Weekend Reading #270

This is the two-hundred-and-seventieth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 1st June 2024

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*****

What we're thinking.

A bit of a selloff off this past week pretty much everywhere. Heck even Nvidia was down for a few days. There are plenty of divergences opening up beneath the index surface and it's not a straightforward market beta bet at the moment. We are unbothered, moisturized, happy in our lane, focused, flourishing BUT with our fingers on the button as always should we need to act. 

What we're eating.

Being back in Asia, it seems right to bring back my favourite category of our weekly updates, “What we’re eating”. I’ve spent the past two weeks in Hong Kong and what a place it is to enjoy good food. Highlights were probably Yat Luk Roast Goose in Central (一樂燒鵝) or for sweet treats, Bakehouse.  

Yat Luk is your classic Hong Kong style restaurant with tables closely packed together and often involves sharing your personal space with strangers with the high density of diners they cram in. I was lucky to only queue for a few minutes but at times I’ve seen people queue upwards of half an hour for the deliciousness that awaits within. There were two of us, and so we went for the classic half-goose, along with a serving each of pork belly over rice. It’s repeatedly come up on my list of HK local recommended spots so well worth a visit if you’re in the area.  

My other recommendation is a bit more of a modern take on a Hong Kong classic with ‘Bakehouse’ (originally in WanChai but now operating several branches across HK). Founded by a Swiss baker, who wanted to truly perfect the famous Egg Tart, this spot was an instant success thanks to social media, and now 5 years later can still require queuing for more than half an hour or often situations where the store is simply sold out of egg tarts. But whilst Bakehouse’s egg tarts are often the star of the show, it’s well worth trying all of their other treats, both the savoury and sweet. Their bread and their croissants rival any Parisian bakery. I probably most frequent the branch at Mid-Levels as I often stay around there and can judge the queue from the escalators. If you don’t see too long of a queue, give it a try, you’ll be sure to see many of their iconic blue bags around Hong Kong. HS

What we're watching.

This is a refreshing interview with former Singaporean Foreign Minister, George Yeo. In it he talks geopolitics primarily but also about the difference in value systems between the West and most of Asia. The most notable takeaway for me apart from the deep insights, is how he speaks what he thinks, and it is not ideological. So much of what we see in the West is tainted with an ideological brush these days, but Yeo has no skin in the game, and he is a pleasure to listen to. What’s more of a lesson is that I found this link by following a guy named Arnaud Bertrand, who I most certainly do not agree with in many areas. In fact, some of his stuff I find very disingenuous. The lesson is that one must keep following and interacting with people who think different to you because otherwise you disappear into an echo chamber abyss. In this case, a small reward. 

I stumbled upon what could be my new favourite thing (until I jump to something new again) - a fantastic Youtube account run by a young guy called James Dumoulin. It's called School of Hard Knocks and entirely comprises short clips of Dumoulin travelling to a variety of US cities and interviewing wealthy people about how they became wealthy and what their takeaways are. Most of it is him approaching random people who seem wealthy and chatting to them but there are such famous faces in there too. This is a brilliant show, and this young chap is busy pulling it off. The random encounters are the best ones. DC

What we're reading.

This is a rather poignant article about a videogaming journalist named Gene Park. I started following him many years ago as I went through a stage of investing in videogame companies. One of those companies, CD Projekt Red is a Polish company which I made a lot of money on many years ago and have kept following. In 2022 Park got diagnosed with colon cancer and this article speaks about his videogame “therapy” as he played CD Projekt’s Cyberpunk 2077 to help him get through it. Well worth a read. DC 

Private Credit has been one of the biggest “hot” sectors of the market, growing over the course of the past decade or so to over US$2tn, according to this IMF report from last month. It’s not a segment in which we’re directly involved, but like many forms of financial “innovation”, the skeptic’s view of it can be quickly summarised into it being the same old thing in a brand-new package – fund manager replaces bank manager in selecting and assembling the loan book, and fund AUM replaces bank deposits in terms of the capital. Is the profile of the risks taken in this book the same, lower or higher than what a bank would take? No idea, though the incentives of a fund manager are tied to more capital raised and more capital deployed, so whether that skews the risk management on the book is an important question. It’s perhaps not a coincidence that just as we were pondering the risks around the private credit space, this article popped up on Bloomberg about a Canadian Private Credit fund halting cash payouts. It’s not the same thing as a bank deciding that your interest received on savings accounts is no longer withdrawable, but one would struggle to see how gating liquidity is the result of a good thing happening. There’s most certainly more than meets the eye here. EL 

What we're listening to.

After one rather over-adventurous experience investing in India in my previous iteration as a fund manager (a great story but not for the newsletter), I stopped paying such close attention to that market in order to limit my universe. This had nothing to do with my thoughts on the Indian overall market, which has continued to do very well indeed over the past years as expected. But more recently I’ve been getting signals from the universe that seem to suggest I should pay attention again. So, when a chap named Dan Tennbaum appeared on the Capital Allocators podcast to talk about the Indian markets, I had a listen. And it was an excellent segway back into a market that has a long, long way to go over time. India is still in its early development stage as a market and indeed an economy and for me (and anyone who wants a high-level overview) it was a great place to nip back in. DC