YWR: Shanghai Crash Fund

Do you remember the CLSA China Conferences back in the day?

I mean 2005-2007.

They were the best parties.

Every fund manager had to be there.

Because China was the centre of the world back then. And we all craved perspective on what was happening in China.

Which was why I was there too. Our CIO thought it was important and good for me to go in 2007. Also it was already several years into a massive bull market. Perfect time to go to a conference.

I remember my taxi pulling into Pudong and being amazed at the forest of sleek 100 story office towers all less than 10 years old. I stayed at the Shangri-la hotel in Pudong and stared out at the city lights at night. Shanghai felt futuristic.

And Shanghai was pumping. You could feel it. There was an excitement about China’s future and all the things it would become. Plus the property market was hitting new highs. So everyone had money.

During the day we would buzz around the hotel from one room to another taking in the exciting investment pitches. Banks, consumer companies, insurance, telecoms, education companies, tech starts ups, and property. Plus the CLSA analysts would be there with their shiny 90 page reports to tell you how they had analysed everything and the future for all these companies looked great.

Then at the night we would go out for fancy dinners. My favourite place was an old warehouse district which had been renovated into an outdoor mall. Xintiandi. While everything else in China was desperately trying to be modern and new, Xintiandi had its own cool style. Because I was curious I learned that Xintiandi was an early project by Chinese property developer, Shui On Land led by Chairman Vincent Lo. Xintiandi was such a success Shui On Land had turned it into a brand and used the name for further projects; primarily in Shanghai.

It’s funny. 19 years later I don’t remember anything the CLSA analysts told me. But I do remember Xintiandi.

So I have a question.

If you like something at $100, and would have bought it then, and then it sells off 90%, shouldn’t you like it more at $10?

That’s my question about Shui On Land (272 HK).