language that you used to spark a discussion. Hope that's okay!
Hi Michael! I would love to see a write-up on Swire Pacific or perhaps a thematic on HK conglomerates? You already did CK Hutchison which was great.
Hi Jacob! Sure, let me through the numbers for Swire Pacific. I wrote a little bit about Hong Kong conglomerates here (see below link). Is Swire Pacific a bet on Cathay Pacific recovering?
https://www.asiancenturystocks.com/p/hongkong2021?r=2xe91
Thx!
Yeah a more "balanced" way to invest in Cathay.
HK is becoming more and more tarred with the "uninvestible" brush these days, although this might be true for the very long term, in particular if China decides to truly turn inwards again; but that's not where we are today and in the near and intermediate future, as far as I can see.
Hi Michael, I am a big fun and a new subscriber. Lots of questions, I ´ll start with one regarding pandemic outlook and how you see it playing out in SEA. I am in Europe and see the travel market being ready for a take off (let's hope we do not see another variant). Do you see something similar in SEA soon? If yes, any reopening plays that you would recommend?
Hi Giannis! Welcome. I definitely see similar trends, although with a lag compared to Europe. Asian borders have been the most closed of any region globally, as I wrote about in this thematic last spring:
https://www.asiancenturystocks.com/p/the-asian-travel-recovery-trade
The experience will vary from country to country. For example:
• The Philippines: Just opened up to vaccinated travellers for the first time in two years. Every person I know in the Philippines have become infected by Omicron or Delta. https://www.straitstimes.com/asia/se-asia/philippines-to-open-borders-to-fully-vaccinated-travellers-next-month
• Malaysia has said that it will completely open up its borders from March https://asia.nikkei.com/Spotlight/Coronavirus/Malaysia-poised-to-completely-reopen-borders-from-March
• Thailand has a new visa for vaccinated travellers, offering them quarantine free travel https://www.bloomberg.com/news/articles/2022-01-31/thailand-ready-for-rush-of-tourists-with-quarantine-free-visas
• Japan's borders are still closed but Omicron is spreading quickly with 100k cases per day
• Singapore is also experiencing a significant Omicron wave. Vaccinated travel lanes will open up gradually.
• Expect HK / China's borders to remain closed at least until National Congress at the end of 2022.
So it's a mixed picture, and I expect the likes of Fraport and Flughafen Wien to recover much faster than their Southeast Asian peers. A few related stocks include:
• Gateway services providers SATS, Macroasia and Cardig Aero Services.
• Airports Malaysia Airports, Shanghai Airport, Guangzhou
• Hospitality: Ichigo Hotel REIT, Nagacorp, Bloomberry Resorts
• Software: Trip.com, Travelsky
To clarify, I'm not recommending you to buy any of these stocks - just showing you examples of travel related equities.
Thanks Michael for the detailed reply! I will need some time to catch up with the back content of the site, lots of stuff to read :-)
Sure - no pressure. Happy to help
Hi Michael ,
I am horrendously late to the party but can I still ask a few questions like :
1) Which do you feel are your 3 best written articles ?
2) Are these 3 articles also you largest position holdings, if not so why ?
Thank you !
Hi Alan! No problem at all, feel free to ask me anything anytime.
If by articles you mean deep-dives, I'm proud of, I'd say Subaru, MAP Aktif and Bloomberry Resorts. Because I did my own work, and I feel like I truly added value to readers with these reports. Nobody were really paying attention.
But there's a difference between the originality of an idea, or how exhaustive a report is and what's going to make you money. The Sanrio report wasn't anything special, but the new management team has does wonders for shareholders. Same with CNOOC, where my analysis was standard fare but where the stock continues to be completely mispriced, in my view.
I do like MAP Aktif and Bloomberry Resorts. In the latter case, I don't like the new president and I fear that the Philippines might one day return to martial law. I. Subaru's case, it's really a bet on the yen so that one I'd probably trade (long as long as the weak yen continues to cause margin expansion above analyst estimates).
I should also mention that I make many mistakes... I should have bought more VTech for example, but didn't. I should have bought Subaru as well. Perhaps time to go through the portfolio line by and line yet another time and think through the allocation.
Thanks for the reply Michael. Heartily agree that its not the great write outs that make the most money, sometimes, reversion to the mean for some large and unexciting stocks could do it as well.
I have a "dumb things I have done" column for each year to add on to the things that I should have or shouldn't have done. And it gets longer each year , always work in progress for the portfolio.
Michael! Any favorite books that you enjoy reading? Loved the Overlook book you reviewed btw
So many to choose from!
• Tomorrow's Gold by Marc Faber is great reading for those who want to understand market cycles
• Money Masters of Out Time by John Train gives you a glimpse into the minds of the greatest investors in the 1980s
• Devil Take the Hindmost by Ed Chancellor is my favourite book about economic history
• Asian Godfathers by Joe Studwell helps you get a sense of the rules of the game in Southeast Asia
• Mr China by Tim Clissold gives you a glimpse of deal making in 1990s mainland China
Hi Michael, what are your thoughts on using ETF to invest in Asia? Any that you would recommend?
Hi Julia! I'll refrain from giving outright investment recommendations, but I mentioned a few Asia-related ETFs in the following post: https://www.asiancenturystocks.com/p/im-a-new-investor-where-do-i-begin
The key thing to look out for is that many of the most popular ETFs follow indices that are very tech heavy. MSCI China used to have 50% tech companies, for example. More diversified indices tend to have lower volatility.
Hi Michael, how are you thinking about the Indonesian tobacco sector?
Sampoerna looks fascinating from several perspectives. I've invested in BAT Malaysia, and for some reason the black market seems difficult to stamp out across both Malaysia and Indonesia. In terms of Indonesia, they raised excise taxes, +23% in 2020 and another +16% in 2021 if I'm not mistaken. It's hard to say how much of Sampoerna's current weakness is due to COVID-19 down-trading, how much due to higher excise taxes and how much due to growth of an illicit market. I feel that there are parallels with Malaysia, and that makes me somewhat uncomfortable. But let me dig deeper later this spring, and hopefully I'll be able to answer your question better.
In the meantime, here is my write-up on the Asian tobacco sector from August last year:
https://www.asiancenturystocks.com/p/tobacco
Hi Michael, how high does palm oil need to go until you consider buying United Plantations….?
Haha, great question. I think the time has come. It's absolutely astounding that the price hasn't moved yet. People are probably on the fence, just like I have been.
Hi Michael, what’s ur thought on 7532 Pan pacific int holdings. Now that it came down quite a bit and the mgmt seems to find SG a broken slot machine that keeps on giving. Esp long term view.
It's one of my favourite businesses in Japan. As a customer, I just love what they're doing. Just one of those unique businesses that you'll want to hold for long periods of time. I've always felt the valuation multiple has been a bit high. But like you say, the price has come off and I still think they could expand multiple-fold overseas. I'm seriously considering doing a deep-dive on the company in the next few months. Stay tuned!
Looking at Baba and many other stocks, do you think that the Chinese government could damage their stock market even further without any significant reaction from their people and the financial industry? Doesn't the Chinese pension system depend also on the performance of the Chinese/HK stock market?
Friends in China tell me that Xi is incredibly popular among the masses, but disliked by the entrepreneurial class. People are being disgruntled in private, but it's hard to quantify how popular or unpopular he is given the lack of data.
Note that the vast majority of software stocks are listed as ADRs or in Hong Kong. And many of the larger private property developers are actually listed in Hong Kong. Chinese pensions are probably more invested in the A-share market than overseas. It seems to me that the major losers so far have been foreign investors rather than domestic.
While people like Jack Ma are surely dissatisfied with the way the crackdown has taken place, maintaining the status quo might have been even more dangerous for Xi's faction within the party. Through these crackdowns, on Alibaba and Evergrande for example, Xi has probably managed to weaken his opponents in the Jiang and Wen camps, more than anything.
What is currently your highest conviction idea in HK?
Great question. So if we stick to HK-based companies and not just HK-listed ones, I think Cafe de Coral is worth significantly more than the current share price. The brand name is excellent. Omicron will run through the population, reaching some type of herd immunity I believe. People will go back to restaurants like night follows day and restrictions will be lifted. It might taken another year, but eventually the business will recover.
Hi Michael, thanks for your answer to my previous question. I have another, although I fear you may not like this question as much! I am very curious, outside of Asia what stocks are you personally interested or invested in? Excluding Haier D-shares :)
Hi Giles. You're welcome to become a subscriber.
In terms of stocks outside of Asia, I really don't spend much time researching those. So instead of discussing where I see value, I prefer to guide you towards Substacks that specialise in those regions:
• Finding Moats International https://findingmoatsinternational.substack.com/?utm_source=substack&utm_medium=web&utm_campaign=substack_profile
• Superfluous Value: https://superfluousvalue.substack.com/
• Turtles: https://turtles.substack.com/?utm_source=substack&utm_medium=web&utm_campaign=substack_profile
• Value Situations https://valuesits.substack.com/?utm_source=substack&utm_medium=web&utm_campaign=substack_profile
• Uproar Capital https://uproarcapital.substack.com/
• Insider Ideas
Your Substack is very good as well ;)
Hi Michael, thanks for the AMA! I'm currently a student in SG who's relatively new to investing and have really enjoyed your reports/monday links. I have a few questions if you don't mind sharing:
1. What is your idea generation process like and how do you filter ideas quickly before deciding to deep dive into one
2. When it comes to corporate governance of SEA-companies, what are some of the key things you look at?
3. What are some of the well-performing value-oriented funds/investors based in SG/SEA (can have global mandate)? Understand that you have published about funds through the "borrowing ideas from funds" posts but seems like most of the funds are mostly non-SG/SEA-based (aside from Apollo Asia, Arisaig, AG (SG-office))
4. What are some books you would recommend reading?
Hi Vincent,
1. When it comes to investing on my own, I'm looking for stocks that are worth more than the price at which they're trading. I'll often dig deeper into those and then decide to write full reports about them. How to filter quickly? Stable share count, high ROIC and steady earnings growth is a good start. Combined with an attractive valuation multiple within 3-5 years.
2. Corporate governance sucks generally but just avoid the ones that dilute shareholders all the time or just accumulate cash on the balance sheet (low dividend payout despite a mature business, say). I love companies that repurchase shares. It's almost always a positive sign in terms of corporate governance.
3. The problem writing about fund holdings in SEA is that there's no requirements for funds to disclose what they own. Only mutual funds are compelled to disclose what they own. That's not the case in the US, and in HK all shareholdings > 5% have to be disclosed. But in terms of Asian value investors, Flowering Tree, Pangolin Asia come to mind... Santa Lucia is another one I know from before
4. Money Masters of Our Time by John Train is the OG of value investing books. Even Buffett recommended it! So it must be good.
Michael thanks for the answer - would you mind extrapolating a bit on the hurdles of the fund set ups? I am currently doing likewise - managing own money + writing research - but am wondering if it makes sense to go institutional instead
Well, ok so in Singapore you do need two professionals, each with at least 5 years of relevant experience. So if you're hiring somebody else, expect at least US$100k in additional expenses. Then you'll have administrator, custody, audit, office rent, etc. It adds up to well above US$200k just for the manager, so with normal fees I'd imagine that you won't break even unless you reach at least US$20 million in AUM.
While you could go with a hedge fund hotel, they're not cheap either. And I've seen so many fail scaling up to the levels needed for institutional investors to start paying attention. Starting a fund in Europe or here is mostly for those who have established track records and/or significant amount of personal wealth that they're willing to put on the line.
Hi Michael, do you invest in companies where the IR material and Annual Reports are in a language that you do not speak? I am aware that we can use Google Translate on PDF's, however the translation results are often nonsensical, especially from Chinese and Japanese. How do you perform your research in such cases ?
I speak and read Chinese, so I'm comfortable with Chinese and Taiwanese companies in terms of the language.
I have invested in Korean and Japanese companies. And frankly, I can never get as comfortable with them as with companies that report in English. I always have this nagging feeling that other shareholders are better informed than me.
So the language is one of the reasons that I love stocks in Southeast Asia (ex-Vietnam). Most companies report in English, and the reporting is often much better than you'd expect. Certainly better than in the Chinese A-share market or in Korea.
Hi Michael, a few broad Qs: Why did you decide to start ACS vs running a fund or at least working in one? how do you see it grow/develop? what are your targets for it?
Hi Leonid!
My first job at age 15 was as a journalist for a city newspaper. I enjoy writing, and I enjoy running my own gig.
There are significant hurdles starting a fund here in the region in terms of AUM. It can be done, but the hurdles are daunting. So I figured that the second-best option is to write on Substack while managing my own money. So far, I'm very happy I made this decision.
I'm very close to being able to support myself and my family with the income from just the Substack now. That was one of my primary goals. Longer-term though, I'm keen to compound my personal capital and to find great ideas - to learn about those unique companies that can really make a difference. I've found that having free reins with the current set-up has enabled me to dig deeper into stocks that most fund managers would find too "icky" to touch.
Hi Michael, in November you wrote about 'Six contrarian bets in Hong Kong'. Given the current Omicron outbreak in Hong Kong, I would be interested to know if your thoughts on these bets have changed, and if so how?
Hi Giles! Great question. The timing on that essay was just horrendous - five days before Omicron become worldwide news. So in fact, the situation has actually changed materially.
The number of Omicron cases seems was doubling every four days in Hong Kong. That would suggest herd immunity within 2 months.
But Hong Kong imposed new restrictions 3 days ago. These new restrictions are likely to increasing the doubling time. There has not been any country that's been able to keep Omicron at bay, so they will be fighting a losing war. But expect pain in the meantime. https://www.channelnewsasia.com/asia/covid-19-hong-kong-new-social-restrictions-vegetable-shortage-2486016
It seems that Hong Kong's COVID policies are set by Beijing. And we know that Beijing has a zero-tolerance policy to COVID, which implies temporary lockdowns wherever new cases emerge.
My personal view is that this cat-and-mouse game will continue until Xi secures a third term at the National Congress at the end of 2022.
Long-term, I'm definitely positive. Omicron cannot be evaded. It's just that Hong Kong's re-opening will lag that of the Philippines, Japan Malaysia, Indonesia, etc. And any reopening of borders will happen between Hong Kong and the mainland first. It is Beijing's highest priority for Hong Kong to become more tightly integrated into the mainland.
It would natural to me that the companies mentioned in my article will benefit materially once the HK-Mainland border opens up, presumably after National Congress later this year.
This is a fantastic AMA Michael. Thankyou
Hi Bernard, thanks! I took a lot of inspiration from your AMAs actually, even borrowed some of the language that you used to spark a discussion. Hope that's okay!