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

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Right, you don't see regulators making an issue of that because those issues really haven't been addressed, but the regulators no longer sort of latching on to that to make an issue of it. So this is what I mean by that headwind seems to have sort of eased off or ceased completely.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“The regulators have gone from being very antagonistic, right? And it's an antagonistic on multiple fronts, all the way from, hey, you know, you are actually not a Chinese company because you're listed offshore and all of your profit goes to this Cayman Shell company through the VIE structure. So from challenging their corporate governance, corporate structure and their listing venue to then challenging them on data security. It's like, look, you might not actually be a Chinese company, so we can't regulate you like a Chinese company. And so this is a foreign company who owns a lot of sensitive, you know, Chinese privacy and data. And so they're sort of going after these tech platforms from just a variety of different directions. So that was true of Uber, that sort of listed. It's true of Alibaba that has already been listed and trading for a while. Now, I think that has largely eased off.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Know so better suit it for the post COVID environment has taken a lot of market shares away from the dominant players. And that's something we should factor in, right? Because that's not just sentiment, right? That's actually pure competition.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“And I think the regulatory ones is significantly reduced. But the other one is Allod the newer tech platforms in China have simply taken advantage of the last three years and really took market share away from the Alibaba's, right? Just look at Pindu Ador, right? I mean, they're tiny Alibaba three years ago and their performance the last three years is, I think, you know, something like plus 100%. They've doubled their stock price, whereas Alibaba has probably fallen 65%. So it just says a lot of this is not just Alibaba and regulatory headwind because Pinduodor is also a e-commerce platform, right? A lot of it is also because newer technology, perhaps one that's”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Not the banks. First of all, people in China recognize that the banks will always be bailed out and the largest shareholder of all these banks are the state, right? So favorable policies entails. So they generally trade with a little bit of that that the government put embedded in there. So they tend to hold their value well. Now, of course, they still trade that very, very cheap valuation multiple versus kind of their monopoly position and versus the amount of cash flow they have. If you just look at how much, if you look at the stocks that have had poor performance, yes, the banks are certainly not the worst performers, certainly versus the tech. But I would say if you say, who is more likely to be trading at a distress valuation relative to potential? I say for banks, it's very obvious. For the tech companies, it's less obvious in the following sense, right? The headwind that the tech companies face, too fun, right? One is regular.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So, what do you say a lot of the banks arch in China are trading at distressed prices? Because if I look at a stock like 10 cent or Alibaba, I would say their five-year stock pattern actually looks more in a bear market than many Chinese banks and definitely US banks, like New York Community Bank, for example. Are there any Chinese stocks that are trading at down 95%? Because we have banks like that. Not the banks.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Bad debt, but I would say that, first of all, has already been provisioned for, and second of all, again, that risk is overinplated.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Far less than what has been disclosed, the disclosure is actually significantly more aggressive because they knew what might be coming. So in fact, as an anecdote, a very good friend of mine was a bank executive. They said they actually tried to reclassify a lot of good loans as bad loans so that the bank would have just have this automatically no to anyone pressuring the bank to lend down more money to help out a real estate developer so they can sort of push off that kind of local political pressure. And then so, you know, that sort of tells you like they already know what might be coming and they have sort of erected a self-defense mechanism. They're, of course, now all being traded as if they're likely to experience systemic crisis or there could be a bank run or they could lose significant amount of their balance sheet as a result.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“I would say I am bullish on the sort of top state owned banks, the really blue chip top state-owned banks. They're the ones that sort of participate in the stress testing, right? They're the ones that have always been in full communication with Beijing about what is coming down the pikes to kind of write down that they might they might face. And so if you look at them, they have always had classified on their balance sheet a lot of bad loans. And it's not because they've made so many bad loans and so they're forced to sort of recognize bad loans, right? They've always been making provisions because they kind of knew what policy is coming forth and by making such a large provision they kept more of the internal cash flow they are they artificially make it such that they can't make more loans so actually the balance sheet and the bad loan that's actually on the book”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Haircut right because the way in which this structure is the banks actually held out to collateral and so the equity value gets destroyed first and the bank can sort of take whatever you know Evergrand has and then sell the collateral to the next developer and hoping they recover not the full amount at least 80 70 of that now still painful experience for sure”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Can take and how much they need to back it if things don't go so well. That was also taken into account before they laid out the three red line policy of like, okay, if you go above this line, you can't get refinancing, right? Because they kind of know, okay, if the line was too aggressive, then too, developers are going to get in trouble all at the same time and they probably can't handle it. And so it was actually a very carefully. So that's why I said it's a engineer bankruptcy, the ever grant and they've sort of done stress testing to know that they can handle that. So it's not like a disorderly bankruptcy are some of the banks taking a haircut? Absolutely, right? And sort of punishment for making unwise loans, what you're also now seeing is a lot of the haircut is actually born by Evergrand's equity shareholder and Evergrand sort of debt holders before the bank sort of actually takes the”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So I would say the one party that's been most concerned by that and have spent the most time trying to study, well, how do you deflate that bubble without blowing things up is actually Beijing. I can tell you, Beijing's biggest fixation is how to avoid the Japanese type, you know, a real estate bubble from crushing the economy. And of course, later on how to avoid the US gold financial crisis type of a real estate induced systemic bubble. And this is why it's actually before long before it sort of rolled out the three red line to deleverage the real estate builders. They sort of done simulation to see, okay, all right, how much have all my banks actually lent out to these people? You know, what's in the shadow banking, you know, what sort of direct lending? And is there a path to gradually deflate that? And so they've done all these simulations and kind of figure out what is the maximum paying that.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Got it. Okay, so that's the liquidity front. Now tell us about Solvency. If a lot of the banks have been making tremendous amount of commercial real estate loans to developers whose collateral is projects that are valued at 40 price to income, is there a risk that a lot of the Chinese banking system is insolvent if prices go down and the people who are borrowing money from them go bankrupt?”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“That is true. I mean, most of the, I would say, just if you rank the banks from one to 100, you can probably see that top 80 are all either directly owned or significantly owned and therefore significantly controlled by the state. This is really the case where they are, you can think of it as an extension of the people think of China, right? So the central bank will always come out and back these banks. And even if there's enough private shareholders in there, I think the government has made it very clear that they will back banks to avoid any kind of systemic crisis from sort of a bank run.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So the People's Bank of China has tons of very, very liquid assets. No one's worried about People's Bank of China running out of money, but I'm talking about the banking system, the commercial banks, some of which are state-owned, some of which are publicly traded, but I think the government is still very heavily involved. You can tell us a little bit about that. There's a sense that the Chinese government really controls the banking system. So they would. Is that true?”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Leap into action for a sign of trouble and just commit to backing banks with unlimited resources. You can stem a bank run on day one, right? I think the US learned that during the global financial crisis and demonstrated that in spades when Silicon Valley Bank and First Republic Bank sort of first started experiencing bank runs. So I think the Chinese sort of learned that. And again, they got obviously their own currency that they can print. They got a very, very strong balance sheet. And so they're actually quite credible when they say they can back any bank that's in trouble with a due to liquidity reasons or actually structural reasons. So I would say the US has sort of taught China how to deal with that and then I don't expect a bank run.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“When you mention these sort of spectacular bank runs, they actually become the reason why we will see less bank runs, and certainly for China. Because the US have probably demonstrated beyond doubt that if you have a central bank that can print your own currency and you”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“It's completely unreasonable, right? I mean, if you look at Shanghai, Shanghai and Beijing are probably the extremes. And you can map that to the premium locations in Hong Kong, Taipei, Seoul, Tokyo. It's right up there, right? And then you factor in the fact that the per capita income is sort of lower in China, right? Just unaffordability is a tremendous issue for China as it's true for most of the other Asian economies. Yeah, this is actually more of a social problem than it is a financial problem for most Asian countries.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“One of the prerequisites for getting married is you need to buy an apartment and move into your own place. So they'll, you know, as people continue to go mature into the marriage age, right? The man is always going to be there. So I don't see a risk to the downside, but I would also agree that the kind of run-up that was experienced before is unlikely to return either.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“I would say it's hard to say. I would certainly say it's less liquid now because it used to be a buying frenzy, right? It used to be for you to buy real estate, right? The government really tries to stop you and it becomes a lottery system, right? You have to win a lottery before you're given the opportunity to buy an apartment. So that's all largely gone away except for the most premium trophy luxury apartment. Certainly the kind of frenzy, the liquidity, we probably won't see that returning anytime soon. Now, do we go into sort of long-term downward trend? I also don't think so as well. Again, right, there's no forced selling and most people in China have been sort of buyered. They were buy and hold. So you don't have a lot of sort of selling pressure. And you actually continue to have sort of buying demand as young people.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“All real estate for real estate prices, if I can't rely on real estate as a way to create wealth, what am I going to do given bank deposit yields is now two and a half percent and then stock market's too volatile? So I think all of a sudden you have this very sort of negative sentiment because people sort of entering a new phase where they don't actually know how to generate passive wealth increase.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Even if this is not kind of on the scale of our kind of global financial crisis, our real estate crisis of 07, I would say the psychological impact cannot be understated because for a very long time Chinese households just assume, look, if I store value in real estate, real estate always goes up. So, you know, there's this income effect and wealth effect coming through the real estate channel. It's the first time for them to first experience the other direction and to go kind of into the sphere state that it may not ever go back to the old days where real estate is such a reliable creator of wealth. And I think that's creating tremendous amps for people. Not only have they seen their sort of wealth fallen because real estate prices have fallen as a result of the developers going bankrupt, but there's just sort of this confidence about, well, what is the future for?”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“My unwind badly. The government basis that if you're too geared up, right, you just can't renew your financing. You have to sell your project to someone. You either complete it and sell it or sell it to another developer that isn't as geared up. And so it's been this almost engineered bankruptcy for the super geared up developers. And what's actually now happening is the bankers then facilitating a transfer of these projects to developers that are less leveraged. So from our own data and research, most of the projects are high enough quality that they will be bought and taken over by developers that have the balance sheet to do it. Many developers will go under, but the project themselves will actually be completed and delivered. There's going to be delay and people are going to be anxious about that, but it's not going to spill over.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“If you're going to blah leverage, right? It's a little bit better and noisier to handle ones on the developer side than the household side, right? Because once the household, it becomes kind of a natural crisis and a social issue. On the developer side, essentially, a lot of developers are heavily geared. So Jack, you're absolutely right. A lot of developers, you know, unlike the US, where like if you're developing a giant community, right, you kind of build floor homes, sell those four homes, you get paid, you build another floor homes. It takes a while to build a whole community. Like the Chinese developer just have multiple sites all going at the same time assuming they can always sell it. They can always get financing. And so some of them are geared up, like not, you know, we're talking about 20 to 1 type of gearing, right? And so a lot of developers who's now gone under. It's not because their property is no good. No one wants to buy the project they're developing. It's that the government is so afraid of how this”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Okay, that's interesting. And so you said you made a contrast, unlike the subprime bubble of 2005 or 6 in the US, when people who were buying property were buying it with credit that they probably or may not be able to pay back. The Chinese speculator, the Chinese buyer of property is buying that with cash that they have. Okay, but there is a tremendous amount of leverage in the Chinese real estate system, right? It's just on the developer's side who are now going bankrupt and the dominoes are falling. Tell us about that side.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Stock market just yet because again, pension in China is pay as you go. So there's not a lot of assets stored in its retirement market. So it's a very recharged market as a result. Prices fluctuate way too much. Retail doesn't always understand fundamentals. So oftentimes it could be a story stock that gets too overhyped. Now runs up and crashes. So from people's experience, it feels a little more like casino than it does like sensible investing. So I don't think there's a great preference for real estate. But there's probably more of a distrust for the stock market.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“I think it's very cultural. So it probably has to do with the fact that the Chinese stock market hasn't existed for a very long time, right? Like in the US, you can trace the stock market all the way back to the early 90s, the craziness in the past that says that this is all old history and it's actually been a stable, wealth-creating market, right? for most people. Now, in China, like the Shanghai Stock Exchange only reopened for business about 20 plus years ago. And for the first five, 10 years, they only listed a few big state enterprises. So it wasn't, you know, it's nothing like the S&P 500 where you can buy into great entrepreneurs and great product companies, right? And so stock market is a very new thing for the Chinese. And I would say because it's so retail in nature, because China doesn't have its big pension funds investing.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“And so people in China who buy many, many apartments, it's not on leverage, right? They actually just have a lot of cash that they put in a bank and then they would put into real estate. Actually, a tiny, tiny fraction of their wealth goes into the stock market, right? Stock market for the Chinese is still not viewed as a channel for.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So, when people say, oh, people are speculating, they are speculating, just they're speculating with cash. You want to think of it as people in China buy real estate as a store of value, much like, say, my Indian friends, they buy gold as a store of value, right? You don't expect gold to breed and provide little gold nuggets as dividends, right? They don't expect it to be productive, right? Just like Chinese people, they buy real estate, they don't rent it out for additional income. It's not investment property. It's a store of value. It happens to be real estate rather than gold. It's equally displatable as a display of wealth, I guess.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“In most cities and provinces, that is actually forbidden. And so it's actually quite funny. In China, you have to go down a lot of households go down to the city hall to get a fake divorce so they can buy a second home. And so if you're actually at city hall filing for a divorce, they actually would ask you, are you here to buy another apartment? That's why you want a divorce or do you actually need marriage counseling because you have a, you know, marital problem. So if you're actually getting a divorce to buy another apartment, like you go to that line and we'll get it processed. And if you're actually getting a real divorce, you have to go get marriage counseling. And so the government has actually been trying really hard to prevent any speculation. And so forbidding you to buy a second unit to buy a second unit, you just can't get financing, right? It has to be 100% cash down.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So in China, so I'll give you a funny anecdote, right? So in China, your first home, you could put 30% down and finance. Now, financing costs in China's meaningfully higher than in the US historically. So, you know, people actually do have to commit down a meaningful down payment and have the cash to cover interest, right? So there's none of that U.S. Ninja loan during the real estate crisis, right? Now, if you want to buy a second unit.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“It's going to be targeted government spending in the key areas and sectors, and that will gradually then sort of kick start. And depending on how big that package is, the speed of it getting rebooted can be faster or slower.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“The slower growth post COVID is an issue, but it's not like China is now experiencing what the US experienced in 2007, where people are being foreclosed on, right? This is a country where people buy real estate 100% on cash, part regulatory and lack of cheap financing. So people, people feel a little poor that real estate prices have come down, but people are not losing their home, not getting margin call. And so, you know, a lot of this feeling poor is quite sentiment-driven. So sentiment is a little easier to fix, right? You are more likely to get a catalyst that could fix sentiment. But in China, that usually historically, if you look at cycles, it comes down to the state spending. And it's not like simple rate cutting monetary policy. It really is the state going out there and say, okay, households, if you're not going to spend money, what we're going to do is we're going to send money for you.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“I would say I am a contrarian, so it's just important for people to understand why I have the kind of portfolio positioning I have, is I'm a contrarian. So whenever I see an asset class that's just had tremendous headwind in terms of bad publicity, bad optics, negative press, I actually get a little excited. I go, okay, you know, things are probably not as bad as what's made out to be. Prices are probably too pessimistic. There's an opportunity there. So I like China right now because it is really, really cheap and just the kind of headwind it has faced, real or imaginary are enormous and probably overblown. And so I like it for that reason. When you ask callous, right? What will it take for sentiment to shift? And when I say it's sentiment rather than sort of actual fundamental economic damage, yeah, you know, like real estate is an issue.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“They average multiple of 14 times down to a two standard deviation extreme. I think it was as bad as closer to being eight times, right? Even if earnings was growing, you're going to have very bad returns because prices are falling reflecting extreme pessimism, right? If you look at Chinese shares, be it the offshore on trade in Hong Kong, US or onshore in China, there's a lot of fear being priced into it. I would say what's priced into it, a conflict with the US via Taiwan, that's definitely priced into it, worsening trade relationship with the US, US being one of China's biggest trade partners, right? And that's scary. I believe that somehow, you know, Beijing is going to abandon capitalism and perhaps go back to the way to central planning, right? Good. I'm very extreme and very irrational. But the fear is there. And so you have these fears.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Now, Jack, it really is dominated by sentiment. Clearly, there's been a slowing down post COVID. Obviously, during COVID and all the way through to post-COVID. So the slowdown in the underlying fundamental growth is absolutely there. But if you look at corporate earnings growth year over year on average, it's actually growing just not as fast as historically. What's really delivered this brutal negative performance the last two, three years has been sentiment, right? The Chinese shares. It's called the Anglo-Shore shares have historically traded at about 14 times earnings. So they've historically always traded at a lower multiple than, say, the S&P 500. And that's reasonable, right? S&P 500 is a, you know, it's a more liquid market, safer market. So trades at a higher valuation multiple. So the Chinese companies, despite faster growth, actually traded a lower multiple to reflect their riskiness. Now, if you go from”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Generally, yes, most of our portfolios would be shares that are hard to access and primarily onshore, because that's where we see opportunities are.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“The ETF is now three plus years in terms of track record. Yeah, so over the time that we have had the fund that has, you know, invested predominantly in the A shers the performance between say a shers company versus say the Alibaba in the ten cents. That acquitive performance difference is night and day. It's enormous if you've actually seen companies have actually delivered positive results at the same time where most of the offshore companies have had a minus 70% return.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“So, yeah, over the last three years, and that just tells you how different the offshore shares and the onshore shares can be in terms of performance.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“A good thing when they see it, just lacking global investing experience. So that's where we focus. We just think if you buy the onshore shares, you might more likely buy something that'll grow to become much bigger. You have an advantage because you're trading against not international hedge funds, but really trading against local retail investors. And the result of that is if you look at the performance of Yangshu versus the offshore, the differential in returns is, I think, cuitively about 50-60%.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Into Alibaba. Yeah, so in our strategy, we look at obviously all the Chinese stocks and what we have concluded is that really you're going to buy a lot more of the sleeper stocks that no one's have heard of, companies that are still young in their growth cycle, buying what are called onshore, basically companies that are listed in domestic Chinese stock exchanges rather than kind of the Alibaba's in 10 cents, which by the time they list are already with the world's largest, you know, one of the world's largest tech companies, fully valued, everyone's jumped on the bandwagon already, right? So we just believe in, like, you don't want to be buying a stock that everyone knows is great and you buy when it's very expensive already, right? You want to go into the onshore local market where there's not a lot of competition from international capital where there's more opportunity for alpha because the local retail investors make more mistakes. They don't understand.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Healthy margin, there's a profile earnings growth over time. And then that sort of valuation signal interacting with growth, gross related type quality metrics helps to get at buying a growing cash flow at a big discount. Now what's also important is, of course, sentiment. Because oftentimes something that is cheap may be good quality. You could wait for two years before there is callous that causes to be revalued, that cause analysts to come back and talk about that stock. You don't want to wait too long because otherwise your capital is not very efficient. So it's also important to understand sentiment. And by looking at sentiment, looking at flows, looking at sort of new changes and sort of analyst recommendations, it also gets you a sense of are you near a catalyst? And that's about to sort of ignite and propel stock price upward.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Valuation is huge for us, and it works particularly well in emerging markets, really well in China, because their valuation swings are that much more dramatic, right? So cheap can get way too cheap and overreality can get way too overvalued. So you do want to use that signal. And that's probably one of the most powerful ones. Now, the next one that sort of interacts really well with the valuation is quality, right? Because you don't want to buy a company that really is a bad company. you know, on its way to death, right? And then, or it's a company that's forever cheap, right? You think of state-owned utility companies and there are lots of those in emerging markets, and certainly there's no lack of large scale enterprises that are just not very productive. If you buy a cheap company that is a state-owned enterprise, it's rather dysfunctional, you'll never make money, right? Just be forever cheap. So you also want to screen for quality. So make sure the growth characteristics are there as well. And it does have a”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“A few broad categories that we actually swing for. One is screening for the quality of the company, one screens for relative valuation. One screen is for sentiment. So let's kind of look at first valuation because I think that is easiest to understand. It works surprisingly well in all emerging markets and works super well in China, screening for valuation is basically looking at, is this company cheap relative to the proper peer group? Is it cheap relative to its historical valuation range? That tries to help you capture, you know, market goes through valuation cycles, stocks go in and out of favors. And it's like Warren Buffett says, right? You're going to be more successful over time on average if you buy cheap, if you buy expensive, right? Could be a great company, but if you pay too much for it, the return is going to be there. It might be a bad company, a lot of negative news, growth is slow, but if you pay a dirt cheap price for it, you might still come out ahead, right?”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“Just because US market's pretty efficient, you know, most of the tricks that companies might play on the accounting side, you know, most of the techniques for teasing out good companies, they don't work as well in the US because it's so competitive. It's been armed out. But they work tremendously well in emerging markets and they work really well in China. So Jack, to your point, you use these accounting red flag tools that's been developed back in the 80s and 90s in the US. Like they don't work in the US anymore, but they work really well in terms of helping you screen out companies that are problematic, whose numbers are not as reliable. They do really good job in China to help you avoid those problem stocks.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT
“No, I think brutal is absolutely justified. It's probably spot up. So, first and foremost, we're an emerging market expert. We really have our pedigree in the institutional space, running money for large sovereign funds, especially those that are in Asia, you know, where you run money for government of Taiwan and other large Asian government pension funds. And we kind of narrowed that down to single countries because we're getting mandates for these individual country pension funds. China happens to be one of the biggest markets. It happens to be a market where when we were launching our funds that had a lot of global interest, you know, both positive and negative. And the methodology, the quantum methodology, right? The quantitative screening plus sort of sensible model building applies really well in China. In fact, many of the quantitative models, something we in academic call factor models, that have stopped working in the US.”
2024-04-01 · Forward Guidance · The "Beijing Put" | Jason Hsu's Bull Case For Chinese Stocks · IDENTIFIED FROM THE TRANSCRIPT