Will the stocks from China recover & Asian Century Stocks with Michael Fritzell

Leong Chung Wei Bernard -

Fresh out of the studio, Michael Fritzell, Founder of Asian Century Stocks, shared invaluable insights into Asia's financial markets and discussed the recent tumultuous situation in Chinese equities and what potential government responses are possible. He provided a high-level overview of the Asian stock market, contrasting it with markets in the US and Europe and stressed the importance of understanding corporate governance and the role of short-sellers in exposing corporate frauds in Asian markets. He delved deep with his unique insights into forensic accounting challenges, the future potential of Asian stocks and the dynamic and intricate nature of these evolving markets.

“Let's remember if the leadership wants to do something, they have all the tools at their disposal and I don't think that they will want to underwrite massive unemployment. I think the Chinese leadership wants stability above all. So I will not rule out any kind of stimulus and perhaps it would look different than in the past. It will not go through the popular market, but it could well happen that you will see greater lending, perhaps in a select industries like autos or semiconductors, whatever it might be. But I've seen so many cycles at this point. I started investing in China in 2008. And 2007 was a boom, 2010, another boom, 2013 was a low in the Asian market. It felt very much like today. I would go to these conferences and meet local investors and they were just so despondent. I feel very much the same kind of sentiment today. People say there's nothing, they can't see anything positive and that's fine, but we can't predict the future.” - Michael Fritzell

Introduction

  • Michael Fritzell, Founder of Asian Century Stocks (Linkedin, @MikeFritzell)
  • How did you start your career?
  • What brought you to Asia and what are your perspectives on the region given your experience covering the financial aspect of the Asian market?
  • From your career journey, what are the lessons you learned that you can share with my audience?

Will China equities recover & Asian Century Stocks with Michael Fritzell

  • Of course, we kick off with the Year of the Dragon after the turbulent stock tanking last week in China equities (which at one point dropped to 40% from its all-time high and we record on the week after Chinese New Year). What just happened? 
  • What are the steps taken by the Chinese government to stabilize the stock market (and we observed a small rebound)?
  • To start, can you provide a high-level overview of the Asian stock market based on the market capitalization and baseline where the Asian stock market including China as compared to the other regions, for example, the US and Europe?
  • What is the inspiration behind starting Asian Century Stocks and what is the vision and mission to help others understand the Asian stock market?
  • Who is the intended audience for Asian Century Stocks?
  • What is the coverage of Asian stocks look like, for example, by country or by industry vertical?
  • For your subscribers, what are the types of information (for example, thematic reports, portfolio and deep dives) you provide to them and how do they in turn utilize and apply the information?
  • If I am a new investor who wants to build an Asian portfolio, what would be the things I need to watch out for? (Reference: I am an investor, where do I begin) 
  • Can you describe three to five stocks that you have covered recently and explain why they are interesting?
  • What is the one thing you know about the Asian stock market that very few do?
  • The first article I have read on your site is the article: Fraud in Asia. It is concise and explains the strengths and weaknesses of Asian stocks based on the book “Asian Financial Stock Analysis” by  Tan Chin Wee and Thomas Robinson. In your article, you mention various methods companies use to commit fraud, like overstating earnings and managing earnings. Can you share more insights on how these fraudulent practices differ in Asian markets compared to Western markets?
  • What are the key indicators that investors should look for to evaluate effective corporate governance in Asian companies?
  • Despite the short-sellers having an agenda, I respect them for their detailed exposure to companies, for example, Luckin Coffee by an unknown group and the Adani Group by Hindenberg Research. Can you elaborate on the role and influence of short-sellers in the Asian financial markets? How do they influence investors in placing bets? 
  • How do Asian investors short the market? From my understanding, Hindenburg Research needed a different approach to short the market in the region. 
  • Given your focus on forensic accounting in the context of Asian markets, what are the unique challenges faced in this field when dealing with Asian companies?
  • What does great look like for Asian stocks in the next decade?

Closing

Podcast Information: Bernard Leong (@bernardleong, Linkedin) hosts and produces the show. Proper credits for the intro and end music: "Energetic Sports Drive" and the episode is mixed & edited in both video and audio format by G. Thomas Craig (@gthomascraig, LinkedIn).