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Hong Kong’s Hang Seng index closes more than 4% down as China tech and education shares plunge
Mathews has a webcast on the recent turmoil this afternoon ( I wish they would just send out a transcript.... so much more efficient)
Nothing recent from Seafarer
Older webcasts on Seafarer website are worthwhile to review for better understanding on the changes over the past decade.
The emerging market indeces, EEM and VWO have 40% exposure to China, which is the largest component. This also spilled over to the smaller EM stocks as well.
Matthews thinks the dramatic drops were over reactions, caused in large part by the Chinese fumbling the announcement and rollout of the regs. It also occurred at the end of the month and many investors in China needed to raise cash.
Mattthews folks saw some of this coming, but said that the business models of the worst hit firms ( education sector) were not good and they were not invested in any of the worst hit names.
They specifically do not see these regs as "anti-foreign investor" and the Chinese government trotted out one of their heavy hitters to say that specifically Monday night after they were surprised by the reaction
They think a lot of the downside is over.
I was impressed by their knowledge of Chinese politics and economics
As for them thinking the worst is over, i'm not shocked. But remember...Matthews business is investing in Asia and specifically China...so of course they will be optimistic, for their own survival of nothing else. I don't think other investment firms have the same sentiment.
I used to like the Matthews investment guys but the personnel turmoil there with the global CIO coming on, then leaving within 6 months and the mass exodus of portfolio managers has me questioning how good the remaining guys are. Andrew mattock who manages the matthews china fund has a decent track record but is a benchmark hugger, active share is less than 60%. The entire China small cap team led by Tiffany Hsiao left to Artisan Partners, and no surprise the performance for that fund nosedived after they departed. Keep that in mind as you talk to the folks there.
Its been interesting to see where Matthews PMs have left to. I've been trying to find a way to get into Tiffany Hsio's China private/public fund at Artisan (I loved her China Small fund at Matthews). Others left for Genesis (UK) and Rondure in SLC IIRC.
Andy Rothman, a China specialist at Matthews Asia, views the growth reversal as a blip along a road leading to China eventually becoming the world’s largest economy. The recent U.S. results are “like getting so excited about the Washington Nationals winning five in a row but they’re still five games below .500,” he said.
Don't really want to buy education stocks (TAL, EDU, etc), but at current prices.....tempting. The Chinese gubmint is even more devious than our gubmint - they turned 800 lb gorilla BABA into a 400 lb. gorilla.
And at least it will never be boring.
Supposedly, he uhhh....paints a lot now. Somewhere, location unknown. China is scary in many ways.