I bought HKEX: 3067 at about HKD14 almost two weeks ago. Right now, I am underwater but do feel free to undercut me. =p
Obviously, despite all the fear, uncertainty and doubt (FUD) going on, I do think it is a compelling buy. And my opinion is backed by action.
So this is a summary of my thesis so that maybe 5 years down the road, I can look back and decide if I am a genius or an idiot.
Increased Probability of OBOR Succeeding
Overnight, everybody on Twitter transformed from virology experts to Afghanistan experts. I am definitely no Afghanistan expert. The things I know mostly come from history textbooks in Secondary school and JC and of course, reading books like “The Kite Runner” by Khaled Hosseini. Highly recommended fiction although I digress.
The full US withdrawal from Kabul was a long-time coming and somewhat expected after China invited the Taliban to Tianjin.
Yes, yes, there is a lot of human tragedy but this is generally good news for China in its One Belt One Road (OBOR) initiative. Let’s take a look at the map of central Asia below.
The coloured states represent central Asia but for all geopolitical purposes, these ex-Soviet states are minor players on the international scene. What matters to OBOR is the cooperation and alliance of Afghanistan, Iran and of course, Turkey. That creates a clear path to continental Europe.
No coincidence that all three of them are moving away from/antagonising the US right now.
A pan Eurasian empire is the US’ worst nightmare and although the odds of OBOR succeeding is still very very small, it is increasing nonetheless.
Replenish China Allocation
Enough of geopolitics. Time to introduce finance, investing and some numbers.
Yours truly is generally quite bearish of the thesis that China can replace the US as numero uno. But well, we all need to hedge in case we are wrong. So some years back, I already decided to allocate 20% of my stocks portfolio to the HK market.
With the recent HK stock market plunge (somewhat engineered by the Chinese regulators), the allocation has dropped to 15%.
So buying iShares Hang Seng Tech ETF helps to rebalance the portfolio. I recommend such a strategy since the underlying mechanism tends to help us to buy low and sell high.
Harder to Pick Winners in the Space
Regulating monopolies will ensure that the smaller firms in the tech space get the oxygen they need to survive. Probably a net positive for the industry in the long run.
But as investors, that makes it harder to cherry pick. Investors want to pick monopolies or future monopolies that print money. I already have Tencent, Alibaba and Ping An but it appears likely they will bear the brunt of future regulations.
On a risk/reward basis, I believe the iShares Hang Seng Tech ETF is a better play than averaging down on those stocks.
Crypto Bucket Filled
Generally, nothing beats the risk/reward ratio in the crypto space.
However, I have maxed out my allocation to crypto for this year, four months early. The mini-bear between May-July accelerated my DCA purchases. Right now, I am just slowly taking profits as some of my coins break ATHs.
Of course, if prices veer south again, I would become more aggressive again and start allocating the 2022 bucket. Otherwise, I would just increase my stablecoin stack that earns me between 10% to 15% a year.
So yes, I am comparing the iShares Hang Seng Tech ETF with stablecoin returns and I would be disappointed if the ETF price does not hit $30 some time within the next 5 years.
Thanks for reading.
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