Hong Hao: A once-in-a-lifetime investment opportunity has arrived!

Q: Today's topic is "The Rise of Non-USD Assets," could you explain this to everyone?

We saw that in the first half of the year, the USD, US bonds, and US stocks all underperformed. The USD, as a major currency, had fallen by more than 10%; as of June, US stocks only had single-digit growth; US bonds are still in the red, and the losses accumulated over the past two months for US bonds may be the largest in over 20 years.

As a traditional safe-haven currency and asset, US bonds have not helped anyone hedge but rather increased risks. This was the situation in the first half of the year.

The reason for this situation is mainly that funds are withdrawing from USD assets and flowing into other assets, such as Gold, Silver, Cryptos, and non-USD stock markets, like Hong Kong stocks and European stocks.

Gold has risen nearly 30% since the beginning of the year, and Silver is even stronger; Hong Kong stocks and European stocks have risen over 20%. Therefore, we believe this is the beginning of a major asset rotation, moving from USD assets to non-USD assets.

I believe many friends have made a fortune over the past few years in USD (or US stocks), like $NVIDIA(NVDA.US)$ tripling their money in three years. We can consider reallocating past profits into other markets and asset classes. If this is the case, this rotation has only just begun, and we expect it to accelerate in the coming years.

Q: Moving forward, is the plan to go long on Hong Kong Stocks, Gold, and Silver?

Correct, no doubt about it.

(Host adds a follow-up question: Is this a cycle that has just begun, at least for this year?)

This is a cycle measured in decades. I believe it is an opportunity that occurs once in a lifetime, which is when you start allocating to non-Dollar Assets. Because the relative weight of non-Dollar Assets in investors' portfolios is at a historical low. So this may be the only chance in a person's life.

Q: In April, you accurately predicted that the stock market, both US stocks and Hong Kong stocks, would experience a significant drop. Is there a good time to enter the market, or can one buy at any time?

I believe there may be a need for consolidation in the short term. Whether it's the rebound of US stocks or the USD index dropping from 115 to 96 and then rebounding, the US dollar has been rebounding recently; although it is weak, not many are discussing it, but the USD has already risen from 96 to 98.

The downtrend in the first half of the year was very fierce, and there is a demand for a rebound in the short term, within a month or two. For friends who have not yet made asset transfers, this wave is a technical rebound, and profits can be extracted during the rebound and transferred to other asset categories.

(Host adds a follow-up question: But is it your opinion that the portfolio should include some US stocks, right?)

US Stocks always account for 50% of the entire global index. You can underweight, but it may also need to be around 35%. The profitability of large-cap US stocks is impressive; just look at their technological breakthroughs. $Meta Platforms(META.US)$ 、 $Amazon(AMZN.US)$ 、 $Alphabet-A(GOOGL.US)$ And NVIDIA's business is all about changing the way humans produce. There is no reason not to hold these Stocks.

Others, like small-cap US stocks or AI-related stocks, will perform very well.

Q: What about Crypto? Do you have any allocation in Crypto?

Just keep buying, no need to think. The Funds I manage cannot allocate to Crypto; unfortunately, I wish I could, otherwise I would have outperformed this year and wouldn't need to work anymore.

Individuals certainly have allocations in Crypto.

I believe investors are increasing their holdings in Cryptos because today we have seen Cryptos reaching new highs. For example, if you currently have 10% of your Assets in Cryptos, you are holding a substantial pie ( $比特币 (BTC.CC)$ ), holding 1 million USD in Assets, of which 0.1 million USD is in the pie, which has now appreciated to 0.12 million USD, already outperforming many this year.

If the halving causes Bitcoin to create huge volatility, everyone should seize the opportunity; those without positions should buy in. Our view on Bitcoin ( $比特币 (BTC.CC)$ ) is similar to our view on Gold, it should be about asset reallocation, not just speculative trading, but rather a firm hold. It’s best to forget the passwords, leave them alone, because you might get tempted and want to take profits and exit. Keeping it in Cryptos is so good.

Q: Back to Hong Kong Stocks. At the beginning, you mentioned that investing in non-US Assets is a once-in-a-decade golden opportunity; let's talk about capital flows. Is there money in Hong Kong Stocks?

Yes, I saw you mention an amazing number, with daily trading volume expected to reach 800 billion yuan. Do you mean that money from the north is coming down plus foreign capital?

Actually, foreign capital has not returned yet, and long position Funds have instead decreased. This year, the main contributors are northbound capital and money from Chinese people overseas.

(Host's follow-up question: What is the level of attractiveness of the positioning of Hong Kong Stocks for them?)

I believe it is very significant.

As such a large economy, the chance of underperforming for four years is very low. As a global investor, if there is no allocation in the Chinese stock market, I believe this investment portfolio is lacking.

(Host's supplementary question: What advantages does the Hong Kong stock market have technically?)

Technically, everyone has advantages. For example, we see that the gap from the drop at the beginning of April has actually been filled now; there are many stocks like Hong Kong Exchanges that have broken through and reached new highs. In general, under such circumstances, it should continue to reach new highs.

Of course, when we do technical analysis, it is actually about probability. Technical analysis tells you what the possible future paths might be, and its success rate historically. Some patterns have relatively high success rates, for example, one of our patterns - gap filling and platform breakthroughs, has a success rate of about 65%, meaning two-thirds to three-quarters. However, there is still a one-quarter chance of failure, which is unknown.

Therefore, technical analysis is a reference factor; it cannot be your deciding factor.

Q: If we reach the second half of the year, will liquidity in Hong Kong become stronger?

I believe it will. The valuation is not expensive, and will the fundamentals improve? I don't think they will get worse. So, if this is the case, the success rate will be relatively high.

When predicting the Hang Seng Index in the first half of the year, it was said that the high point in the third quarter would exceed 24,000 points, and indeed it has already reached that level. The next step is to consider whether our main theme remains firm at this crucial point.

What should investors do now? I think they should hold firm, adhere to their principles, and test their faith.

In Hong Kong stocks, we are seeing many yield stocks this year, such as the three heroes of new consumption: our tea beverage stocks, $LAOPU GOLD(06181.HK)$ , and $POP MART(09992.HK)$ , all of which have increased several times.

Let's also take a look at stablecoin concept stocks and crypto concept stocks, for example, Chinese brokerage firms have surged, $CMSC(06099.HK)$ as well; let's also look at innovative drugs, for instance, the one mentioned earlier $HENGRUI PHARMA(01276.HK)$ , all of which are at a premium, with valuations higher than those of A-shares.

So it seems there are many opportunities in Medical, Consumer, and Technology. In fact, if you look at the index, although it has rebounded this year, the performance is quite average. This is mainly because we see those big platform companies burning money on AI without any substantial results.

Currently, collectively, these large AI apps have made one million USD together, which is quite astonishing; and there are only three companies left fighting in the food delivery battle, making two cents on each delivery, and two and a half cents on a cup of milk tea. I don't know how profits are made; it seems very puzzling to me.

Other countries' AI and technology companies are developing AI, while we are focused on food delivery. This has dragged down the Technology Index.

(Host adds a question: But regarding Medical, are you referring to our Hong Kong stocks?)

Yes, those innovative drugs are performing exceptionally well. Indeed, our innovative drug trial costs are much lower than those of Western companies.

Moreover, now with some AI assistance, you find that innovative drugs are developed independently. Chemistry is quite simple; it's just mixing things in a laboratory. You may know what chemical reactions this compound might produce, but you don't know what effects these reactions will have on medication.

So look at how it used to be in the U.S. with chemistry; all the lab workers were Chinese because it was cheaper, plain and simple. The second wave was outsourcing to Chinese lab companies, and the third wave involves us using AI to conduct experiments through trial and error, significantly lowering the costs of innovative drugs and greatly increasing the speed.

So this is the third wave of revolution. Thus, I believe that this year is mainly due to our eruption—an AI eruption—so much of this AI computing power is being used for innovative drugs, which represents a significant advancement for all of humanity.

Of course, some things are just telling stories, such as using Chinese medicine to treat Dementia (cognitive impairment), these are just stories.