The Nine Dragons of Kowloon

Global battery leader Contemporary Amperex Technology Limited (CATL) just listed in the H-Share market in Hong Kong. Introducing the Nine Dragons of Kowloon!

We did Western astrology and the planets.

Now is the most auspicious moment for a little Feng Shui.

Kowloon translates to Jiǔlóng (九龙) or Nine Dragons.

Let us leverage the Wiki Oracle to parse the significance of Nine Dragons.

Nine Dragons (九龍圖卷; Jiǔlóngtú juǎn) is a handscroll painting by Chinese artist Chen Rong. Painted in 1244, it depicts the apparitions of dragons soaring amidst clouds, mists, whirlpools, rocky mountains and fire, the painting refers to the dynamic forces of nature in Daoism and the liquid, water-like essence of the Tao.

For those who do not know, the Tao is the Way of Winnie the Pooh.

Not a bad book for those who love honey.

It is deep, since it reflects a belief in the dynamism of Nature, and how to meld with it.

Investors are a pragmatic bunch.

All you need to know is what number to pick when forming a portfolio.

I see my subscribers growing purely out of prudent and thoughtful superstition.

It is bad luck for you not to subscribe after reading this :-)

The numerology of East versus West

Stockbroking is marketing for the lunching classes, so it pays to know your product.

The Oracle of AI knows everything about numerology.

I asked it what number to pick when building a portfolio.

In Western culture, lucky numbers often include 7, 8, 9, 11, 13, and 21. These numbers are frequently associated with good fortune, positive outcomes, and good vibes, according to several articles. For example, the number 7 is often considered lucky due to its association with completion, perfection, and spiritual awakening.

Now you understand everything.

The Magnificent Seven was all about spiritual awakening.

Things are different if you live in the East.

In Eastern cultures, certain numbers are considered lucky due to their association with good fortune, wealth, or positive outcomes. The most prominent lucky number in Chinese culture is 8, followed by 2, 6, and 9. The number 4 is widely considered unlucky.

The conclusion for this newsletter is clear.

We recommend that you focus on themes with 8 or 9 stocks.

I am going with 9 since there is a famous Love Potion by that name.

Don’t diss that Gypsy Madame Ruth.

The number nine will curl your toes in comfort.

The Feng Shui looks good to Madame Ruth.

Settled.

Hong Kong as a financial centre

Way back on 31-Mar-25, before Liberation Day, I shared my target stock allocations in Introducing the 'Causeway Bay Eight' of Hong Kong Listed C-Tech Names.

• US stock 40%

• Other assets 60%

The benchmark allocation to US stocks is about 60-70% depending on the index.

When looking to allocate within the 60% bucket I suggested.

• Australia 15%

• Europe 15%

• Japan 10%

• China 10%

• Other 10%

The China allocation I prefer is Hong Kong listed H-Shares.

Since then, I moved my own portfolio to about 20% US stock with the other 20% from that 40% allocation held in gold and cash, with the currency being Euro and AUD.

I remain patient on my bearish call for the US market, with dry powder in cash and gold to buy US stocks to a target holding of 40%. The one stock I own from the Magnificent Seven is Microsoft XNYS: MSFT. This market will remain volatile.

However, I am more bullish on stocks elsewhere due to attractive valuations.

As I showed in Global Equity Valuations, Hong Kong is the cheapest developed market.

In the past few years, Hong Kong has been demonized in the Western Press.

I think that is overdone.

This city state has a fine history as a trading entrepot that connects the East and the West, with a strong finance sector, and abundant trade. The West used to laud Hong Kong when the role of that state was to channel Western finance to the mainland.

This role is now reversed.

Hong Kong now channels Eastern mainland finance to the world at large.

Hong Kong is back on the ascendant as a global financial center.

The thematic that I believe will prove most remunerative over the next thirty years is the growth of Hong Kong as the global center for Chinese multinationals.

The West loved Hong Kong as an Asian center for Western multinationals.

In the spirit of Peter Thiel, and his admonition that Competition is for Losers, the West would like to hobble Hong Kong and thereby remove the competition. The USA is the one center with the most to lose from the rise of China. That is why Hong Kong has become Public Enemy Number One in Washington D.C.

I have been in finance for three decades, so I have a fair idea how it works.

This Western plan to hobble Hong Kong will fail.

The Causeway-Bay Eight

First, let me reprise my ground rules for China-exposed stock selection.

1. They are not (currently) under US sanctions.

2. They are Hong Kong listed and quoted in a pegged convertible currency.

3. They are technology focused and chosen to cover a diverse group of sectors.

This does not mean I do not like US sanctioned stocks like China Mobile XHKG: 941. This is a great 5G telecommunications play with 90% share of the best 5G mobile communications market on the planet. That is why it is has been sanctioned.

When I apply my criteria to the Hong Kong market I get these eight stocks.

1. 700.HK Tencent Holdings

2. 9988.HK Alibaba Group

3. 1810.HK Xiaomi Corporation

4. 3690.HK Meituan

5. 1211.HK BYD Corporation

6. 9618.HK Jingdong Mall (aka JD.com)

7. 9961.HK Trip.com

8. 9888.HK Baidu

These are simply the eight largest Hong Kong listed, and China exposed stocks that meet my criteria, on my current understanding of U.S. Sanctions.

American citizens are advised to avoid Chinese stock exposures.

The geopolitical situation is febrile, and U.S. punishments are severe.

For those who have no burning desire to travel to the USA, the field is open.

I have been to the USA many times, probably not again for a long time.

Now let us look for a ninth dragon.