Six Months discussed on Capital Allocators


In on shoal credit and fixed income which is a gigantic market into global bond indices is much trickier you gotta think about custody you gotta think about can i head john show you got to think about report and of course plugging in onshore chon credit and fixing come requires further opening of the capital of account because you and i am not going to commit x billion to china's government bonds if we can't get it out it's just not gonna happen so the fixed income and credit bit is gonna take time but it's coming meanwhile the msci inclusion has started and over the past several years the ebbs and flows of china's onshore equities have say more about the rotation of the chinese liquidity bubble so this gigantic liquidity bubble inside china right tights from housing to balm's to commodities to stocks and ran around guys whatever's hot next month until the authorities side don't do that anymore so for longtime chinese equities have nothing to do with onto metals and everything to do with liquidity and speculation but what's interesting i the pass a three to six months is to observe move and to work with clients who picking johnny stocks on shore and to notice how china's equities seem to be slowly more aligned to what we in the westmont coal fundamentals so responding more to it hangs results beta calibrated with multiples now this is nato russian there's a wonderful friend of mine told me the other day that some of the best performing external fund manages he's had since the early two thousands have been on shore china's long showed equity hedge funds there's a structural shift occurring we can be skeptical as we talk about china's policy and economics in fact we should be we should be but is this something that structural that's changing i don't recall any country being included in the msa indices to be subsequently excluded but i'm afraid the facts are that whether it be passive money or active money ivan the next several years it will be increasing allocations to china's onshore equities and that's not gonna go away my no that this is going to be a powerful change for global capital markets so i need to find a way to calibrate it a need to find a way to think about this structural shift and how this probably a great opportunity for stock pickers in the mine land vakhin find some and i need to calibrate that structural change against the delivery djing the complexity of de leveraging the white china's trying to come to grips with his extraordinary stock of debt and shadow banking and toronto calibrate the tried and most of all trying to be proportionate bet an immensely complex gigantic economy about which by design westerners will never know much to let's turn to something that's been more stagnant and always seems on the cusp of chain change which is japan it seems every few years there's an anecdote there you know people still in the graveyard from shorting jj gbd's their structural reform in the corporate sector what are you seeing in japan i'm seeing a lot of opportunity because it's boring a love boring boring compared to everyone in the next booth on why by three arrows we're going to drive dolly into infinity and all that kind of stuff ride and all as people projecting that all this is the greatest macro put unity.

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