another argument for an EM ex-China fund

Anna

jackpak said:

I notice that SIVLX has 9.88% exposure to China, but also 19.81% to Hong Kong. To what extent would exposure to Hong Kong be considered exposure to China?

Or Taiwan or Singapore?

jackpak

Thanks Lewis. China exercises sovereignty over Hong Kong (unlike Taiwan and Singapore, at least not yet) and has steadily been tightening its control despite promising autonomy at the time of handover from Britain in 1997. I’m wondering if whatever risks one might ascribe to investing in China wouldn't bleed over, at least in part, to Hong Kong and that perhaps a fund like SIVLX shouldn’t be considered quite so China light.

Sven

I’m wondering if whatever risks one might ascribe to investing in China wouldn't bleed over, at least in part, to Hong Kong and that perhaps a fund like SIVLX shouldn’t be considered quite so China light.

Tough to call at this moment. Appointment of Xi poses concern me. Many EM fund managers buy Chinese stocks either through HK stock exchange or ADRs, where they are highly liquid. It used to be difficult to buy Chinese A shares in the mainland’s stock exchanges where foreign investors don’t have access. It sounds like Mobius invested directly in China.

Seafarer as a whole has been careful in their stock selection. Noted that they focus more on consumer stables, health care and not so much in banking, construction, materials and tech sectors. Also they have wrote extensively how they evaluate the companies and sectors they invest in.

LewisBraham

This report seems to do a better job than the FRDM ETF's Cato-Institute derived benchmark at delineating and ranking the admittedly nebulous "freedom" or at least democracy in emerging and developed markets. It's quite a fascinating read:
https://v-dem.net/documents/29/V-dem_democracyreport2023_lowres.pdf