YouSaid · the spoken record

Jason Hsu

lines on the record: 96
first: 2024-04-01
most recent: 2024-04-01
sittings or episodes: 1
sources: podcast

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“Absolutely. So please, please find me on LinkedIn. I don't use X. I only use LinkedIn. I'm probably a little too old school for that. So find me on LinkedIn. Connect with me and subscribe to my newsletter, The Bridge. And I hope to sort of bridge you be the bridge for you and the different emerging economies to learn more about Taiwan, Korea, China, India. So yeah, lean on us as your source of information about emerging markets.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Households feeling poor and they don't spend money, and that's just bad for everyone. So generally, their policy is much more fiscal rather than monetary, right? It literally is the government has to go and spend money.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So again, we can't take the American lens to understand the Chinese monetary policy. In the US, right, when we lower interest rate, everyone's cost of capital lowers, cost of financing lower. So we go spend money, we go borrow money, right? That's not in China. And you see that in Japan as well. So this is not just something weird about the Chinese, right? This is true of the Japanese. When the bank lowers interest rate, what happens is because everyone saves so excessively, right? A big part of the disposable income is bank interest, right? So if you lower their bank interest, all of a sudden they feel really poor. They don't spend money, right? So in China, when the government lowers your interest rate, you are actually quite angry and you stop spending money. We saw that in Japan, right? So it's not how it works in the US. You can't just transpose and say that's how it works in China. So the Chinese government is very reluctant to just lower interest rate because they know, look, I might be lowering cost of finance for some people, but broadly I'm making house.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“It's basically across the board, right? It's both from their Social Security Fund, it's also their regional investment funds. And their industry investment funds. They're all jumping in.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So, the two elements of the Beijing put the second thing you just mentioned is the Bureaucrats encouraging bank deposits to be converted to wealth management products. So, you know, a 64 portfolio, but something that includes stocks. The first one is, sorry, what are the large Chinese institutional investors allocating towards the stock market? Sorry, did you say it was the Chinese pension system or the state-owned enterprises?”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Interest that you buy a stock and hold it forever, right? They just watch it, right? And so there's so much like themes and stories that brokers constantly try to sell you. So with the regulator. And so they actually promoted this guy who's Name is the broker butcher, right? To be the new regulator, the head of the regulator. It's like, look, we want wealth management. We do not want just brokerage day trading, right? That's not what the industry should be about. And so there's this big push. Like all the banks got.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So, this first bar, directly, government in the short run could just buy, and they've done so historically in counter-cyclical buying. And funny thing is they actually do make good money, right? Because that's like the warm busted approach, right? Buy when everyone's fearful and that's what they're doing. Now, the other piece I think that's probably more significant in the long run is the Chinese bureaucrats, bureaucrats in Beijing, one thing that does trouble them is they realize people think of their stock market, right? Their domestic retail investors think of their own stock market as a casino, right? It doesn't have a lot of good price disequality, right? It doesn't get long-term capital to companies that actually have great product, great innovators. And so capital can go randomly into thematic stocks, fraudulent stocks. And then that's clearly not good for long-term development, right? So they want long-term capital. But if all you have is brokerage, right? You know, it's not in brokerage best.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Private equity and venture capital money to support industry development. But you know, those are very, very well funded, often overfunded because these deals have all become quite valuable once they go IPO. So they're sending out a lot of cash. So they're basically buying, right? They're basically buying at a market low. Now the question is, you know, does this do an up? It certainly is a great signal when you're actually buying rather than just saying, oh, you know, the economy is going to be great, right? So it's not cheap talking anymore when the government's actually buying. And what you're seeing is years today, right? government owned mega cap stocks have outperformed the bra market by by quite a bit if you look at kind of the small cap which are more private companies versus the large cap performance like this this year i think the differential is probably closer to 10 right that's how much like the large cap stale enterprises have done”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I'll talk about the second channel that you just talked about, which is like state-owned enterprise is fine. I mean, I literally witnessed that, right? at lunch and someone got a call and and it was essentially like you know sort of Beijing calling a major state-owned investment fund asking well you know what's been your buying activity what have you bought today right so it does actually happen but it's not unique to China right like you know one of our big clients the big pension fund in in Taiwan, they also do that they do countless cyclical buying meaning when the market falls a lot the government is under a lot of pressure and they would sort of jump in with a government reserve fund now in China both you have the national social security fund which is a pretty big monster you got the sovereign wealth fund you also have a lot of regional and provincial investment funds industry funds that historically are meant to provide really”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“To be a manufacturer, right? It is positioned to be the world's greatest software outsourcing, call center outsourcing, right? Because their advantage is software development, right? Their advantages, their natural language is English. So they can do commerce well with the rest of the world. So that's not an advantage in a factory floor. So I think people got a little carried away thinking somehow just because India has a lot of population comparable to size in China that India will just become the world's factory and all the factory will move to India. So I think there was some unrealistic enthusiasm around that theme. And so when India made new highs, we sort of eased off.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“I would say so this is not a structural underway, and I want to be super, super clear about that because it was our big overway to start with. India was a big overweight for us a while back. It's gone to a minor underway because everyone just got too enthusiastic about India and is India going to grow absolutely, right? But I don't think India becomes China, right? I don't think India replaces China as the world's factory. And that's evidenced by, look, Foxconn, the world's biggest contract manufacturer. It went to India billions and billions of dollars and they still struggle to make the latest iPhone, right? So the iPhone's made in India are not sold in the US. The iPhones made in India are kind of the lower spec older models. So they just struggled with quality and it also labor efficiency. And it's just because India is not putting”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I would say we have probably two, the biggest country overway is Mexico for us. And a lot of that is, you know, we are seeing the, I would say the kind of the early day benefits of sort of French showing to Mexico, whether it's now the US is buying more from Mexico and that's sort of starting to show up in the Mexican export data or you got China exporting a lot more to Mexico as sort of a trade-through station where Chinese factories are moving to Mexico and they need a lot of intermediate materials to come from China into Mexico. You're seeing even Taiwan and Korea exporting more to Mexico because again now the components don't go to China. They go directly to Mexico. So you're actually seeing that in trade data. You're seeing that show up in Explorer and firms and a sector supports that.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so we're often looking at dividend yields that are right now many of them have dividend yields higher than your bank deposit rate, right? It's how attractive they are. So you could easily find someone who's paying like four and a half percent and like the bank deposit yield right now is like 2%, right? So that's a pretty good deal”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“One of the easiest telltale sign is, is the name of the company starts with China, like only if you're directly managed by Beijing can your company name start with China? That was something I learned. It's like, oh, you know, when I register a company, can I just call it China something? No. Like, you cannot register any. Because it immediately communicates.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“You're not bullish on the regional one so much as the literally Beijing, the Chinese Communist Party. So what would some examples be of state communist party Chinese Beijing companies, state-owned enterprises”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Are so visible, they're almost like the face of the Communist Party. Like it's a testament of stewardship. And so when they underperform, Beijing has to fire people because you now have embarrassed the government and then your inconfidence is on display. And then you're replaced by someone. The next guy would go, hey, I better do a really good job. I don't know if I get fired. And so where this is not true is, of course, in the small local municipalities where Beijing doesn't have transparency.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“State owned enterprise. So there's like a smaller local state-owned enterprise. Like the performance is abysmal, right? It's exactly what you predict, right? It's probably the mayor and all of his family being hired and pay egregious salaries, right? And it's just not productive. And then you look at the centrally connected Beijing operator, the state enterprises. They have better efficiency ratio than anyone else. And their management does actually even make a lot of money. And if they make any mistake, they don't paying dividend. They just get fired and replaced by someone else. So we realized, wow, that's really good governance, right? Because your largest shareholder wants you to pay, want you to grow earnings. I want you to pay dividends. If you fail to deliver that, you just get fired, right? So there's no entrenchment problem. So it's actually quite surprising when we saw that data. And so we actually now, after looking at the data and seeing it repeat over so many cycles, we have very strong confidence that, okay, like the Beijing control salone.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“A lot of our top down research do become our models at ghost then into stock selection. For example, so we had the same thesis, which is like, boy, everyone hates state-owned enterprises. And I can understand why you would hate state-owned enterprises, right? Like political intervariance is one thing, right? And just the fact that it's viewed as to say, look, it feels like it's the DMV that somehow became a listed company, right? So you just don't feel like it's going to be very efficient, right? People are not incentivized to do a great job or create profits. So we went into it with the same suspicion. But when we look closer and so we actually went and bought data and then we realized, wow, you know, there's a lot of data you can classify stable enterprises into centrally connected, those that are sort of operated directly by Beijing to the local municipality connected. And what you see is like if you look at the municipality connected.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Must be right now at this very juncture, you know, we're recording this late March 2024. So I guess that goes to the real governance question of, you know, if you own a company in the US or the UK, like that company may not have the best management, but generally they are trying to advocate for shareholders and they're trying to increase their earnings, which hopefully they will pay to you in buybacks or dividends. And I think Western investors, part of the reason maybe a lot of Western investors pulled out of the market, or I should say non-Chinese investors, is because there's a sense that no, you know, there's a risk that this will be nationalized. What do I really own here? And I think probably that sense of risk, maybe in its greatest with the state-owned enterprises. So what do you really own here if you own a state-owned enterprise? And is your answer based on what your models say or your individual research?”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so certainly valuation is a big driver, but in terms of our biggest overweights right now, our biggest overweight right now is we have a big overweight into the blue chip state-owned enterprises. And that's simply because if you kind of look at their relative valuation given the kind of risk they have, they look like they have almost a downside insurance provided by the government. And so you only get upside captures. So given the devaluation, given the low risk, they become very attractive for the model.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Has your model gotten more bullish on Chinese companies and their allocation to China has grown, not because they're looking at anything in the macro data, but just because the companies are getting cheaper relative to other ones.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Yes. Now again, you're going to generally create country overways or underways that makes sense, right? Because usually it's the great companies in that country that will be sort of world leading in terms of its sort of industry capability. And that leads the country overweight or underweight.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Macro is one variable and it has to interact with many things that the industry and the company level. And so ultimately you can only make money by selecting the right companies, right? The right companies in the context of that macro backdrop.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So even though there's not a lot of sort of macro thinking and macro variables that go into building models, selecting models, it then circuit that down and you apply the information to look at individual stocks from a bottom-up perspective. And so all the macro information will sort of filter through and be expressed in terms of companies within industries and sort of industries against other industries. And so I would say, like you say, because if you look at pure macro, you run into this risk of you can have periods of strong GDP growth, but with bad stock market performance, right? We've seen that over and over again, right? It just says, look.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So you want to use some human analogist to say if I'm going to look at data, right? What is actually informative data? And so this will be like, oh, if I want to study China Which probably is when there are very few stocks and not a lot of liquidity? Or do I look at Japan or Taiwan or South Korea when they're about to enter the MSCI and had tremendous retail trading? That's probably where if you look at that data and you say machine learning, go fit the model to that data. The calibrated parameters will make more sense for you to then apply to the China model than trying to calibrate data using 1992 China data.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“And this is where the word quantum comes in, right? You want to use data to inform you, right? But you've got to be intelligent and say, well, what data do I use? A lot of people just say, I want to use Much data as I can. The people who are trying to study the SMP today by saying, wow, I can look at US data going back to the 1800s. It's like, yes, that is more data, but it's not useful data, right? This is some, yeah, there's no data.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Said questions earlier about we could ask the model how did China do what it did? How is that similar to Japan? Those to me seem like questions that a human being would ask another human being. How do you get the Excel spreadsheet or the Python to give answers and insight on those seemingly non-quantitative, very qualitative matters?”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“China right now and go, you know, that feels a lot like what Taiwan went through. That feels a lot like Japan went through, right? You look at BUID, right? BUID today is not that different than Toyota in the 70s, right? Toyota in the 70s was like the worst car you could buy, lowest quality, right? And it could only get into like, you know, poor part of Europe and Middle East because, you know, that was the market that was willing to buy from them because they had no brand and no quality just yet. And that's where BOID is today, right? No one knows who they are, right? They got to go in with a low price strategy and gradually their quality, their low price will start to convert people and they'll build some brand. And then it'll be a long time before they can come into US and the US will have some incumbent automaker that tries to stop Toyota back in the 80s, just as they will try to prevent BOID from coming in. So it's, you know, it's the same script.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So if you are a pure stock picking fundamental researcher, that's just impossible, right? To manage an EM portfolio well is impossible. Too many countries in there and they're too far to get to and frankly the cost and effort would discourage most firms from doing a particularly good job. So being more data driven, being more systematic, quantitative means you say, look, I'm going to do as good of a job as possible based on available data that I can buy that I can gather. And I'm going to build model off of like, you know, well, how did China develop? How did Japan develop? How did Korea develop? And how did some countries not develop and how can we sort of apply these models and look at what's happening in Brazil, right? Look at what's happening in Saudi Arabia and see if I find patterns. History doesn't repeat perfectly, but it sure rhymes a lot, right? And so we can see what's happening.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“I would say the EM over time, the resource rich ones have become such a small component of EM, right? And then be it Africa, be it Middle East, be a LADM, right? If you kind of go, oh, that just round out countries are too small in the basket, you would actually have very few luck. And again, I would say that's just an index design bug rather than a useful feature. You really want to say, look, we just care about sort of less develop countries where if they just get a few things right and sort of run with it, they can do really, really well, right? And so that's how we think about Yep, right? So we don't think about Frontier versus EM. We really think of the countries that are less developed. And we're a little bit more of capital, just getting a few products right, getting some infrastructure right. They can create a lot of wealth. So that's how we think about it.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So, you know, a lot of LATM are quite resource rich. And certainly the Middle East, energy being such a strategic component, Africa, there's so much mining of cobalt that is critical for making batteries. So these regions are going to be a big beneficiary.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“AI and the requirement on the hardware side, right? That's just be honest, right? Like what manufacturing companies in Asia need is major US innovation, right? Because like innovation is just not something Asia is known for. It's known for engineering. It's known for making what's already made in the US just cheaper and a lot more of it. Nvidia is sort of demonstrating like a new hardware demand, right? Very soon AJ I'll figure out how to do that and they'll just do that at a third of the price and that's going to drive another manufacturing and tech boom in kind of the export oriented part of Asia. And that'll be great for EM as well. So I'm seeing sort of at least two meaningful catalysts for two parts of EM.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Geopolitical tension, Saysi Mang Sai, and we seem to be adding to it. So I think resource-based EM are continuous will continue to see high prices, high demand and high global attention to get access to them. And that's definitely a tailwind for them. So I'm actually quite positive about that part of EM. And then I would say on the manufacturing part of Yem, right? If the China French shoring continues, right, even if China keeps 90% of its business, right? Just like 10% of that massive flow would buoy up Mexico, Vietnam, and Indonesia tremendously. So I think that's quite exciting, especially now if you think of”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“And then, of course, the US recover better and recover because of the tremendous social media-based technology platform sort of growth cycle. Now, if you believe in cycles, right, like one could argue, right? The cycle of EM underperformance has been a bit over than 10 years. And given how cheap it is, it might be the cycle of EM again. And so you really want to look at kind of the future of EM as, you know, well, is there a thesis for the resource dominated EM economy to have another sort of resource boom for the manufacturing export dominated economy, right? Do they have kind of a thesis for that to sort of outperform? And I would say on the resource at least, like we're going to a world where”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Cycles, right? I mean, these macro cycles are much longer than kind of individual stock market cycles. And EM had that almost 10 year stretch before the global financial crisis or the caused an insane flight to safety, insane flight to capital that destroyed a lot of the EM currency. So before that major crisis, EM was going through a wonderful cycle where they're hitting on all cylinders from the resource-oriented economies to the value add economies that Southeast Asian economies. So they're hitting on all cylinders. But really, the undoing was the US global financial crisis.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Yes, they still are. Even though they really shouldn't be. Even though they really shouldn't be, right? Per capita income perspective on just the quality of kind of their product, they probably are more advanced than many European countries, but just legacy reasons, they're still stuck in the EM basket.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“And to evolve and go from a per capita income of 3,000 eventually to 13,000, right? Yeah. So China's in the biggest lagger and really dragged down EM performance. Without China, EMX China performance is actually quite respectable. Last year you would have done 20 something at a time when China did minus 25% if you were to take that out. We are a big proponent that you need to look at the French shoring theme and understand, well, what does that mean other than it's a headwind for China? But what does that mean as a tailwind for Mexico as a tailwind for the rest of Southeast Asia? As a tailwind for the more developed part of EM, like Taiwan and South Korea.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So, Jack, first and foremost, you hit on a super important point, right? Like if you just held on to an EM basket passively, right, then you kind of just index it. What you would have had is like at the height of China where everyone loves China, everyone thinks China's going to overtake the US, you would have almost 50% of EM portfolio in China and India would be tiny. But then, of course, it's like maximal allocation to the most thematic story stock and you know you're going to do poorly, right? Because the sentiment swings, the cycles, right? It means, you know, when everyone's sort of too in love with something, it tends to do poorly later. And then you get too pessimistic. First of all, you got to be a bit more active and then sort of think it through, right? You know, obviously having 50% of EM in China is just too risky, too concentrated and then betting way too big on China continuing on this path and not having much allocation to India sort of misses the point. It's like, look, you know, India has a great opportunity to follow Chinese trajectory.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“It's about the same things, right? Over the long run, and unfortunately this is true in China as well, over the long run, companies have to make money, right? You got to have earnings growth, right? You got to have positive cash flow, right? You got to have products out there that people want to buy. So in the long run, it's exactly the same thing, right? You cannot just hype up a stock based on a story and expect that to go off forever. But on any given day, right, really it's dominated by macro, like so, you know, the equivalent of a J Powell, right? It would be the people think of China. This would be this regular saying that it'll be, you know, the National Party Congress and kind of the transcript for what was said and people team leaf reading. So insurance, it's a lot of noise that's more kind of macro in nature and a lot of gossip about individual companies and industry that moves prices.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Within China, people are probably more pessimistic about their own stock market and about kind of their own economic growth and economic growth policies. Then I would say you're foreigners, right? Like, so this is not, oh, you know, Americans are pessimistic about China and then therefore they're selling their Chinese ETF and that's crashed the Chinese market. That is not at all attacking, right? The domestic sentiment being even more negative, right? And the funny thing is, right? I mean, the Chinese recognize that they want to balance view they should read global newspapers. So the Chinese read a lot of American reportings about what's going on in China, right? And that freaks them out. And so the sentiment is very, very fragile, very negative. But also, we've seen that before, right? Like the sentiment swing in China is very extreme, right? Again, these are very short-term capital. They're not long-term pension funds. I can sort of ignore the noise and not have the prospective history, right? These are all retail individuals who probably.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“The American household savings rate is borderline negative, right? The Chinese household savings rate is like 30%, right? And at the speed which the GDP is going, the size of GDP, they save a lot of money. By some estimate, and then sort of, you know, you got to take this with a grain of salt between what's directly in bank deposits.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So this just sort of gives you a sense of scale, right? So when you're talking about like, you know, in 2020, 21, when the market was quite exuberant, the stock market, Chinese stock market at that time was about 13 trillion in size. So not quite the US at 40, but it was still the world's second largest stock market and then very liquid. And that was 95, 98% all sort of Chinese investors, either through mutual funds or directly through their own brokerage account, right? So we should just acknowledge this, like foreign flows into China is tiny relative to some of the domestic wealth that's in the market. Well, what's interesting is that is still a tiny fraction of the household wallet. The Chinese household oversees excessively.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“And when that sort of cycle sort of reverses, you always kind of see them go back to at least historical norm, if not with a bit of a bull market behind them, perhaps to the historical highs. And there, you're not just banking on earnings per share growth, you're really benefiting from this shift in sentiment and therefore shift in evaluation multiple.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Yeah. I mean, we are seeing some of the manufacturers who are really trading at the absolute cyclical bottom. Who are kind of the PE of four.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Because they can take kind of their experience in running factories. And now this will be made in Italy, right? It gives you a higher brand, you know, better margin. And that the same thing is happening. And you've seen that in the trade data, that Mexico, now US biggest trade partner, but like how the heck did that happen, right? Well, it's because now you're seeing a lot of Chinese manufacturers moving their factory to Mexico benefiting from NAFTA, the proximity to the US. And these are Chinese operated factories. So with all the operational efficiency, and look, it's just part of China understanding French showing and implications. These clever entrepreneurs, all you expect clever Chinese entrepreneurs to be very plugged into where can they go to cost down, to reduce frictions, to maintain the business that they currently have. So, you know, I'm not too worried about the Chinese manufacturers.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“That's being pushed out to many other parts of Asia, to Mexico. Now with French shoring, there's just sort of an acceleration of that trend that was already happening, right? For those for your audience who've been to Europe, just go to Italy, right? Two-thirds of Italian textile manufacturer, fashion manufacturer are now owned and operated by the Chinese.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So I would say French shoring is accelerating a lot of things that would have happened just on its own pace anyways, right? Because to understand what is in store for China the next 10 years, you can just go back and look at what happened to Japan once it got sort of very developed in per capita GDP was quite high and it was starting to make things that are not just low cost OEM, but really global quality, right? And then later on you got Taiwan and South Korea. China is sort of at that point. It is no longer just dirt cheap, right? Today you manufacture in China not because it's dirt cheap. It's because, wow, it's really good quality for a really competitive price and no one can sort of get that price quality ratio just right. So China has been trying to push out a lot of manufacturing. I just want to like t-shirts or jeans or like you say plastic toys.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“I definitely think so. I mean, the market is too large to go away, right? I mean, you're talking about it being the world's factory, right? That is not changing anytime soon. Its per capita GDP stands at 13,000 and continues to grow as they sort of gain efficiency, gain productivity. Yeah, I mean, so I think everything else that people are afraid of right now is more noise. It's not that they're not meaningful. They're not important, but I think once you look at a longer time scale, they'll feel more like noise's hardest working economy, right? Let's call it one of the world's hardest working economy. You know, I think that'll continue to continue. And when you have a hardworking, productive economy, it'll drive wealth creation. It'll drive growth. And that's going to filter its way through to the stock market.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So, first of all, these tech giants, they're already trading at fairly rich valuation, even though it's come down a lot. But historically, they've always traded more the NASDAQ type valuation than the domestic valuation, right? And you kind of go, look, can I buy domestic consumer growth-oriented themes at a 30% discount versus what I can buy in terms of a Alibaba or 10 cent and you look domestically, yes, absolutely, right? Just give me an example. Most people think, oh, you know, the only way to create wealth in China must be from tech IPOs, you know, technology shares. But no, for a long time, the wealthiest person in China right now is the guy who sells water. The last one was the guy who sold hot pot, right? So growth in China is not just tech, right? Growth in China is just anything and everything that's on the consumer side. And there are just a lot of those.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so a funny thing is the person who was in charge of sort of putting that in place has since then been fired. And now sort of tutoring has sort of come back to life, right? So the regulators has clearly gone the other direction because when it was first sort of put in place, it was any kind of online education, offline tutoring was not allowed. Now they sort of defined everything and I would say other than probably a very narrow set of tutoring activities that is not allowed everything else is sort of back to where it was before. And then you've seen that the company EDU, right? That was the biggest player and probably the most iconic have recovered very, very significantly right there. I think you give them probably another few upper limit days back to where it was.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT