Doing an Odd Thing – Hong Kong
Investment Conclusion
I am buying some HK equities. HK assets are a diversification of US policy risks. The worse it goes for the US, the more money pours back into HK. The HK$ peg does the rest. The inflows surge domestic liquidity. Unlike Taiwan where the exchange rate (having soared 23% against the US$ in a month) acts as a buffer and absorbs the liquidity inflows, in HK capital inflows boost domestic liquidity almost in a one to one ratio because of the HK$ Peg.
Any way let’s assume I am wrong, and we are really back in a Goldilocks market, then HK equities will rise with the tide.
Adding HK is adding a layer to my existing equity exposure to China.
Don’t take this as a sign that I am any less bearish on the fallout from US polices on international trade, global alliances or the budget. I am just diversifying the hedges of investment risks.
I shall send you the Wealth Protection Portfolio later in the week. Apart from this buying of HK equities for 2-3% of the portfolio and an increase in short 30 yr US Treasury position, there are no changes.
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