RightSide Commentary -Internationals

    It cannot have only been the dreadful 4 in Fei Chen's new phone number (four sounds like death in Chinese) which brought a tumble in Hong Kong H shares, Shanghai, and Shenzhen today. Teh fall was in Big Picture Stocks: Olympic plays (which are now long in tooth and getting to the end of extra business gains); all across Asia oil companies; airlines; and financials. We are underweight these shares.

    But even the indexes are not necessarily in a reversal. I expect further Chinese govt support for the stock market if matters look too grim, as with the 2/3 cut in the turnover tax. China can ease the rules in margin requirements, for example if the stock markets need goosing up.

     To respond to a sarcastic Quebec reader, no I am not sorry we sold our double-short China ETF. I could not write to him under our rules without telling you all. I remain pretty comfortable with our selection of smallish listed China stocks with the advantage of being run by entrepreneurial Chinese. They were not affected by the Mao purges, because they were too young. They did not rise to the top using pull (guanxi) because their companies were too small for corrupt pols from Beijing Central of the local gonifs to hold up. 

     That does not mean they are pure as the driven snow. China doesn't work that way. We know (if we didn't know it before) after D. Wong's note yesterday that there are risks with family-controlled firms in Asia. I am not as certain as he is that Li Ka-Ching is incorruptable. We know too that one of our shares ran into problems by failing to replace its auditor when required to, and had to hire a new expensive U.S. trained Chinese-American CFO in a hurry.