TOL - 22nd Sep, 2023
Why these stocks remain "massively under owned" (and are a glaring opportunity)
Look beyond the convenient headlines, and you might find the contrarian opportunity of a lifetime.
Let's face it. It's easy to write a negative headline about China, the Chinese economy, Chinese stocks (and for that matter, most emerging markets). I could point you towards a whole litany of examples in the financial press over the last decade but this one from the Wall Street Journal probably sums it up best.
It's not just bad, it could actually get worse.
But what if you flipped the consensus script on its head? Instead of looking at the underlying economic data and the balance sheet woes in property development companies, why not look at the Chinese stock market from the perspective of where it could go.
That's how Andrew Clifford, Platinum Asset Management co-CIO and CEO, looks at the opportunity in Chinese markets. He proposed it as an investment opportunity at the recent Livewire Live investor event.
"There's a stock market, it's down 50% from its highs of two years ago. Its economy is already in recession. Valuations look really attractive by historical standards, interest rates are being cut and the government is stimulating. Fiscal stimulus is plentiful and ongoing. Do you want to buy that market? I think I do. I just described China," he argued.
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Clifford has also been bullish on Japanese equities, which have undoubtedly been the story of the Asia-Pacific so far this year. For decades, Japan was the easiest underweight position one could have in compiling a global equity portfolio. Earnings were anaemic, the economic picture was unappealing, and relentless stimulus from the Bank of Japan did next to nothing for sparking demand. But all that changed this year when rules were loosened on Japanese exchanges around investor returns. Warren Buffett's buying of Japanese trading houses has also helped the cause.
But even Clifford would say that while this opportunity is under-owned, it's just a "nice" one.
In this wire, you will hear more of Clifford's case for why investors should sink their teeth (and cash) into both Chinese and Japanese equities.
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Hans is one of Livewire's senior editors, specialising in global markets and economics. He is the creator and presenter of Livewire's "Signal or Noise".
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Hans is one of Livewire's senior editors, specialising in global markets and economics. He is the creator and presenter of Livewire's "Signal or Noise".
Expertise
Hans is one of Livewire's senior editors, specialising in global markets and economics. He is the creator and presenter of Livewire's "Signal or Noise".
Expertise
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