Country Risk in an Uncertain World

European Straights, 2020-07-13

This one will be short, but thought-provoking.

Hong Kong Under the Chinese Rule

• Doing business in China has always been very hard and connections were mandatory

• Hong Kong is no longer the gateway into Mainland China

• The world is not flat, it’s an illusion of people living in the US, Western Europe, Japan, maybe China - where there’s support from investment banks.

• China will not back down, the new laws are here to stay.

• If Hong Kong becomes part of the Great Firewall —> very hard to do business, and English as a language may be eliminated at least in apps in favour of Mandarin.

• Not very obvious why after the protests Hong Kong should stay the financial powerhouse and not, say, Shenzhen or Shanghai.

o   Also, the current events are not news for people with money.

• Hong Kong is the 3rd casualty of the Great Fragmentation (after UK and US)

• Uncertainty runs the world now.

o   If you can’t accept it as an investor, you’re stuck with your domestic market + some marginal ones.

o   Local intelligence becomes very valuable (vs articles in WSJ).

o   Cooperation in intelligence is the way to get it ahead of others.

See also: The Retreat of Globalization

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