Episode 382: Don't Believe the China Boogeyman Narrative
On this week's Stansberry Investor Hour, Dan and Corey welcome Brendan Ahern to the show. Brendan is the chief investment officer at asset manager KraneShares. The company provides investors access to Chinese companies, climate investments, and uncorrelated assets through exchange-traded funds.
Brendan kicks off the show by describing the basics of KraneShares and its involvement in Chinese markets. He discusses the recent surge in Chinese stocks and gives context for what's driving it. As Brendan explains, the country is focused on stabilizing real estate prices and stimulating the broader economy. By lowering interest rates and announcing loads of subsidies that will benefit its citizens, the government can increase domestic consumption at a crucial time...
What has worked in China has been export-driven manufacturing. And now they see their biggest client, the U.S., is cutting interest rates, right?... And so they know the demand for export-driven manufacturing from China to the U.S. [will fall]. So if they know part of their economy is going to slow because of the global economy slowing, they need to raise domestic consumption, which is why they're pushing this button right now.
Next, Brendan talks about China's negative reputation due to Western disinformation and political rhetoric. As almost all U.S. investors are implicitly involved with China, and as the majority of Western companies outsource to China, our economy depends on the foreign nation. Brendan also discusses the influence U.S. investors have had on Chinese companies in regard to corporate governance... billionaire hedge-fund manager David Tepper going all-in on China... and why he believes China won't invade Taiwan. As Brendan says...
China cannot afford not to export to Europe, to the United States. Their economy would just collapse... The U.S. government is very clearly going to support Taiwan. And I think that's a huge deterrent. I don't know why there's some skepticism about the U.S. Our great military, you know, it's a great deterrent for China.
Finally, Brendan breaks down the growth prospects for China today and shares his thoughts on the U.S. moving to produce more semiconductors domestically. After, he discusses today's data-driven world and the new ways this data is collected by research firms. KraneShares is able to leverage this data in turn and be selective about which Chinese companies it gets involved with. As Brendan explains, cooperation with China is both important for investors' portfolio diversification and for a harmonious future...
I have kids, and they've got to grow up in a world with China. And maybe we're building a little bit of a bridge. You know, maybe people say, "Hey, if [investors] can communicate with Chinese companies, maybe the politicians should as well."
Click here or on the image below to watch the video interview with Brendan right now. For the full audio episode, click here.
(Additional past episodes are located here.)
The transcript is coming soon.