Per què Clive Thompson compra accions de Hong Kong: valoracions baixes, dividends i riscos de la Xina

Hello dear friends. My name is Clive Thompson and today I'm in China and the city is called Duryang. Uh it's a small town of about 6 million people. That's small for China. Anyway, um the last time I hit was here perhaps it was 10 years ago, maybe a bit more than that. And I recollect that things weren't so modern as we're looking as you can see behind me. Um, for example, the traffic uh, nobody obeyed any traffic rules. People rode through red lights. I mean, when I say people rode through red lights, every car rode through red lights without looking. Well, I guess they did look left or right, but uh, they basically didn't care about any rules, but now they're very strict and the traffic actually stops at the red lights. Um, anyway, today I'm going to talk about lots of different things. I'll tell you more about China in a minute, but uh I'm going to be talking about why I think the Hong Kong stock market is probably one of the most attractive markets in the world at the moment. Um but first of all, nothing's going to say today is meant to be investment advice. It's all my personal opinion and I'll be telling you what I'm doing and I'll be naming stocks. I'll tell you all 20 stocks that I own in Hong Kong. But just to put this into perspective, um I only have about five to eight% of my portfolio exposed to Hong Kong. Um it was less. I've increased it recently in the recent weeks. Um I because I think that the Hong Kong market is particularly attractive. I'll tell you why and I'll tell you what stocks I own and why I think some of them are attractive, but I'm not going to go into all the details. you'll have plenty of opportunity to find out how whether the stocks I'm choosing I'm mentioning are good stocks on your own because some of the stocks might meet my criteria but they may not meet yours but there'll definitely be some stocks in the list which will meet what you're looking for definitely u just another word on uh Duryang it's near to a big city which you might have heard of called Chenddu uh Changdu is a city of about 20 million people um and it's right in the heart of China so if you draw a map of and put a pin in the middle, you're going to hit Changdu. Uh we're very close to Changdu. It's about an hour's drive away from Changdu uh where I am at the moment. And uh although it's not a very well-known city, um it's uh very very modern now compared with 10 years ago. Uh you know, 10 years ago when I came here and if you took a taxi, all the taxis were smashed up to bits. Uh the speedometers weren't working. the the there was no counter for the um the the fair. So the the you couldn't see what your fair was. The car you couldn't see how fast the car was going. Uh there were no safety belts. Uh and there was no modern equipment like uh screens or even car radios probably weren't working. Uh I don't know then but really the cars were now when you look around it's hard to find a smashed up car. They're all looking brand new. So the cars back 10 11 years ago had all come from Shenzen. So Shenzen back then was a modern city and as the cars aged become unusable. They were effectively sold or transported to the center of China, the inner cities where people would fix them up and drive them around. But now the inner cities are full of brand new sparkling cars. And these are expensive models. Uh every bit as flash as you'd find in a city like Geneva. And that obviously makes it far more uh expensive looking than in some of the cities around uh in France for example where a lot of the cars do look a little bit old. Not all um but it's only in Geneva we got a lot of BMWs and Teslas and here we got a lot of um highclass brand name Chinese cars as well as western names too such as BMW, Jeep, uh and of course Tesla is everywhere. Um so what am I when am I going to talk about Hong Kong stocks? First of all, the first thing to say is there is a lot of political risk because Hong Kong is in fact part of China. There's no doubt about that. And so if you're buying a stock through Hong Kong, first of all, you're buying into China, whether the stock is related to the Hong Kong economy or to the Chinese economy. And many of the stocks which are quoted in Hong Kong are in fact Chinese registered companies or they're registered in the Cayman Islands or Hong Kong or something like that, but their real business is in China. So you've got to reckon that anything I mention today is to all intents and purposes heavily dependent on Chinese politics and the Chinese economy. So if the Chinese economy goes down the drain, so do your stocks. if there's uh sanctions against China, you might find your Chinese stocks, your Hong Kong stocks locked in some way, as has happened to those who held Russian stocks. So, for that reason, if you do have exposure to Hong Kong, I think it should be very small. And to put that in perspective, my holdings are well below 10% even after I've increased them quite a lot in the last few weeks. Um, and I'll tell you why I've been increasing them now. One of the things I've noticed uh here is there's far less people coming up to me and trying to see what I'm doing or who I am. You know, 10 years ago, 11 years ago, when I came to Durang, all I had to do was stand still in a park somewhere in the middle of nowhere and it would only be a few minutes before some mother would push her kid towards me uh telling the child to say hello to the foreigner. Uh but of course, it was really for the mother to have a look at them. mother's friend would come up uh not to look at me of course but to uh dis discuss because her friend was there then the friend of the friend would come

and pretty soon in the middle of nowhere I'd have a large crowd of people around me not to look at me very polite like that uh but curiosity to talk to each other around the Florida um so I'm having a few experiences like that but far fewer than before uh and I'll just recount one experience a couple of days ago I was on a subway train. Um, and this lady from Situan, speaking in the Sichuan dialect, which is not Mandarin at all, um, Mandarin speaker probably can't understand the Situan dialect. Uh, she was speaking dialect to her friend across the way. And she was she was saying, "Look, there's a foreigner on our train on the that's on the subway. Look, there's a foreigner on the subway. What do you think he's doing here?" And then she said, "Oh, and look, he's got Nike shoes and matching Nike socks. Fancy that." Anyway, all the trains have train guards. Uh the subway trains, not like the uh UK underground where he got no guards in the train at all. Uh so immediately the guard could hear her talking in a very loud voice and he came up to her and told her to quieten down because you're not allowed to talk in a loud voice on the subway. Now I know in some cities if if a trade guard came up and started telling people what to do uh he'd probably get stabbed but not in China people are well behaved so this lady did actually come up and quiet and done but you may wonder how I knew what she was saying because clearly I don't speak the Sichuan dialect either but my wife uh was actually born in Sichuan province and uh so uh one of her mother tongues is the Sichuan dialect of course everybody body can speak Mandarin but the situ dialect is still very prevalent here. Anyway, back to uh Hong Kong's doctor. But whenever I mention uh an idea, a stock uh whether it be gold, silver, or a place like Hong Kong or a sector like the oil sector, whatever it is, it does not mean that I'm suggesting you have an all-in bet. And I'm certainly not doing that myself. What I'm saying is it's an area where I think I'm going to put some extra money and I've got a reason for doing it which I'm going to tell you or not a reason, lots of reasons. I'm going to tell you the reasons and it's something which you can consider if it fits with your portfolio. But again, it's not meant to be investment advice. Not saying you should do something. You should consult with your own investment advisors. And it's never going to be an all-in debt. Uh I know some people think that if I mention something, they should put 100% of their money into it. very bad idea because I'm only going to be right 33% of the time. The other 33 or the second 33% I'll be 100% wrong and the third 33% it's going to do nothing at all. Now, as I mentioned, there is political risk if you're investing outside of the United States uh and particularly if you're investing in uh thong stocks which are to a broad extent exposed to the Chinese economy and to the Chinese political system. So my exposure somewhere between five and 8% I would say. So where am I getting the money to do this? Well, I've been reducing my technology exposure in the United States. And I'll just tell you quickly why I'm doing that. Um in the main I'm I'm reducing the semiconductor sector. Um I've come down a lot. I still have a little bit left. And the reason I'm doing that, semiconductors, whether you like it or not, is a cyclical business. People don't realize that at the moment. They seem pricing semiconductor stocks as if the high prices that we have today will last forever and that the growth we have today will last forever. This growth will come to an end and the high prices will come to an end. The laws of supply and demand are such that semiconductors are very much a cyclical industry and at some point supply will exceed demand and prices will come down and when that happens the prices of those semiconductors are going to fall very heavily. And when I say heavily I think I think we're going to lose 50% on some of these semiconductors maybe a lot more. Um, so that's what that's what that's where my money is coming from to buy into Hong Kong. But again, I stress that I always do things very gradually. So I'm not going all in or all out. I'm reducing and have been reducing my technology stocks in general. Uh, I still have some left, but less than well well under half, probably less than a quarter of what I used to have. And I've been increasing my Hong Kong stocks, which are not quite double what I used to have. Um, so perhaps I've gone from three and a half or four to seven or eight uh in recent months. Um, during this video, I'm going to tell you the dangerous stocks. I won't make any great comment on it, but I will tell you how you can find out if they meet your needs very quickly. Um, so before I tell you uh about which stocks uh or why I think the Hong Kong market is attractive, I'll start off by telling you the first five names of the 20 Hong Kong stocks I own. And by the way, you may think 20 stocks is a lot, especially if that represents five or eight. Yes. Uh, every stock I own is a very, very tiny percentage. And I've always done it that way because I find that the less you own something, the less concerned you are if you make a profit and the less concerned you are if you make a loss. So it doesn't bother me in the slightest if I end up selling something at a loss because the loss is so small. I don't care. And it doesn't bother me if something goes up two, three, four,

five, six times because the profit isn't big enough to be worth talking about. But collectively, I want the stocks I own to do well. Uh, but most people if they have a small number of stocks, they become very trigger-happy. Oh, I've got a 25% profit. I'll sell it to take it. I better get it while it's still there. And then they go on and miss the next 400 500% of gains. And likewise, when they got a loss, oh, I can't take my loss because I've got to wait for it to get back to the purchase price and then it never does. And it hards again and it hards again. I don't have that problem. If I feel that I want to be out of a stock, even though it's at a loss, I don't think, well, I'll sell it when it gets back to what I paid for it. I just can sell it because the loss is so small, I don't care. So, that's why I have 20 Hong Kong stocks representing less than 8% of my total stock market portfolio. And by the way, brokerage is very important. Um, some people have to pay brokerages. I have free brokerage. Uh, if you look carefully, you'll find a way of getting free brokerage somewhere. Uh there's plenty of low lowc cost brokers or zerocost brokers. Now let's just move on. I'm just looking at my notes here to see why I like the Hong Kong market. Oh no, first of all, I'll tell you about five of the first five stocks. I'm going to give you these 20 stocks in groups of five uh one after the other. Uh but first I will so first I'll give you the five stocks first five out of 20. Um but during this video I'll be telling you about one stock which I have just bought today as it happens. Um and it's a an exciting company where the earnings are expected to grow 23.3% per year for the next three years. They grew by 38.9% last year. They have zero debt. Uh so zero debt to equity ratio. That's brilliant. They've got 1.2 billion in cash in the bank. Uh they've just they've got a dividend yield uh in excess of 10%. uh well I think it's 80% officially but um they're paying uh in addition to their normal dividend they'll be paying a special dividend in August uh which you can benefit from and that's going to be pretty high as well. Um let's uh so I I'll also tell you about an artificial intelligence company uh which I think is on the cusp of uh going places um possibly. So let's uh talk about the five stocks first without mentioning the reasons why I'm investing in the Hong Kong market yet. Um first one is called 361 degrees international. Uh you all know that as an apparel store. Uh you may have seen the shop somewhere. Uh 361 degrees basically sells clothes I think. Uh or is it sport shoes? But basically it's footwear. And another one which is involved um oh by the way the symbol for that one is 1361. >> So 361 degrees international symbol 1361. Bosidang international symbol 398. >> Uh that's another apparel store selling clothing or footwear. Then I've got China Medical Systems holdings number is 867. So that obviously is medical uh um drugs in China. Then we've got CNO C N O C the Chinese National Oil Company symbol number 883 or Chinese medical system. Did I say 867 cenox 883 and the fifth one for the time being is a pharmaceutical company called Honu N pharmaceutical symbol 1681. again another company selling traditional Chinese medicines and western medicines as well or um modern Chinese wet medicines. Why do I think the Hong Kong market is attractive or one of the most attractive at the moment? The answer is this. over the last 5 years. That's from July 2021 until July 2026. That's 5 years. The Hong Kong market has dropped from 24,218 to sorry, from 28,28 24,213. It's dropped by 14.19% in 5 years. down 14.19%. At the same time, the SNP 500 in the USA has gone up from 4369 to 7575. That's a rise of 73.37%. Hong Kong is down 14.19% over 5 years and the S&P 500 is up 73.37%. That's a difference of about 90% between the two markets. >> But what's happened to the earnings of the S&P and Hangen in the same period? Well, despite the Hang Sen index going down by 14%, earnings of stocks in the Hangen index have risen over the period from 1,593 to 1,84, which is a rise of 13.23%. So, earnings over 5 years are up 13 something%. >> But the stocks are down 14%. Earnings up, stocks down. Makes no

sense. Meanwhile, in the United States, earnings are almost the same, just a little bit more than Hangen. Uh they're up 18% or 18.67% over the five years. So earnings up 18%, stocks up 73%. So stocks have risen in the United States far more than the earnings have risen. So earnings are already up 18, stocks are up 73. But in Hong Kong, earnings are up 13. nearly as same as America, just a little bit less, but the stocks are down 14. Lot of not much sense in that because you'd have thought that barring the political story and of course there has been a lot of political stories about China in the last 5 years. Barring the political story, they should be doing or moving in the same direction according to way earnings are going. But what about valuation? Now, one of the ways you can value stocks is the price earning ratio. There are lots of other ratios like price to sales, price to book, and uh price to growth and things like that, but I I think we're fair enough in valuing on the price ratio. Um it's kind of representative of all the other ratios. Anyway, as far as I can tell, the hang index about 5 years ago was on a slightly lower price earnings ratio than the United States. It was about 17.71 times earnings. And the United States 5 years ago was on 22.31 times earnings. Uh that higher price earnings ratio was justified in the USA because of the higher earnings growth expected out of the USA at the time. So quite justified that the USA would be on 22 times and hanging on 17 times. Uh a gap which was fully justified in my view. um maybe slightly overjustified in the United States case but certainly the USA should have been trading on a higher price earnings model. So 22 for the states back then 5 years ago and 17 for Hong Kong or call it 18 for Hong Kong near enough. What's it today? Well today the Brailing price earnings ratio in the Hangen is only 13 times 13.4 four times to be precise. What's the trailing ratio of the S&P 500? The trailing ratio of the S&P 500 today is 32.6 times. So S&P is on a price ratio of 32.6 trailing and the pang index is on 133.42. That's a huge difference. So the price earnings ratio in Hong Kong has collapsed. That that means stocks have become much cheaper than they were 5 years ago in all respects. First of all, because the price is down and secondly because every stock or most stocks are earning much more than 5 years ago. Whereas in the United States, it's quite normal that the price earnings ratio uh well, it's not quite normal that stocks are up because the earnings have risen, but the earnings have earnings risen 18%, but stocks are up 70 something%. But what's odd uh what ringing the rise in price has been the expansion of the price earnings ratio from 22.31 to 32.60 times 32 times. Now that's trailing not forward. Forward looking much more acceptable but the trailing PE ratio in the United States is at the moment very very high. It's historically high. Maybe not the highest level but uh certainly at a level which um one needs to say makes no sense especially when you uh look at it makes make doesn't make a lot of sense compared with historical norms and doesn't make a lot of sense when you compare it with the uh indices you can find elsewhere in the world particularly in Hong Kong. So, we've got this valuation gap where Hong Kong stocks have become considerably cheaper over the last 5 years and US stocks have become significantly more expensive over the last 5 years. >> What about dividend yields? >> Well, if you buy the S&P 500, you can expect to get a dividend yield of 1.03% before tax. And don't forget, US stocks have got a withholding tax depending on where you live. could be zero, could be 15%, but more likely in for most people, you're suffering 30% withholding taxes on your dividends. So, for most people, you'll probably be apart from an American citizen who can get that tax back, uh, you'll probably be paying or earning 0.7% after your 30% tax or 1% if you're not paying tax. What about Hong Kong? Well, Hong Kong doesn't have dividend withholding tax. Uh, Chinese companies do. So if you've got a company rich in China, uh, expect to get 10% withholding, but I don't think you get that from the Hong Kong stocks. Um, and what are Chinese stocks yielding? Uh, well, Hong Kong stocks yielding. If you buy the Hang Sen index, you could expect to get a yield at the moment of 3.27%. That's trailing. Obviously, it should be a bit higher if the dividends are going to increase. And from what I can see, most companies are expected to increase their dividends. So Hong Kong stocks are paying more than three times the gross dividend in the United States and they have a lower withholding tax rate effectively zero or 10%. Do Hong Kong stocks three times as much dividend as the USA? A price ratio less

than half that of the USA and growth rate not far different. Now let's uh just justify a little bit the overvaluated United States. Um the S&P 500 S&P 500 index uh according to analyst forecasts the earnings should grow this year 2026 by 23%. In comparison Hong Kong the Hang Sen index the forecast earnings increase from analysts is 8.3% much less the United States. So in that respect for the current year you might well expect to have a lower price earnings ratio from Hong Kong than the United States and we do in fact have that but I think it's overdone the way the the ratio is far lower because if I look forward to the analysts forecast for 2027 they tend to converge with the forecasts of forecast rate of the United States. So analysts are currently projecting that the US stocks on the S&P 500 in 2027 will increase their earnings by 17.4%. Whereas Hong Kong stocks, if the analysts are right, are expected to increase their earnings by almost the same of 16.4%. So in the United States, according to the forecast, we're going to see a slowing of earnings growth according to Alice. And in Hong Kong, according to Dallas, we're going to see a speeding up of growth. So all of that makes me think that Hong Kong stock are looking attractive. Now, let's just pause here for a second and talk about the next group of stocks uh that would be in my portfolio. I told you the first five. Next five are a company called Buffang who make food additives. These are things like monosodium, glutinate. They make uh animal feeds. They make foods of various restrictions. Uh we've got BYD. Uh BYD is an electronics car company. Um in terms of uh number of cars sold, it's selling significantly more cars than Tesla. Uh it's making significantly more profit than Tesla and it's growing at roughly the same speed as Tesla is forecast to grow. However, its market capitalization is significantly less than Tesla. So, BYD is on a more normalized price earning pressure. It's a little bit higher. I find it high, but it's 20 or 30 times. Tesla's on 70 or 80 times. Those figures are very approximate, but I'm basically saying that there's uh quite a big difference between the two. I hope you can't hear. I hope this noise is not disturbing you. kid playing a game there on the machine. Looks quite fun, doesn't it? Maybe if I was a teenager, I'd be playing that, too. Let's get away from the noise. So, my instructor BYD, then I've got a company, another food company called Deham Food and Agriculture. They're involved in various foods and fertilizer and things like that. I've got a Oh, that first of all, BYD, I give you the numbers. Tupang is 546. Uh BYD is 1211. Deon Food and Agriculture is 2419. Those little symbols. Next one is Jiangshi copper. Obviously Jangi Copper does what it says on the tin. It mines copper but also brings out gold and silver. So it's a copper, gold, silver, and a few other metals mining company. Jangshi copper symbol is 358 in Hong Kong. Uh then I have Pingan Insurance Group. Uh that's the Pingan Insurance Company of China. It's probably the biggest insurance company in the world. If it's not the biggest, it must be number two. It's certainly one of the biggest companies in the world when it comes to insurance. And they are a major beneficiary of AI applications as they uh put AI into their claims systems and everything else. Um 2318 is a symbol for ping an insurance. Um so just a quick word about what's going on in China again. Um so I was I was walking down the street with my little boy my my son who's 9 years old and a child comes up to him and says that your dad in Chinese and he said yes in Chinese. My little my boy can't speak Chinese. And the boy said, "Your dad's very old," >> which my little boy told me that. I said, "Look, I'm not bothered. They can call me old. It's a fact. I'm an older dad. You know, I'm nearly 70 years old. Um, and so what? It's great having a son at the age of 70. I can spend a lot more time with my son than people who are at work 24 hours a day or at work seven days, five days a week." Uh, so that's great news. Let's talk about the internet in China. The Now I don't know if I'm going to be up able to upload this video easily. Um I did yesterday upload a 12minute video, not to my normal YouTube channel. I have a YouTube kids channel. Um which is called Little Trot. You look up Little Trot on YouTube, you might find it. Um and it was a 12minute video of a card trick with my son. Um but that video took 18 hours to upload. 18 hours. Yeah,

the internet in China when you're trying to get outside the great firewall is absolutely terrible. Um, if you using Wi-Fi, you cannot access any Western website. You can't get to Google, you can't go to YouTube, you can't go to Facebook, you can't go to uh is it Facebook, FaceTime or what I don't know, Facebook. Uh, you can't use uh even simple gaming sites. Uh, you can't use LinkedIn, you can't use uh chess games. nothing is available to you um on Wi-Fi or on VPN. So, there are VPNs in China, but they don't get you out of China. So, if you're using NordVPN or one of the other well-known Western names, you can't get out. That's absolutely impossible. Um there are some VPNs which do get you out of China, but they are so-called illegal. Uh and that means two things. Firstly, your data is very much at risk because they're unauthorized, unofficial VPNs. And secondly, if you get caught using them by the Chinese authorities, it's an unlikely scenario, but you might be in trouble. So, the only way to get out of China uh to Western websites, as far as I can see, is to use roaming. Um, so roaming is where you go, you're on your normal network back home, but you're paying on an arm and a leg for the data. So, how much does that cost? Um, 30 to 50 Franks a day if you're watching YouTube videos sometimes or uploading. Yeah, it's very expensive. Um, nothing I can do about it. Uh, if I but is part of the cost. You're paying just as much to stay in a hotel and and double that or triple that. So, what's an extra $50 or $30 to be able to access your normal websites? This is a a gold shop behind me. It's called Chao Tyuk. They do have some funny names, don't they? There we are. Behind me. So, let's go on and uh discuss the next companies I've got. Um, next company I've got is called Luck Fuk. Same name as you saw there, but with L UK, F O K. Uh, symbol 590. That, like the shop I was just looking at, is a gold and silver, many gold jewelry shop. Uh, where you can also buy decorated gold bars and things like that. Um, behind me you see a car sales room. Beautiful cars. I don't see the prices on them. Um, so there's Luck Folk 590 as a symbol. I've got a company called Newborn Town which is a social media company. They have uh chat applications, video applications, uh music applications, that sort of thing. Um, next one is that's symbol 9911. Then we have PopMart International in my portfolio. Symbol 99929. So PopMart International is a company which makes uh toys. So perhaps you see some of the children uh at school with these little things dangling off their rucks sacks. Uh maybe little bunnies or rabbits or something like that. Uh that would be an example. But they make dolls, they make monsters, uh they make cryb babies, those sort of things. So the sort of things you might find in a large department store uh in the children's section. That's Pop Martin National 9992. Then I've got a company called Yadia, Y A Da uh Group Holdings, uh symbol 1585. Yadia make two wheeled vehicles. um sort of motorcycleish but more likely these scooters and the things you stand on um where where the you know things you stand on which are motorized and electric motors of course. Uh then I've got Biang Services uh group. Um now Bing Jiang Services Group the symbol is 3316 and it's a property management company. I know what some of you are thinking. Well, property is the worst thing you invested in China. And that's absolutely true. I'm going to talk about that in a minute. Um, but Bing Services is a service company. They're providing things like cleaning services, gardening services, um, delivery, um, maintenance of the lift. So, all you know, all the all the services that a property company properties need. Uh, so they're providing both to two W services. one to property owners and the second type of services are services to people who don't own the property but rent it um such as uh h household services like cleaning and uh so forth. Um next one I've got is a company from this province. It's called it's quoted in Hong Kong but it's also a Chinese company. It's called Stituan Bcha Bao Industrial Limited. Uh so it's a company which specializes in tea and of course you must know tea is very popular in China but they have all the different types of tea that you can buy and yeah basically it's doing very well. Uh next one is called by wrong. Um I'm going to talk about that a bit in a second but it's the artificial intelligence company I referred to. Now this is not a buy recommendation but I just tell you a few words about it. Um so by wrong symbol 6608 uh price ratio is 28 times which is

looking on the high side but that drops to a much lower 14 times if the analyst forecasts are right. Um earnings per share expected to grow by 47 12% to 50% next year according to the analysts. Bad news, they pay no dividend. Um, bad news, there's been a lot of insider selling in Well, I think the last batch of insider selling was January this year. Um, and it was at uh more like 12 Hong Kong dollars for a share, which is now closen to four or five dollars at the moment, Hong Kong dollars that is. Um the reason I think it's quite interesting is this is a company which for many years has touted itself as an artificial intelligence company but they're not so much a company which makes artificial intelligence although they have now got their own AI model um but historically they weren't that they were using other artificial intelligencees and they were mostly using it uh other people's LLMs large language models to help companies design documentation and things like that but they moved into a new phase now with something they're calling silicon assistance and that's assistant with a T. Um now what's a silicon assistant? Basically it's something which replaces a human being. Now that's a very fancy name for something that basically many many companies on the planet are doing. So they are they're dressing something up which is now becoming very common where you have a AI tool to do a human being's job. Uh they're dressing it up with a fancy name and calling a silicon assistant. Um they say that internally uh they've deployed 200 different types of silicon assistants in their own company. Um, and they not revealing how many they've passed on to customers, but they have they say they have 8,000 customers and they basically say uh they've deployed 1,000 of these silicon assistants with one of their customers already. So, it it it's it's something which is very new. I think I feel it's very new. I've been following this company for several years, but I don't own it. haven't done it until very recently. Um, but I my feeling is that they are starting to really harness the latest technology in AI in the way that it's supposed to be harnessed. I.e. They've got their own AI tool and they're rolling it out with these digital assistants, but they're calling them silicon assistants instead of digital assistants, which is what most other companies, but really they're doing the same kind of thing as companies like Alibaba, Tencent, BU, Microsoft, Salesforce, Service Now and many other companies are doing. So, it's not that special. But what I what I think is interesting is it's a company according to the financial accounts which has got uh no debt. And uh what they say they're doing, they're rolling this out in lots of different areas. um they're replacing real humans in businesses in the 8,000 business customers in in China uh with these digital assistance or silicon assistants in areas like customer service, sales and marketing, credit approval, fraud detection, insurance claims, and many other areas. The bad news is if you want to look at this company, you'll find that uh if you go to Simply Wall Street, you'll find that Simply Wall Street has got a very low valuation based on a future cash flow. They value it at something like 28 uh whereas the share price is about $484 down from about $12 earlier this year. So, who's right? Will it be the simply Wall Street valuation or will it be the uh the old price of 12 or $13? Uh you know it's a I have my position is extremely small on this one. Uh it's just a small holding because I think I want to have some exposure to the sector and it seems like a uh an interesting gamble to go for China where the expansion probably is higher in potential than it is for United States for a similar company which to be on a higher multiple anyway. Next company I'm going to talk about uh and again I would urge you to look at Simply Wall Street to see whether it meets your needs. And for all of these companies you should go to Simply Wall Street uh look at the green uh you can do this for free by the way. It's not nothing which is going to cost you any money to do. look at the green snowflake and see if it meets your needs in terms of growth, in terms of safety, in terms of the future, in terms of the dividend yield. Um, some of these companies have got very high dividend yields by the way. Uh, many of them are very high safety. Many of them very high growth. It's quite hard to get high growth, high safety, high future growth, high dividend, and low valuation all together. But this one um I'm going to mention green tea company 6831 might be one which meets all of those criteria. But I would mention like everything there are serious risks and downsides which I'm going to talk about. So the green tea company 6831 earnings per share are expected to grow by 23.3% on average over the next three years. Last year earnings per share grew by 38.9%. It's healthy in terms of having zero

debt and having 1.2 billion of cash in the bank. Uh it's just paid its regular dividend which I think is about 8% of the share price and it's going to pay a special dividend um in August. So the holders who buy it before 29th of July will get that special dividend uh which is I can't remember how much it is but I think it's something like seven or eight% of the share price again. Um so that's coming up. Uh the the company has 600 outlets uh around China. What they do it's not a tea company despite the name green tea. what they do, they special, it's a restaurant company. Um, it's a bit like Applebee's, I suppose. Uh, the sort of place where you can go with your family, have a fairly quick meal. It's reasonably priced. There's lots of choice. It's stuff that the kids like. Uh, it's very popular. They've grown rapidly in the past. Uh, they're at 800, six or 800 restaurants now. They're planning to be at a thousand in two or three years um according to their own um papers. So, I think it's a an interesting proposition, but what's the downside? Well, first of all, this is a new company floating on the stock market in May 2025. And what does that mean? It means that a lot of historical shareholders who are subject to a lockup agreement, meaning they can't sell their shares for the next 6 months, 12 months or whatever. So, the shares have been public for a year or so. And these locked up shareholders sooner or later their lockup will expire. So those shares probably will come onto the market at some point uh potentially depressing the price. Although right now I see it as a very attractive company because it's on a low price selling ratio. You can look that up on Simply Wall Street. It's on a high dividend yield. Look that up on Simply Wall Street. It's got a high growth and and it's got zero debt. Um what but there is another downside to this particular company the green tea company and that is that the share price when it launched um as an IPO last year the I think the launch price was something like $7 Hong Kong 19 and the price now is $6 and something. So it's below the launch price below the IPO price. What does that mean? means there's going to be a lot of stale shareholders who bought on the IPO who are now thinking, well, if I could get my money back, I'd be out of here. So potentially, it's like limiting your upside for quite some time because if the share price starts to rise, there'll be plenty of people who want to get out at a reasonable price. I reasonable price being something close to what they paid for it. So my idea is that this is not a company where you're going to make a ton of money. more likely it's the kind of company where you're going to make a decent dividend. It's a high dividend as I mentioned. So, if you're retired like me and you want a decent dividend flow, it's not a bad choice for the dividends. Uh but again, this is not a stock recommendation. It's just a thought process that each company I'm I'm mentioning may or may not meet your needs. Uh so you some people have a need for a high dividend, some people have a need for high safety, some people have a need for high growth, some people have a need for a good track record. But all of these things you can see by going to Simply Wall Street. There's a link below this video. It's absolutely free to look up these companies and see if they meet your needs. Of course, there is a unlimited version. There are some limitations with the free version. Uh there is an unlimited version of Simply Wall Street. Um, and if you click on the link below and then decide you want to pay for it later on, you don't have to pay for it straight away. You don't have to put up a credit card initially, but if you do decide you want to have the unlimited version later on, uh, provided you do it within a reasonable time frame, I think I think you got uh maybe a month or three months after you've signed up. Um, you'll get a 30% discount based on the link you see below this video. You have to have used that link when you signed up because if you don't, you won't get the 30% discount. Um, and I would encourage you to do so. Uh, the full priced uh unlimited version is slightly more than $20, about $20 a month. Um, but with the discount, it will come down significantly and you can work that out. It's going to cost you less than a cup of coffee every week to have the unlimited version. So, I would suggest that you do have a look and see if that's valuable to you, but you don't have to. It is a free um you can look these companies that I mentioned up free of charge. Uh how I got any more companies to mention? Yes, I've got one or two more to mention. Um another company which is not really a Hong Kong company. It's a Chinese company but it's quoted in the USA uh called Alibaba. Uh you've probably heard of Alibaba. It's obviously a social network, a shopping company. It does everything that you can think of uh in social media from films to movies to shopping to chat uh to and of course um payment systems as well. So uh where where I'm in China I'm using something called Alip Pay. Many people use WeChat today but I'm using Alip Pay which is part of AliExpress um Alibaba. Um so Alibaba now you can't buy that on the Hong Kong stock exchange. They did try to float on the Hong Kong stock exchange a few years ago but were stopped for some reason by the Chinese governor. Uh the the reasons for for that happening I don't know but that's a that's a sign of political interference

um in the Chinese market. And as I mentioned you've got political risk in China. Um and I'm also going to explain to you in a minute why the Chinese market has underperformed the US market because it's not just the political risk there other are other reasons. Um and what else have I got? Oh yes. Uh another company which is quoted in Hong Kong is Tencent. Uh Tencent bit like Alibaba, you know, with music, films, chat, uh payment systems, uh social media of all descriptions. Uh very very large company. Um I own 10 cent indirectly. Um, you can buy it or you should buy it on the Hong Kong stock exchange uh uh with the symbol 700, but you can buy it indirectly through the Netherlands company called Process NV. Uh, Process Envy is the largest internet investment company in the world and they own a very significant stake of 10 cent and the stake in Tencent is worth more than the rest of process itself together. So, in a way, if you're buying it through Process, uh, you're getting 10 10 cent as a discount and everything else that process owns for free. Uh, again, not investment advice. It's just the way I've chosen to do it and what my personal opinion. Um, so I do stress that. Now, what other reasons why the Chinese market is down? Well, I've mentioned the political risk and everybody knows the trouble that China's been having um in the negotiations about trade and tariffs and everything else. Um but let's just talk about um what's been going on internally within China and why people are shying away from shares and therefore not only are Chinese stocks down but the Hong the Hong Kong stocks are down with it because uh many of the Hong Kong companies are or most of the Hong Kong companies are very very exposed to the Chinese economy and therefore behave in the similar fashion to Chinese shares. The first problem we've had is the technology and education regulations. So a few years ago, the Chinese government stepped in and felt that some of these companies were becoming a little bit too big for their boots and maybe also uh they were disrupting children from what they should be doing in their studies. So, one of the things they did was raided the gaming industry, which meant that many companies in the gaming sector found they couldn't sell as much because of restrictions put on what they're allowed to sell and how many hours children are allowed to go online in gaming. Uh, that was one problem, but obviously it did affect some of the biggest companies in China because uh online games is a very big part of the children's economy. Anyway, the other part which was affected the uh economy was restrictions on online education. It was felt that uh some families in fact almost all of them were being forced to pay for online education services to give their children a head start in life. So families were signing up for these expensive education courses to try and get their children to the top of the class, get ahead of everybody else. uh because Chinese families value their children their children's education very much but it was felt that that was unfair on some so they reigned in that and basically made it very difficult if not impossible for you to get online education uh at least not in the same way as you could which was bad basically for the um educational part of the economy but the biggest that wasn't the biggest thing the biggest thing which has affected the Chinese economy has been the property price crash. Now, I'm sure everybody knows that property prices in China have literally crashed. Um, the reason for that, there was a massive amount of overbuilding. Uh, companies, many, many companies were building properties hand over fist. They were borrowing money from the banks, building properties. When they couldn't borrow from the banks, they would sell these properties to future owners before the properties had been built. And they were taking that money that had from the from the buyers of the property that they were taking the deposits and investing it in more land to buy more land so they could sell more properties. So it turned into a sort of pyramid scheme where companies were promising to build properties with money they'd received from depositors. But instead of doing that, they were taking the money they received from depositors and investing it into new property. a land with the province to build on that. So they're all in a race against each other to get as much land as they could to build on. And then suddenly there were more properties than there were people to build on the properties. And guess what happened? The prices started to fall. Then the property companies found it hard. Oh yes, the government brought in a new rule. I think they called it the three bars. I don't know what bars is, but they wanted a rule which basically meant that it became much harder for people to own multiple properties and much harder for the property companies to build multiple property. They were limited to what they could buy and it became harder uh for them to borrow money from the banks. So, as it became harder from them to borrow the money from the banks, it became harder to roll over the loans. And the people who paid for these properties to be built were now expecting the properties to be built quite rightly so. And they weren't getting the properties. And then the company started to fail one by one. So the biggest failure was in fact the bank called the the property company called Everrands. So Ever Grand failed spectacularly. It was a huge huge property company. It wasn't the only one

to fail of course but it was a spectacular failure and people all around the world who' invested Everrand bonds and Everrand equity and of course many many Chinese investors lost all their money. But the worst part of it was the properties the deposits they've taken for the properties to be built has gone have gone. Basically, nobody's going to get their money back or they'll get very little of the money back and the properties they paid for to be built won't be built or will be built at extra cost by different builders. So that has that property collapse has destroyed the confidence in the Chinese economy and people have become very afraid of investing in anything. They don't want to lose money. uh they've lost money on property and now they don't want to lose money on stocks. So stocks are down uh significantly. But I think that crisis is probably behind us. That's my guess. Um and that's why I think the uh very cheap Hen index uh and I'm talking about Hang of course you can look at we can look at China separately but it's much harder to invest directly into China. Um but I think that the with the index down um it's down for a reason. I the the main reason being the Ever Grand crisis and the property crisis in general, but I think that's now behind us and I don't think we're going to see a repeat of that. Um that's my guess, not advice. Uh which means that the when that's kind of gets forgotten and these things always get forgotten always. So when that gets forgotten, Hong Kong stocks should remove return to a more normal P ratio. And I would say the old P ratio we saw of 16 17 times would be far more normal than the price earnings ratio we're seeing at the moment of 13 times. So we go from 13 to 16, that's about 20% increase in the share price. And if you add to that typical uh over the next two years, let's call it 25% rise in the underlying earnings as forecast. Uh I I think that would translate over two or three years into something like a 50% upside potential. Okay, that's my personal view. U it's why I'm buying into the Hong Kong stock market. I'm not putting in huge amounts of money. I'm going to be still well below 10% exposure uh because I remain exposed to other things including gold and silver and other sectors of the market uh oils and u u yeah basically every business you could think of. But the if I'm putting money a little bit somewhere I'm taking it out of the technology sector in the United States and putting it towards Hong Kong. Now again if you do things you should do it very gradually. Uh don't put all your money in all your eggs in one basket. Don't be exposed to one sector or one thing. Uh ladies and gentlemen, my name is Clive Thompson. Uh there is a link below to get the Simply Wall Street um application or you can go on the web. If you use that link, you'll get this 30% discount if you decide to pay for it later, but it is free. You don't need a credit card. Um but uh thank you very much for watching this and I hope that you uh find some use in looking up these companies. So all of these companies I mentioned by the way I'll just run through the numbers not the names again very very quickly so you can uh write these numbers down if you want to go and look them up on Simply Wall Street. You can look them up one after the other very quickly very easily um and in a few seconds you can see whether these companies are likely to meet your criteria or worthy of further investigation. So here are the numbers of all the companies. Uh these are the Hong Kong ticker symbols. Um I won't say the names of the companies again. 1361 398 867 883 1 1681 546 1 2 4 1 9 35H 231H 590 9911 1 99992 1585 3316 6608 2555 6831 and 700. Ladies and gentlemen, don't forget to like and subscribe. I'll be back with more soon. Bye-bye now. So, behind me, you can see the shopping mall here in Dyang. It's not the only shopping mall. It's just one of them. I'm having trouble typing Does it stop?