Date
12 November 2019
While the broader economy may fluctuate, successful companies will be able to find enough business regardless of the environment. Photo: Reuters
While the broader economy may fluctuate, successful companies will be able to find enough business regardless of the environment. Photo: Reuters

Ignore macro noises and focus on individual stocks

Investors have been overwhelmed by a flood of negative news recently, grappling with issues such as the social unrest in Hong Kong, escalating US-China trade war and an inverted USD yield curve.

But these macro factors may not necessarily prove a drag for individual companies across the board. No matter how the overall economy is doing, there would always be winners.

Japan’s economic meltdown in 1990s provided an example. Despite the subsequent prolonged recession, great companies like Uniqlo, SoftBank and Asahi only became stronger.

While the broader economy may fluctuate, successful companies will be able to find enough business regardless of the environment.

Coming to the current situation, economic conditions in both the US and China are not that bad. The unemployment rate in the US is close to the lowest level in 50 years, and retail sales and GDP are still growing.

In China, despite all the headlines about the trade war, most Chinese don’t really feel the impact.

Meanwhile, US-listed Chinese tech giants have generally posted better earnings than expected.

Admittedly, great companies are rare. One just has to keep learning and keep looking. After you have studied hard enough, and perhaps made some mistakes on the way, you would gradually learn how to tell the good ones from the bad. It’s a process that takes time.

This article appeared in the Hong Kong Economic Journal on Aug 23

Translation by Julie Zhu

[Chinese version 中文版]

– Contact us at [email protected]

RC

Columnist at the Hong Kong Economic Journal