In an interview earlier this year with Bruce Greenwald, Li Lu discussed why China is one of the best markets for value investors. The interview was transcribed on roiss.substack.com. Here’s an excerpt from the interview:
Bruce: Where do you see the unique challenges and opportunities of value investing in China?
Li Lu: China remains one of the best markets if you are a value investor. The market is still underdeveloped and as a result not representative of the real economy compared to the US. The traders and investors are also not as mature and there’s still a mentality of fast trading and high turnover.
That results in some of the companies going through a faster pace of the boom and bust circle, which in turn provided opportunities for those who are mature and patient investors. The service sector or the economy when it comes to financial services is still yet to be developed.
China is right at that stage where the financial service industry is about to take off in a big way. It also just so happens that the Chinese government is quite keen in making macroeconomic policies quite conducive for the development of the financial service industry.
They began to open up to the global firms in a way that they have never done before. All those confluences of factors make the market more attractive today, than it was before.
You can read the entire transcript here:
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