China/EM equities

It’s interesting that I spent many years waiting for the China property market crash to “take everything with it”. And, well, it sort of did, in that the crash in their market has largely played out (e.g. equities/risky-assets).

But it certainly didn’t have a US 06-styled economic wipe-out, with bad and doubtful debts causing banks to collapse, and all that hullaballo.

It also took a few extra things, like crackdowns on corporate-labour-market-practices, and undue-excise-of-market-power that may well be good for labour long run but not so good for capital (holders) long run, to really get the run at the market going, and as if that wasn’t enough, COVID-zero, in addition.

It didn’t take really commodity prices with it, nor the share prices of Australia’s commodity producers. It is of course very hard to imagine the counterfactual of how all that might have gone were it not for Russia, were it not for stimulus (both monetary and fiscal, and the multi-year effect that seems to have had).

So maybe 40% correct, overall, if I had to “rate” the accuracy of the call.

Guessing (forecasting!) the macro direction got the EM & China centric stock exposure correct. And, inexorably, one feels the tug of “well, maybe it’s priced in, now, this property collapse and LR economic impact of re-balancing”.

I read the above comments, and they still don’t quite convey whatever vague dissonance I have. I think something like “this was the long awaited collapse, it hit equities, but perhaps not too much else, & maybe that’s a bit surprising”.

Of course I suppose they could go on to underperform for years given the necessary economic rebalancing. Maybe they aren’t priced for that grinding yearly overhang.

But at single digit multiples…? I feel something between “a little bullish” and how Platinum seem to feel (they are very bullish on the region).

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