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Contributor ○○○

The well publicized China drama wears on. Of course it will settle itself sometime. The question in my mind; is when? Friday I cut my holding of MATFX in half. I am sitting on about 9-10% profit still after purchasing six weeks ago. I was undecided about adding or selling. Just sitting there wasn't an option. (I need to go back on tour. I've got too much time on my hands). Since I'm holding this in an IRA I'm thinking about trimming, taking profits, to repurchase later. It's had such a good run, it could be ready for a break anyway, without the drama. I don't think this will be a quick resolution and we'll see it play out in real time, maybe. If this was something to be fixed with a surprise tweet, I'd feel different. I know @chang is waiting in the wings with a fat wallet to purchase my shares regardless. This is the only dedicated international fund I own. The rest is whatever my U.S. focused growth funds might have (mostly Baba, it seems). I like MATFX, the growth aspect, and think in the long term it has legs. If I had confidence in a 'go anywhere' international fund that might make these decisions for me I'd probably purchase that and call it a day. I haven't found such a fund yet.

Anyone else wondering about this and taking action? Take care. rm

 

 

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Frequent Contributor
LOL! MATFX went up 3% today...

View solution in original post

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Participant ○○

We are in election season so things will get accentuated for a while. Making China scapegoat/ diversion could be a good political strategy. 

But is there an investment implication here? Not so sure.

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Participant ○○○

We started the year at 40/60. BEAR took us to 35/65. China was 3.8% equities.

On March 31 we over rebalanced to 45/55. We bought 28% more equities. Half EM. Half World SCs. China is now 8.4% of equities..

In early Jan we well go to 50/50. China will be 8.0% of equities.

We doubled down on Chinese equities.

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Contributor ○○○

@galeno wrote:

We started the year at 40/60. BEAR took us to 35/65. China was 3.8% equities.

In early Jan we well go to 50/50. China will be 8.0% of equities.

We doubled down on Chinese equities.

Thanks. So, I take it you are either adding or leaving it, but defiantly not selling.


 

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@rhythmmethod Placed my order to buy your MATFX shares today. Well, some of them. Just a nibble.

Just no way we’re going to have a new Cold War with China. And I don’t think tensions with HK (and Taiwan) will get out of control in an election year. (I mean an election year in the US, not in China.)

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@chang wrote:

@rhythmmethod Placed my order to buy your MATFX shares today. Well, some of them. Just a nibble.

Just no way we’re going to have a new Cold War with China. And I don’t think tensions with HK (and Taiwan) will get out of control in an election year. (I mean an election year in the US, but in China).

@chang  I agree. I'm buying a few back myself. It was knee jerk reaction on my part. I'm also following up on your question, answered by yogi, for a high div. foreign ETF - VYMI. I like the look of it.  5% yield plus still beaten down. I'm thinking I'll use that to create my own "Global Wellesley". Stay well. I'm in deep workout mode. Watch out ;-)


 

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Agreed with @chang : Much of the "drama" is political with little impact to the fundamentals of the country, IMO.  

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China is a distraction, not an economic story to recovery of US economy from covid 19.

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Participant ○○○

I'm sorry for the people of Hong Kong, but they are battling an entity (China) with more than 100 times as many people.  The US cannot support them in any serious or effective way.  I rarely support Trump and Pompeo, but with Beijing now asserting total control over HK, I agree there is no reason that HK should now enjoy preferential tariff treatment from the US as compared to the rest of China.  

We are in a Cold War with China, whether we acknowledge it or not. Unlike the last Cold War, we are in this one alone, without allies - having systematically undermined our ties with every single ally during this Presidency.

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@Intruder wrote:

China is a distraction, not an economic story to recovery of US economy from covid 19.


That is certainly true regarding the US economy. I’m more interested in the investment potential from Chinese/Asian equity, where I am increasing my exposure. 

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Participant ○○○

With the US pension funds "disinvesting" from China, Chinese stocks may become more attractively priced.  I'm still not buying. I have not trusted China and most other emerging markets with my money for more than a decade. And I am not going to start now.  IMO, their protection of shareholders, especially foreign shareholders, against crooked corporate management are lacking compared to the N America, Europe, Australia.  I'm not saying corporate management in the developed markets is is any less crooked than in the emerging markets, human nature is the same everywhere.  But, there is a regulatory and legal system in place to deter, if not to fully prevent, flagrant abuses.  

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The propaganda is flying thick and hard from both sides. Here's how I see it. 

China has existed for 3000 years. The Middle Kingdom. Land of the Han and Confucious. Inward looking. China has NEVER attacked another country. Currently the regional hegemon of Asia. On the rise. Lots of peer competitors. After over 100 years of humilliation by outside powers the CCP performed an incredible economic miracle. They used globalization to drastically improve the lives of the bottom 50%. 

The USA has existed for 250 years. A country formed by the unwanted population of Great Britain. An aggressive war-loving nation. Currently the hegemon of the Western hemisphere. In decline. No real peer competitors. Regarding globalization the US oligarchs sold out the the country's working class to massively enrich themselves.

As a guy from a tiny weak "dessert country" of Central America I'd love that he two giants avoid war and work things out.

But I'm not optimistic. Because of the Thucydides Trap.

 

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@SJ60 wrote:

With the US pension funds "disinvesting" from China, Chinese stocks may become more attractively priced.  I'm still not buying. I have not trusted China and most other emerging markets with my money for more than a decade. And I am not going to start now.  IMO, their protection of shareholders, especially foreign shareholders, against crooked corporate management are lacking compared to the N America, Europe, Australia.  I'm not saying corporate management in the developed markets is is any less crooked than in the emerging markets, human nature is the same everywhere.  But, there is a regulatory and legal system in place to deter, if not to fully prevent, flagrant abuses.  


Good post. A good reminder for me to act slowly.

I echo your comment not to make a blanket assumption that any EM is automatically “more corrupt” than another, developed or undeveloped. Corruption is ubiquitous, as well as unique in its causes and effects on investors.

Having lived the last 20 years in the USA, Zurich, Shanghai, Singapore, Dubai and Bangkok, I believe the sun is rising on a Pacific century, economically speaking.

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I am not sure if you are sarcastic or not, but a peace loving people don't get to live on the best land in east Asia. Inward looking is simply a natural result after an agrarian civilization reached its geographical limits. Just take a look at the map of China, to its north, desert and grassland; to its west, high mountains; to its east, the ocean; to its south, tropical forest. As inward looking as the Ancient Rome.

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The South China Sea and the Spratly Islands are ripe for a confrontation between the US and China.  About a month ago, the US asserted its freedom of navigation rights in two different exercises in the area.  The Spratly Islands are claimed by China, Vietnam, the Philippines, Brunei, Malaysia and the ROC (Taiwan), but China is aggressively asserting its claims.  

One wrong move in navigation by a US vessel could result in a confrontation.  The 7th Fleet had a number of navigation errors which resulted in the loss of life and collisions in 2017; the fleet readiness report released earlier this year said that for nine warships of the fleet “commanding officers reported training deficiencies, such as the inability to be certified or maintain proficiency in mission areas such as Electronic Warfare or Undersea Warfare.” The report says ships are not completing repetitive training exercises in accordance with the Surface Readiness Manual.  We would be facing an adversary with the most modern and the largest navy in the world whereas almost 8% of the US fleet is not deployable due to Covid-19.  

When Bush was president we had the incident with a plane being held by the Chinese; the situation was resolved after some time passed, but peacefully; its difficult to see how an incident at sea would be resolved in the same way. 

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@galeno 

Free Tibet.

 

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I'm not being sarcastic. I'm trying to be rational and objective. But I KNOW I'm on TEAM USA. I could not survive in what appears to be today's Chinese regimen. I've probably watched over 100 videos of China on YouTube during this pandemia lockdown.

For me China and the Chinese people are a BLACK BOX. For me, a white latino male brought up in a VERY Catholic WESTERN country, China and the Chinese are just VERY weird people. Frankly we (wife and I) don't like them. We don't trust them. We have LOTS of Chinese tourists. Lots of Chinese businesses. They keep to themselves. My wife and I avoid them. Our children call us racists.

OTOH I understand the USA much better. My wife's and my families have been involved in CR politics for multiple generations. We know how to deal with the USA. When they say "jump" we ask "how high sir?". We've seen what happens to Latin American countries who try to defy the USA. It doesn't go well. We don't mess around with "the big guy".

But the fact is that the USA is in relative decline and China is rising. And I'm trying to justify our 18% of equity allocation in EM which means we're 8% exposed to Chinese equities.

 

 

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@galeno wrote:

I'm not being sarcastic. I'm trying to rational and objective. But I KNOW I'm on TEAM USA. I could not survive in what appears to be today's Chinese regimen. I've probably watched over 100 videos of China on YouTube during this pandemia lockdown.

For me China and the Chinese people are a BLACK BOX. For me, a white latino male brought up in a VERY Catholic WESTERN country, China and the Chinese are just VERY weird people. Frankly we (wife and I) don't like them. We don't trust them. We have LOTS of Chinese tourists. Lots of Chinese businesses. They keep to themselves. My wife and I avoid them. Our children call us racists.

OTOH I understand the USA much better. My wife's and my families have been involved in CR politics for multiple generations. We know how to deal with the USA. When they say "jump" we ask "how high sir?". We've seen what happens to Latin American countries who try to defy the USA. It doesn't go well. We don't mess around with "the big guy".

But the fact is that the USA is in relative decline and China is rising. And I'm trying to justify our 18% of equity allocation in EM which means we're 8% exposed to Chinese equities.

 

 


Just how is the US in relative decline while China is rising? 70% of china’s electricity comes from coal while only 25% of US electricity is derived from coal. In 5 years coal will be down to 20% of electricity generation In US. China’s air is barely breathable for 1.5B people but China is forced to use more coal to keep its manufacturing sector going and millions of its citizens employed. China’s big Economic challenge is to convert its export economy to a consumer based economy to raise the living standards of its citizens which the Soviet Union was unable to accomplish which brought down the Soviet communist government. China has to balance the conflicting goals of raising the standard of living for its citizens through increased manufacturing without killing them. China will now have to deal with increased scrutiny and regulation from global health organizations for it’s unsafe environmental health practices to prevent another Global pandemic from engulfing the world.

Also US $ will remain the global exchange currency which will be instrumental determining the course of the post covid global economy.

 

 

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Top 10 Economies in 2030

https://youtu.be/L5v9jt4__ho

Top 10 Economies in 2050

https://youtu.be/aG-8Fmk58-M

We aleady over-weigh EM by 80% (18% vs 10%). We're OK with that tilt. I'd like to hold 26%. But that's a bit scary.

 

TOP 10 LARGEST ECONOMIES IN 2050 Each year, PricewaterhouseCoopers predicts the size of the largest economies in the world in the year 2050. It shows a drama...
According to projections by a prominent multinational bank, 7 of the world's 10 largest economies will be in emerging markets by 2030. Ranking by GDP in 2030...
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Wow, galeno, you really perplex me - from your comment yesterday that 'China has existed for 3000 years ... the USA has existed for 250 years' (which seemed very balanced), to your comment today that 'China and the Chinese are just VERY weird people ... we don't like them, we don't trust them' (which seems very unbalanced).

I assume you've never traveled to China. Which is a pity, since you never witnessed the extraordinary growth of mega-cities like Beijing, Shanghai and Guangzhou. If you had, perhaps China and the Chinese people would not be such a 'BLACK BOX,' causing you to 'avoid them.'

It's a good thing your children are more enlightened.

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