Japan back then and China now

To my surprise I have found myself following a rather economics-heavy debate on overinvestment in China recently. I’m interested because of my forthcoming e-book project. One of the chapters will be on Japan’s economic miracle. Apart from pondering investment to GDP ratios I was wondering: can we compare today’s China with post-war Japan?


House in Hangzhou, China

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Happy New Year

We flew to Okinawa over the new year to escape the (admittedly mild) winter here in Tokyo for a few days. The weather held up to its reputation (we even swam in the ocean!), the beaches were beautiful and the food tasty. Now back in Tokyo, it’s time for me to put up a few pictures of the trip and look back at the first three months of my blogging here.

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Part of the past occupation series: My predecessor in the asset management job had a penchant for all things Turkey and correctly predicted the constitutional court’s verdict on the AKP closure case back in 2008. So I kind of had to follow the country closely, also given the long-term EU convergence bet that is very popular in emerging market fund management. This resulted in three trips; all memorable and all quite meaningful given the institutional intelligence we had built over the years.

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Cyber Chaikhana

Taking the online offline: this post is about a book project a few friends and I pursued over the last couple of years. Countless brainstorming sessions, endless nights in Den Haag spent working on the manuscript and a trip through Central Asia promoting the book have evoked great passion from many people. This post is about commemorating this.

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Ukrainian winters

Part of the past occupation series: Of all the former Soviet republics bar those in Central Asia, I have been to the Ukraine the most. I spent a month in Odessa learning Russian as a student and went twice on work trips to Kiev. 

Ukraine always seems to be caught in political turmoil and instability. There’s thus plenty to do for a political risk analyst, also given that the country’s bonds are the highest-yielding in Europe (of course except the peripheral EMU names). Unclear connections between the country’s business and political elite add to the flavour.

All that was at play when I went in the winter of 2009, just before Christmas. Minus 16 degrees celsius, a snowstorm sweeping through Kiev’s wide boulevards – and the threat of another gas cut looming. It’s not the most comfortable time of the year to visit. Continue reading

Back to Beijing

Part of the past occupation series: As I prepare my third (and entirely touristic) trip to Beijing and Shanghai this December, I find that China is really the one big topic from my previous job that continues to fascinate me in my new daily life. 

Trying to get to grips with China quickly became my favourite task at work, especially in the latter part of the job when I was responsible for formulating more global macro views. Although the country is neither a big fixed income nor equity market (at least for foreigners), it matters a big deal for all the obvious reasons.

I remember long and detailed discussions with one of my colleagues. We would fill flip chart after flip chart with models on China’s state-owned enterprises, its banks and theories of financial repression. Our discussions could get heated. He was more of a bear, I was a bit more bullish. For whatever that may mean today! If anything, I think he was right.

Although I had been to Xinjiang in 2004, I only visited Beijing five years later – for a whole comfortable week of tourism flanked by one and a half days of meetings with the usual mix of policymakers, analysts and diplomats. I coincided with one of my best friends from uni who had studied Mandarin for four years and had just finished a politics course at Nanjing University. I think I learned most about contemporary China from him.

We lodged in a fairly run-down but comfortable and authentic guest house in downtown Beijing, not too far from the Bell Tower.

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The Eurozone crisis

Part of the past occupation series: I decided not to go into the details of the each of the trips that I went on when researching the Eurozone crisis. It is still a very current debate (I am reminded of that each morning when reading the FT over breakfast) and I continue to have my opinions. I want to reserve this space for a more personal reflection. 

As 2009 drew to a close, the fund management industry appeared to look at credit risk seriously again. Before that, central banks had swamped markets with liquidity for nearly a whole year, a move that saw risky assets of all shapes and colours rally a big deal. I thought it made correlation more important than idiosyncratic risk and the life of a cherry picker like myself rather difficult. It didn’t matter if country A had a better story to tell than country B. The sovereign debt of both countries did very well – until Nakheel, a quasi-sovereign (or at least that’s what many investors thought) issuer from Dubai nearly defaulted on an Islamic bond . Continue reading

The Gulf

Part of the past occupations series. Just before we set off on our most memorable leg of the Middle East research trip, Beirut, my colleague and I toured the UAE and Qatar for four days. It had been my first time here. I would like to go back with some more time on my hands, but in all honesty, other places are probably higher on my priority list.

The KLM flight AMS-DUB is full of familiar oil people cramming into business class. I have a window seat and enjoy an excellent view of Burj al-Khalifa, the world’s tallest building emerging on the right as we approach the city’s airport. A major investment bank again organised an “all inclusive” tour and parked a sales guy from their Saudi office with us. The guy, of Palestinian descent, is probably glad to get out of Riyadh for a while. (In fact, he was just looking forward to get to Beirut.) Continue reading

Lebanon on my mind

Part of the “past occupations series”:

Just as Lebanon appears on the front pages of the international press again, I “revisited” it last week, writing up some anecdotes from a research trip there two years ago. This small country with its bloody history and fractious politics also has a few billion USD worth of international bonds outstanding. Getting some grip on the conflict in the country and the region was thus quite important job-wise, although very daunting given the complexity of the situation.

I once got asked by my CIO to accompany a senior equity portfolio manager on a research trip throughout the Gulf region. Her initial idea had been to see Saudi corporates – but that country’s attitude towards women made that all but impossible. We decided to go for the Gulf countries instead and throw Lebanon into the mix to make the trip worthwhile. I took a backseat regarding the organisation, so this trip was very corporate-focused with plenty of “buy our shares” schmoozing and handing out of glossy information packs: The future is bright and all that is bad is not actually so bad.

Beirut was the last stop of the trip and the undisputed highlight: In contrast to Dubai, Abu Dhabi and Qatar (which we had seen during the days before), it is a real city that did not just get built over the last couple of years. One can feel recent history everywhere, and it is still visible in the scars of the civil war and the ongoing urban regeneration. Our taxi took us to our hotel at breakneck speed, past the Camille Chamoun stadium that got completely destroyed in the civil war (actually the Israelis shelled it during one of their incursions into Beirut). A warm breeze coming through the open windows, and the sight of a somewhat more chaotic and lively street life instantly made me look forward to the days ahead.    Continue reading

Past occupations: asset management

I was a political risk / fund strategy analyst in one of my previous incarnations. The job was within the asset management unit of an oil major, broadly charged with investing the company’s multi-billion pension assets. In that way, it is very similar to a fund manager you can find anywhere in the Londons, New Yorks, etc. The difference, though, was that big corporate culture – with its pros and cons – permeated the walls.

The job sounded perfect back then: It would marry my (then-)affection for politics and emerging markets with business, while maintaining an almost academic research bent. And travel it meant! The job description and the incumbent both told me that frequent research trips were a must. Just a bit more than a year into life in a corporate behemoth like that, that sounded very enticing.

A few interviews later, I had the job and got ready to move to The Hague. Meanwhile, the financial crisis had hit for real and saw financial markets drop calamitously and flows in asset management grind to a halt. Fantastic timing, I thought. Thankfully for us back then, life moved on and markets stabilised thanks to an unprecedented wave of central bank interventions. Riding the liquidity wave, 2009 and 2010 were actually pretty decent years for long-only funds.

Over the next weeks, I will post some memorable anecdotes from my trips around the world. I jotted them down in order not to forget them myself. But who knows, maybe others find them interesting, too.