Episode 98
David Webb | Hong Kong Revolution: Geopolitical & Financial Implications for China and the World
Episode 98
David Webb
David Webb | Hong Kong Revolution: Geopolitical & Financial Implications for China and the World
summary
In this week’s episode of Hidden Forces, Demetri Kofinas speaks with famed Hong Kong investor David Webb, an outspoken critic of China’s authoritarian grip over the coastal territory.
There are two parts to this story that we explore during this conversation. The first deals with Hong Kong – specifically, its political and economic future as an independent territory of mainland China. The second deals with China itself – specifically, its political and financial stability as the most leveraged economy at scale, in the world.
The events in Hong Kong over the last several months – exacerbated by Chief Executive Carrie Lam’s determination to push through the Extradition bill despite mounting opposition – have created a terrifying sense of crisis and disorder in the city. Videos of police beatings and retaliatory violence by protestors, as well as satellite images of what appear to be armored personnel carriers and other vehicles belonging to China’s paramilitary People’s Armed Police, have created an ominous sense of foreboding in the city. “One country, two systems,” might be the fault line upon which the tectonic forces shaping China’s political and economic development are colliding, creating mountains of civil unrest among Hong Kongers. At what point do the political tremors in Hong Kong become civic earthquakes capable of shattering the fragile peace between these two irreconcilable systems? Will open society prevail in Hong Kong, or will China do whatever it takes in order to reassert control over the former British colony?
In the second part of this conversation, David Webb shares his insights from his decades of experience studying the Chinese economy and investing in Chinese companies listed in Hong Kong. Those insights include a discussion about China’s overleveraged banking system, an overvalued RMB, and a system of Ponzi financing for Chinese companies listed on non-mainland exchanges. David Webb also contests a thesis famously put forward by hedge fund manager Kyle Bass about the precarious position of Hong Kong’s currency and the risk of decoupling with the US dollar. Additional topics include a new “tech cold war,” China’s propaganda battle, the US-China trade war, and much, much more.
There is no overtime to this week’s episode on account of some technical constraints. Instead, we have made the transcript to this conversation available to Overtime subscribers, which will be published in the next day or two. You can gain access to the transcript, as well as a copy of the rundown to this week’s episode directly through our Patreon page.
Producer & Host: Demetri Kofinas
Editor & Engineer: Stylianos Nicolaou
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bio
David Webb is a Hong Kong resident since 1991 and former investment banker who retired in 1998 to focus on his investments and establish Webb-site.com, a non-profit platform for better corporate and economic governance, which now has over 27,000 subscribers to its free newsletter. The site includes Webb-site Reports, with news, analysis, and opinions on HK affairs, and Webb-site Who’s Who, a database on HK organizations and people, including Webb-site Total Returns on all HK-listed stocks since 1994 and all directors and advisers of HK-listed companies since 1990, all free. David’s been a member of HK’s Takeovers and Mergers Panel since 2001 (a Deputy Chairman since 2013) and was an elected independent director of Hong Kong Exchanges and Clearing Ltd from 2003 to 2008. In the 1980s he was a best-selling author of games and books for the first generation of home computers. He is an Oxford maths graduate, a member of the World Economic Forum’s Young Global Leaders (2005-2011), and former Chairman of Hong Kong Mensa. As a private investor in HK-listed small-caps for over 24 years, filtering for both valuation and governance quality to avoid the lemons more often than average, he has substantially out-performed the market and amassed shareholdings currently over the 5% disclosure threshold in 19 companies or “Webb-chips” as detailed on the site.
@webbhk
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Itaque hic ipse iam pridem est reiectus; Quid autem habent admirationis, cum prope accesseris? Dici enim nihil potest verius. Duo Reges: constructio interrete. Facile est hoc cernere in primis puerorum aetatulis. Illud non continuo, ut aeque incontentae. Mihi quidem Homerus huius modi quiddam vidisse videatur in iis, quae de Sirenum cantibus finxerit. At ille non pertimuit saneque fidenter: Istis quidem ipsis verbis, inquit; Ergo hoc quidem apparet, nos ad agendum esse natos. Non quam nostram quidem, inquit Pomponius iocans;
Plane idem, inquit, et maxima quidem, qua fieri nulla maior potest. An tu me de L. Quae enim adhuc protulisti, popularia sunt, ego autem a te elegantiora desidero. Quamquam tu hanc copiosiorem etiam soles dicere. Quantum Aristoxeni ingenium consumptum videmus in musicis? Hoc loco discipulos quaerere videtur, ut, qui asoti esse velint, philosophi ante fiant.
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Nec lapathi suavitatem acupenseri Galloni Laelius anteponebat, sed suavitatem ipsam neglegebat; Nam Pyrrho, Aristo, Erillus iam diu abiecti. Sed tamen enitar et, si minus multa mihi occurrent, non fugiam ista popularia. Isto modo, ne si avia quidem eius nata non esset. Cur id non ita fit? Egone non intellego, quid sit don Graece, Latine voluptas? Quis istum dolorem timet? Ex eorum enim scriptis et institutis cum omnis doctrina liberalis, omnis historia. Zenonis est, inquam, hoc Stoici. Atque haec coniunctio confusioque virtutum tamen a philosophis ratione quadam distinguitur. Et ais, si una littera commota sit, fore tota ut labet disciplina.
Polemoni et iam ante Aristoteli ea prima visa sunt, quae paulo ante dixi. Nam his libris eum malo quam reliquo ornatu villae delectari. Videmus igitur ut conquiescere ne infantes quidem possint. Sic enim censent, oportunitatis esse beate vivere. Nihil opus est exemplis hoc facere longius. Atqui iste locus est, Piso, tibi etiam atque etiam confirmandus, inquam; A quibus propter discendi cupiditatem videmus ultimas terras esse peragratas. Nemo igitur esse beatus potest. Paulum, cum regem Persem captum adduceret, eodem flumine invectio? Sed vobis voluptatum perceptarum recordatio vitam beatam facit, et quidem corpore perceptarum.
Tum mihi Piso: Quid ergo? Varietates autem iniurasque fortunae facile veteres philosophorum praeceptis instituta vita superabat. Hoc loco tenere se Triarius non potuit. Ita ne hoc quidem modo paria peccata sunt.
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Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam Pyrrho, Aristo, Erillus iam diu abiecti. Neque solum ea communia, verum etiam paria esse dixerunt. Duo Reges: constructio interrete. Quamquam id quidem licebit iis existimare, qui legerint. Sed non sunt in eo genere tantae commoditates corporis tamque productae temporibus tamque multae. Ergo hoc quidem apparet, nos ad agendum esse natos.
Ad corpus diceres pertinere-, sed ea, quae dixi, ad corpusne refers? Mihi enim satis est, ipsis non satis. Ut id aliis narrare gestiant? Quid in isto egregio tuo officio et tanta fide-sic enim existimo-ad corpus refers? Sed potestne rerum maior esse dissensio?
Re mihi non aeque satisfacit, et quidem locis pluribus. Ex rebus enim timiditas, non ex vocabulis nascitur. Nam si propter voluptatem, quae est ista laus, quae possit e macello peti?
Rhetorice igitur, inquam, nos mavis quam dialectice disputare? Re mihi non aeque satisfacit, et quidem locis pluribus. Et ais, si una littera commota sit, fore tota ut labet disciplina. Apud imperitos tum illa dicta sunt, aliquid etiam coronae datum; Non modo carum sibi quemque, verum etiam vehementer carum esse? Aliam vero vim voluptatis esse, aliam nihil dolendi, nisi valde pertinax fueris, concedas necesse est. Quae similitudo in genere etiam humano apparet.
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Sed ille, ut dixi, vitiose. Tibi hoc incredibile, quod beatissimum. Etsi qui potest intellegi aut cogitari esse aliquod animal, quod se oderit? Erat enim Polemonis. Quod quidem iam fit etiam in Academia. Facit igitur Lucius noster prudenter, qui audire de summo bono potissimum velit; Isto modo, ne si avia quidem eius nata non esset. Aliter homines, aliter philosophos loqui putas oportere? Utrum igitur tibi litteram videor an totas paginas commovere? Est enim effectrix multarum et magnarum voluptatum.
Sed tamen est aliquid, quod nobis non liceat, liceat illis. Itaque et vivere vitem et mori dicimus arboremque et novellan et vetulam et vigere et senescere. Ut placet, inquit, etsi enim illud erat aptius, aequum cuique concedere. Et nemo nimium beatus est; Non autem hoc: igitur ne illud quidem. Esse enim quam vellet iniquus iustus poterat inpune. Haec para/doca illi, nos admirabilia dicamus. Tu autem, si tibi illa probabantur, cur non propriis verbis ea tenebas? Sed quanta sit alias, nunc tantum possitne esse tanta. Nemo igitur esse beatus potest.
An vero, inquit, quisquam potest probare, quod perceptfum, quod. Quid ei reliquisti, nisi te, quoquo modo loqueretur, intellegere, quid diceret? Compensabatur, inquit, cum summis doloribus laetitia. Et quod est munus, quod opus sapientiae? Haec dicuntur inconstantissime. Hoc tu nunc in illo probas.