The Fat Wallet Show with Kristia van Heerden

Podcast: Investing in China

In Latest, The Fat Wallet by Kristia van Heerden

If you listened to this episode on a single ETF strategy, you know my investment philosophy. This simple approach to investing saves me a lot of drama. When a new product comes to the market, I ask myself if it fits with my original philosophy. If it doesn’t, I can satisfy my curiosity about the product without touching my investments. This is a good way to live. 

The new China ETF from Satrix disturbed my Zen approach. If my philosophy is to invest in all the companies in the world according to their market capitalisation, China should have much larger representation in my portfolio. I never thought about it before, since we had no direct way of investing in that economy. This new ETF changes that and gives me a lot to think about.

In this episode of The Fat Wallet Show, Simon Chuckles Brown and I think about how to factor in the corporate governance risk that comes from investing in China. How do we get the right amount of Chinese exposure without betting the farm?


The bleeped show is below:


Lady Kabelo:

I just got an email about the Satrix MSCI China ETF IPO. 

My interest is piqued because China’s growth has been all the rage for years – pre-COVID anyway. I’m sure it will be again. But I have a TFSA strategy that includes the Top40, SA Property Income, and the Global 1200 so I have emerging market exposure. Also, I’m not really an early adopter. I’d probably watch what goes on with this for a while before buying.

What would be a good reason to buy this China-specific ETF? I’m pretty sure I know you and Simon well enough to guess that you would stick with your global 1200. But might there be any merit in buying this?

I broadly understand what an IPO is, mainly from the news on interesting IPO drama like Uber and WeWork. What is the virtue of buying at the IPO stage? For example, is there a discount there that might be worth deviating from your strategy to get good value at a bargain price? I would be afraid of buying this at IPO at an inflated price only for it to sink. Is that a real risk? If so, why do people do it? What is the appeal of this offer supposed to be? Looks to me like the only upside is being first to get it, which seems a weak benefit. 


Win of the week: Herman

In this week’s podcast ‘Spend money to save money’, Andrew mentioned how, whilst poor, he had to be the King of cheap, and paid the price. You made a comment about the poor being pigeon holed into buying cheap, and it costing them. And I agree.

How often has it not been shown that the poor suffer the brunt of recessions, tax hikes, interest rate changes, and inefficient governments much more than the middle class or the rich.

THIS got me thinking: One of the reasons we should take charge of our finances, is to prevent being at the mercy of others. Be it to a horrible boss, or service providers/retailers with nasty products. One of the many ‘luxuries’ afforded to the rich or middle class, is to have a choice in our spending.

Thanks for making me think of this, and playing a role in helping me take charge of my financial situation.


Anet

I own both Naspers and Prosus. Would it not be better to sell and be in cash right now? I know that there is an Income Tax implication, but am more worried about the bigger picture right now. 

Similarly, my gold ETF (NewGold) is doing well due to markets crashing and ZAR weakness but this could all reverse in the next 6 months. 


Alistair

I’ve been getting all my financial advice from a podcast called howtomoney, which is in American. I wanted a South African perspective and I love your show. I’ve been binge listening for three days now during Lockdown.

How do you guys feel about the EasyProperties platform?


The Fat Wallet Show with Kristia van HeerdenThe Fat Wallet Show is a no-nonsense personal finance and investment podcast hosted by Kristia van Heerden and Simon Brown. Every week we answer questions by a growing audience of finance enthusiasts. Submit your pressing money and investment questions to ask@justonelap.com.

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