In the section "Xi is breaking with Deng-era reforms" in the last paragraph, did you mean to write committed or Omitted, because the rest of the paragraph seems to point towards the 5-year strategy not having a growth target anymore.
Hi Hisham. You're absolutely right - I meant "omitted". The latest five-year plan did not include a long-term growth target. I've updated the paragraph to make it clearer.
Hey Michael. Really enjoyed this. Curious if you think companies that have already been penalized — highlighting they are likely not well regarded by the current party leadership — are too risky to invest in? Would you ever touch something like BABA or Tencent?
Frankly, I think very few people know exactly what Xi's long-term plan is. I certainly don't. I've been trying to read the tea leaves to get a better understanding of where politics are heading. But I still don't feel comfortable.
I'd probably be willing to invest in Tencent at the right multiple. They've always been very cooperative with the top leadership and avoided taking sides. I was surprised by the CNY 100 billion contributions to social initiatives. If it's a one-off, then perhaps it's something I can accept. Though who knows?
I'd be more cautious about Alibaba, given its connection to the Shanghai faction. At the same time, the stock has dropped quite a bit and Tmall / Taobao is undoubtedly a very strong franchise. It goes into the too-hard bucket for me.
Hi. This was great.
In the section "Xi is breaking with Deng-era reforms" in the last paragraph, did you mean to write committed or Omitted, because the rest of the paragraph seems to point towards the 5-year strategy not having a growth target anymore.
Hi Hisham. You're absolutely right - I meant "omitted". The latest five-year plan did not include a long-term growth target. I've updated the paragraph to make it clearer.
Hey Michael. Really enjoyed this. Curious if you think companies that have already been penalized — highlighting they are likely not well regarded by the current party leadership — are too risky to invest in? Would you ever touch something like BABA or Tencent?
Thank you, Luis.
Frankly, I think very few people know exactly what Xi's long-term plan is. I certainly don't. I've been trying to read the tea leaves to get a better understanding of where politics are heading. But I still don't feel comfortable.
I'd probably be willing to invest in Tencent at the right multiple. They've always been very cooperative with the top leadership and avoided taking sides. I was surprised by the CNY 100 billion contributions to social initiatives. If it's a one-off, then perhaps it's something I can accept. Though who knows?
I'd be more cautious about Alibaba, given its connection to the Shanghai faction. At the same time, the stock has dropped quite a bit and Tmall / Taobao is undoubtedly a very strong franchise. It goes into the too-hard bucket for me.
Thank you. Definitely a lot of moving parts and very complex dynamics. Appreciate the candid thoughts.