R48 exiting all China related holdings, in past year

[retiredat48]

I posted the following on another forum.  Open to comments...

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I do not want to be overly persuasive here, as the following applies just to me.



Just to me, I decided about a year ago to EXIT ALL INVESTMENTS INVOLVING CHINA, TO ANY DEGREE OTHER THAN SMALL. And have posted same.



A main holding was FSEAX, Fido Southeast Asia fund...owned for decades.



I personally consider China has become too much a political risk...all the way to confiscating, nationalizing or otherwise taking of assets from USA investors. As a retiree, I see no need to carry this risk of huge loss.





Also note that much of China owned stock is not direct ownership...rather intricate stuff, that I suspect China can dis-avow all rights.



Now, in the last year, this decision has been a great one to exit, as China stocks/companies are down a lot...bear market. And look what has happened to those who owned RUSSIA STOCK funds...about a complete wipeout recently.



If China carries out its well-spoken goal of taking Tiawan, brief history shows our President may respond with huge lecture-type words/sanctions etc, that result in China taking a very adverse posture re the USA. Remember, when small South American countries nationalized (stole) our major oil company holdings, the USA did nothing. If you own China assets, likely kiss them goodbye, if nationalized.



Lastly, if I were a Communist leader, I may do same--take USA assets. Why should China (socialistic) be creating millionaire USA citizens?? And China billionaires as well? Thus, they have been cracking down. They abhor "profits", even mandating that profits are not permissible for companies involved in education. Standby for more.



An influencer of my decision was the arguments presented by pro investor Kyle Bass (google his youtube interviews if interested) on CNBC.



Bottom line: You may do well investing in China Stocks/Funds; they have been in a bear market, and some recovery likely, as China tries to woo investors back in. But not for me...an unnecessary risk. I have exited.



Good luck all.



R48

[jongaltiii]

retiredat48 Concur with everything you said. It seems you are in good company as even Charlie Munger cut his stake in BABA: www.bloomberg.com/news/articles/2022-04-11/charlie-munger-tied-daily-journal-slashes-alibaba-stake-in-half

Regrettably, I still own a little FSEAX but that can be remedied fairly easily. 

[Deleted]

I also exited China related holding last year.

I have been reducing rest of EM as well. I have still have some American Funds New World, a long time holding, it has 15% China. I have been trimming it.

[galeno]

Our exposure to China Taiwan equities is 5.5% in our TWSM UCITS ETF (VWRD). PE = 16.0.

EM stocks (44% China + 18% Taiwan = 52%) are CHEAP eith a PE = 11.1.

If we substitute 10% of TWSM for 10% EM we wind up with 11.7% of our equities in China / Tiawan

[bizman]

I have not made any real changes to my portfolio, as my exposure to China is limited to indirect exposure through multinationals with business there, and those with large parts of their supply chain there. In writing that, I realize that we are all exposed to a greater degree than we may like to think, whether we like it or not.

While I have never been a big fan of the CCP, at least up until the ascension to the helm of Xi Jinping, there was been a rather consensus-based and fairly pragmatic quality to their economic and foreign policy in what I would call the post Deng Xiaoping era.

Since the ascension of Chairman Xi, with his "Wolf warrior" diplomats and increasingly confrontational, rather than pragmatic and cooperative, attitude toward the US and anyone he sees as not bending the knee to he and his will, I have watched with growing dismay. And the growth of China's military might while the US has shrunk its Navy and spending on the military to 3% of GDP, which can't maintain the current strength, creates a growing unfavorable balance of power. Note the aggressive flyovers directed at Taiwan.

With the scheduled appointment of Xi to a groundbreaking 3rd term later this year, which will effectively make him dictator for life, and his extinguishment of any potential challenges or challengers, I am not optimistic that he is going to change character in a friendly direction. And we have the precedent of the serial disasters of Chairman Mao's unchallenged rule. Like with Putin, when you are dealing with a strongman leader, bringing him unwelcome news is hazardous to your health. So truth tellers get weeded out in favor of yes men.

Xi's idiotic performance on Covid with not importing mRNA vaccines from the west so as not to lose face, and continuing the zero Covid strategy does not build confidence in his judgment.

It seems fairly clear that he will likely take Taiwan (or at least try) in the next few years. Not only would this be a human tragedy, but it would be a total disaster for the world economy and America's interests. Given the dependence of American semiconductor "makers," who almost all farm out the actual manufacture, rather than design, of their chips to Taiwan Semiconductor, this could be a blow to the world economy that makes the Ukraine/Russia conflict look like a tea party. And this doesn't even address the overall supply chain dependencies of all of American industry.

The US has stupidly done with China via the supply chain what Europe did with Russia and fossil fuels. We will likely rue the day that our elites decided to make a bunch of money in the short term and mortgage our future security thereby.

I recommend all to read or re-read Barbara Tuchman's The Guns of August, which shows how world powers stumbled and bumbled into the disaster of World War I. I hope we can avoid another such catastrophe. But as they say, hope is not a strategy.

I sure hope I'm wrong, but the "rules based international order" of the global internationalists is being shown to be a fraud. As always, it is the law of the jungle. As the US is no longer the one unquestioned superpower, our happy international order is being challenged. The golden age for the world that has been provided for by American power since World War II may not survive.
If so, it would be a tragedy for the whole world and more than our portfolios will feel it.

[retiredat48]

Nice post, bizman.

Guess that means I generally agree with you.

I don't consider China/Xi want to lose the opportunity to take Taiwan, at a time the USA is led by a PERCEIVED (rightly or wrongly) weak President. China likely waiting to get COVID under better control!

R48

[steadyeddy]

Apr 15, 2022 2:04:06 GMT retiredat48 said:

Nice post, bizman.

Guess that means I generally agree with you.

I don't consider China/Xi want to lose the opportunity to take Taiwan, at a time the USA is led by a PERCEIVED (rightly or wrongly) weak President. China likely waiting to get COVID under better control!

R48

rightly...

[Chahta]

"It seems fairly clear that he will likely take Taiwan (or at least try) in the next few years. Not only would this be a human tragedy, but it would be a total disaster for the world economy and America's interests. Given the dependence of American semiconductor "makers," who almost all farm out the actual manufacture, rather than design, of their chips to Taiwan Semiconductor, this could be a blow to the world economy that makes the Ukraine/Russia conflict look like a tea party. And this doesn't even address the overall supply chain dependencies of all of American industry."

This country should never have been so invested in a vulnerable area of the world. If we have any intelligence it should be about our best interests and not money.



"China likely waiting to get COVID under better control!"

Or see how Ukraine progresses.

[Deleted]

Apr 14, 2022 23:40:54 GMT bizman said:

"I recommend all to read or re-read Barbara Tuchman's The Guns of August, which shows how world powers stumbled and bumbled into the disaster of World War I. I hope we can avoid another such catastrophe. But as they say, hope is not a strategy."



Bizman, I'll second the recommendation for Tuchman's "Guns of August", a very telling account of how the world stumbled into World War. My favorite Tuchman book is "The First Signal, An Account of the American Revolution". Check it out, if you haven't already.

[retiredat48]

Apr 16, 2022 1:27:49 GMT @django said:

Apr 14, 2022 23:40:54 GMT bizman said:

"I recommend all to read or re-read Barbara Tuchman's The Guns of August, which shows how world powers stumbled and bumbled into the disaster of World War I. I hope we can avoid another such catastrophe. But as they say, hope is not a strategy."



Bizman, I'll second the recommendation for Tuchman's "Guns of August", a very telling account of how the world stumbled into World War. My favorite Tuchman book is "The First Signal, An Account of the American Revolution". Check it out, if you haven't already.

Do you mean: The First Salute??...by Tuchman

[Deleted]

Apr 16, 2022 1:59:16 GMT retiredat48 said:

Apr 16, 2022 1:27:49 GMT @django said:

Do you mean: The First Salute??...by Tuchman

Yes, thank you for the correction.

[Capital]

Didi sets shareholder meeting on May 23 to vote on U.S. delisting plans

[retiredat48]

Exiting China last year is developing into one of the best major investment moves I have ever made.

Strong dollar now a factor coming into play, as well.

R48

[Deleted]

Your gain is my loss......at least on paper! International is my poorest performer.

[retiredat48]

@sara...I was also too heavy in international in last decade.

So the culling of China was part of reducing holdings in that space.

Now watching the "dollar" carefully, as it rises to new highs. If dollar turns, international will do better simply from exchange rates.

BTW Sara when I clicked on your name tag, a different poster comes up!!

R48

[Deleted]

R48 - That would be my alter ego "slooow".  I'm keeping with my international allocation.  I knew there would be times like this!

[Chahta]

Yahoo Finance had an article today about the Chinese government supporting business since their economy is not doing well.

[retiredat48]

I just watched on CNBC, Mark Lasry, who manages billions for Avenue Capital Group (and he owns the Milw. Bucks basketball team), state he is Now 100% OUT OF CHINA STOCKS.  
According to him, political risk too great...simply no need to invest in China.

R48

[johntaylor]

China = ton of risk re Taiwan etc.

My recent small experiment with China equity produced:

2020 + 59 percent
2021 + 5 percent
2022 - 26 percent
YTD + 9 percent

[retiredat48]

It appears China is set for a good upward market run.

These will happen in bubble-bursting type performance situations.

But doesn't matter to me, for I will likely never enter investing in
china again...don't need the confiscatory risk...Good luck to those investing there.

R48

[FD1000]

Jan 17, 2023 6:17:22 GMT retiredat48 said:

It appears China is set for a good upward market run.

These will happen in bubble-bursting type performance situations.

But doesn't matter to me, for I will likely never enter investing in
china again...don't need the confiscatory risk...Good luck to those investing there.

R48

+1
Good chance, I will not be over 30% in stocks to age 75-80, maybe never..."don't need the confiscatory risk...Good luck to those investing there". 

[johntaylor]

Always fascinated by the area, but Kipling said “A fool lies here who tried to hustle the East”

[Chahta]

Apr 29, 2022 0:37:36 GMT retiredat48 said:

Exiting China last year is developing into one of the best major investment moves I have ever made.

Strong dollar now a factor coming into play, as well.

R48

For the life of me, I do not understand why any American would feel a need to invest in China, with so many opportunities in the US!

10% in world less US is about all I need.