Hi all, saw some posts on Chinese investing which I've been wading into the last 1.5 years, wanted to share...
Semi-retired in my 30's to make chicken videos on Youtube. So you KNOW I know what I'm talking about. I have a CFA and worked for over 10 years in the industry but all I learned some awful things. It's like the quote from one money manager said: "when you invest with me, we turn your money + my experience into my money + your experience". Most firms who have a "mission statement" should really call them "commission statements".
At any rate, I've spent a few years following the economic slowdown in China and as I'm interested to build a 3-5% exposure to select Chinese equities that focus on where that particular market in China provides these industries with a technological and manufacturing advantage. Think batteries where the A-shares trade at a discount to the H-shares.
So I set off to set up some structures and needed RMB. Guess what? Just about EVERY wealthy Chinese person wants USD and wants to get rid of their RMB. They're even willing pay \~4-6% above spot to get it.
I thought about this for awhile and what I'm realizing is ultimately "Money" is supposed to be able to buy power and influence. And in China, no matter how much "Money" you have, you can't buy the influence and power. So RMBs are really more like glorified food stamps. Sure you can buy a fancy electric car (which are amazing for consumers) and some of the best food in the world. But I would argue consumption is a tiny part of the monetary value of money.
So all of that is to say, tactically there are some good investments to be had, but DON'T put more than you can consume into Chinese stocks because the local currency is only good for consumption. That % will look different for different portfolio sizes but for ours I think less than 5% is okay.
TL:DR Some interesting opportunities in China but don't go all in.