Investing in China?

[zoro]

We used to use EWH (Hong Kong index) as a proxy for China.   Things were looking good for China at the time, about 10 years ago.   Unfortunately since then, Ji has taken over the CCP leadership, and the PRC government has taken over Hong Kong and things are, well, not looking so good.    I closed out the position in January and switched  it to the international index fund we use.

Taiwan (EWT) is another option.   They have the unique risk that the PRC may try to annex them though.

I would not invest in mainland China even via an ETF.   My feeling is that there is too much corruption and government intervention for things to go well.   YMMV.

Completely agree. The dishonesty here is staggering. Ive done quite well over the years shorting China frauds, and the difference between the ones that collapse, and the ones that dont - is just the degree of the fraud not if it is present or not. Also the VIE structure for the ADRS is more dangerous than you can imagine - you dont actually own part of the company as an owner. - its more like having an option on the earnings - thats a big difference for me.  I would definately read everything Carson Block at Muddy Waters research writes, before going anywhere near China.
Also why take the China risk, when Japanese equities are much better governed, and are significantly cheaper in many cases.

[Albatross]

Just wanted to update everyone that I liquidated my Alibaba position a few weeks ago when it briefly took a peak above $120/share and made a tiny profit (around US$7k equivalent), so I call that a win.

I am however still stuck with the sick horse of holding the Hang Seng Index. It's currently around 17% down (but including dividends earned in the last 2 years it's more like being down 10%). Like Alibaba I can't bring myself to sell at a loss and so will ride it out until I break even (i.e. it recovers from the -17%), so at least I can feel I had a win on dividends earned (which continue to be OK at around 3%p/a).

[ChpBstrd]

Just wanted to update everyone that I liquidated my Alibaba position a few weeks ago when it briefly took a peak above $120/share and made a tiny profit (around US$7k equivalent), so I call that a win.

I am however still stuck with the sick horse of holding the Hang Seng Index. It's currently around 17% down (but including dividends earned in the last 2 years it's more like being down 10%). Like Alibaba I can't bring myself to sell at a loss and so will ride it out until I break even (i.e. it recovers from the -17%), so at least I can feel I had a win on dividends earned (which continue to be OK at around 3%p/a).

That's maybe not so bad compared to the Nasdaq which is down over 20% YTD. I have a feeling the zero COVID measures are about to end and that's the signal a lot of investment money is waiting for - but that's pure speculation. It would be good optics for the CCP to engineer a celebratory post-pandemic growth economy while the West slumps into recession, but I don't know if they'll do it. The CCP for the past 2.75 years has seen COVID as one of the few possible disruptions that could challenge their power.

[scottish]

I'm not sure about that.   China is having economic difficulties beyond just the zero covid policy.

For example, there are massive pyramid schemes related to building condo apartments.     The developers are using down payments on new construction to continue construction on previously purchased apartments.     Here's a link if you want to read more:   https://www.business-standard.com/article/international/china-to-rescue-property-developers-after-homebuyers-boycott-mortgages-122072801274_1.html

[Radagast]

Anecdotally I have been hearing of ordinary pyramid schemes and other gambling habits recently. There is a generation of young men with too much money from parents desperate to strike it rich, but without the patience skills or business savvy to do it. Plus it is not nearly as easy as it was even ten years ago.

[BNgarden]

I have no insight, just reading articles like this one, sounds like maybe getting out with a small / loss might be better than waiting?
https://www.theguardian.com/business/2022/aug/28/crunch-time-china-tries-to-fend-off-property-crash-global-economy

[lost_in_the_endless_aisle]

Also, companies are pulling their sourcing out of China. Initially it was due to long-term declines in China cost competitiveness, but more recently, ocean freight derangement, then covid lockdowns and the associated mfg disruptions, and now geopolitical risk. My current employer took 15% of international sourcing out of China so far this year, with a plan to get China sourcing as close to 0% as possible. I'm increasingly hearing we are not alone in this approach.

[Freedomin5]

Just wanted to update everyone that I liquidated my Alibaba position a few weeks ago when it briefly took a peak above $120/share and made a tiny profit (around US$7k equivalent), so I call that a win.

I am however still stuck with the sick horse of holding the Hang Seng Index. It's currently around 17% down (but including dividends earned in the last 2 years it's more like being down 10%). Like Alibaba I can't bring myself to sell at a loss and so will ride it out until I break even (i.e. it recovers from the -17%), so at least I can feel I had a win on dividends earned (which continue to be OK at around 3%p/a).

That's maybe not so bad compared to the Nasdaq which is down over 20% YTD. I have a feeling the zero COVID measures are about to end and that's the signal a lot of investment money is waiting for - but that's pure speculation. It would be good optics for the CCP to engineer a celebratory post-pandemic growth economy while the West slumps into recession, but I don't know if they'll do it. The CCP for the past 2.75 years has seen COVID as one of the few possible disruptions that could challenge their power.

I hope you’re right. The lockdowns, daily NAT tests, and travel restrictions are getting old — ask me how I know. As is the dynamic zero COVID policy. Yup, the official name is dynamic zero COVID policy which basically means that the policy dynamically changes on a whim with no notice at any given moment base on (officially) the number of cases in a district, but unofficially, based on randomly throwing darts at the wall (at least that’s what it feels like). It’s no wonder that foreign businesses are hesitant to operate in an environment where nothing is predictable.

Plus it’s difficult for foreign investors when they can’t get into the country. Flights are expensive. There is a reduced number of international flights. Of the reduced flights, these are frequently cancelled or suspended. Depending on the city there is a 7 to 21 day quarantine period upon arrival. If anyone on your flight tests positive, that quarantine period is extended even if you’re negative. These policies are not conducive to international business.

[talltexan]

Just wanted to update everyone that I liquidated my Alibaba position a few weeks ago when it briefly took a peak above $120/share and made a tiny profit (around US$7k equivalent), so I call that a win.

I am however still stuck with the sick horse of holding the Hang Seng Index. It's currently around 17% down (but including dividends earned in the last 2 years it's more like being down 10%). Like Alibaba I can't bring myself to sell at a loss and so will ride it out until I break even (i.e. it recovers from the -17%), so at least I can feel I had a win on dividends earned (which continue to be OK at around 3%p/a).

Wow, you missed a $30/share drop on $BABA, that may well have worked out! To where are you directing the $7,000 in profit?

[Albatross]

Wow, you missed a $30/share drop on $BABA, that may well have worked out! To where are you directing the $7,000 in profit?

I'm saving up for a house so I turned the money (which is HKD pegged to USD) into GBP to buy a house in the UK in the next 1 or 2 years. Helps that GBP has been falling against USD. So simple answer is, keeping it in cash.