AAII Orange County Chapter

Monthly Meeting, June 2nd, 2007

Oasis Senior Center

800 Marguerite

Corona del Mar, CA 92625

Reported by: Rex Chen


Title: How 1.3 Billion Chinese Consumers Can Make You Richer

Speakers:  Robert Hsu, Managing Director, Absolute Return Capital Advisors, LLC. Editor China Strategy


            Chapter President Bob Welge brought the meeting to order at 9:00 am.  In the beginning of the meeting, Bob announce the AAII Orange County’s website and the resources available on the web, including meeting minutes from past events.  Bob then introduce today’s speakers, Robert Hsu to discuss about today’s topic on investing in China.


In this talk, Robert first gives a brief biography and informed investors to look for investment opportunities outside of U.S.  Robert suggests that the movement in the 21st century will be driven by globalization rather than the great powers coming from a single country.  Robert then pinpoints several advantages for investing in China.  First, the demographic in China is favorable as more people are entering the workfare than those that are retiring with 70% of the population under age 40.  Second, the people of China are driving the economy rather than the government.  Hence, one is betting on the entrepreneurs rather than government bureaucrats for growth.  However, Robert does caution the business practice of copycats to be common in China, and that new business models need to be in place to prevent such behaviors.  In addition, the income disparity in China between the wealthy urban and rural residents is dramatic. 


Several stock markets in China are available for marketable trading including Shanghai, Shenzhen, and Hong Kong.  However, the only stock exchange in China that is global is the Hong Kong stock exchange which comprises of 60% global investors.  In comparison, the Shanghai exchange only has 2% foreign investors.  Robert recommends U.S. investors interested in the China play to invest via ADR, or those China stocks listed on the U.S. financial markets.  Further, Robert indicates that in recent years, the banking industry in China has undergone correction with bad debts wiped out by the government.  Today, the four big state owned banks in China are among the top ten banks in the world. 


After the coffee break, Robert took questions from the audience.   One question pertains to the appreciation of Chinese currency and whether any timetable has been set.  Robert predicts that for the near 3 to 4 years, the currency will not be free flowing.  In another question about the relationship between China and Taiwan, Robert suggests that no military actions will happen as Taiwan has been the biggest investor in China, and that there are too much for China to lose if such confrontations were to happen.


More information about Robert Hsu’s China Strategy investment is available in these links:





Following the conclusion of Robert presentation, Bob adjourned the meeting at 11:00 am.