Notes from Hong Kong on Travel, Momentum, and What Might Be Shifting
I’m writing this from somewhere over the Pacific, midway through the long, long flight home from Hong Kong. My colleague, Crewcial Investment Director Regina Cho, and I just spent two days there meeting with managers and conversing with allocators and various investment professionals. We’re tired, but the kind of tired that comes from having been somewhere, speaking to and learning from others in real time, not the numbing fatigue that attends staring at charts on a computer screen for hours on end. The other day I was looking at my frequent flier account on American Airlines, which tracks my total miles flown since I joined their program 35 years ago; I am now just a mere 65,000 miles short of having flown 6 million miles in total.
The thing about travel, with agendas and jet lag and note-taking, is that it helps—even forces—you to notice the small things. And this time, in Hong Kong, we noticed something among the investment managers there we hadn’t felt in years: swagger. It wasn’t loud. But it was there.
It’s been a long stretch for China. The last five years have been punishing for both capital markets and confidence. Two years ago, I remember walking the streets of Hong Kong late at night with a longtime friend in the business. He is a very intense person, meditating twice a day to manage that, and even he had to work hard to remind himself that impermanence is one of the central themes of life. We discussed the idea that things must rise and get better from any low base, with change being the only constant, but the how, when, or why were a mystery.
We didn’t see him this trip, but it’s not a stretch to say he’d agree things have changed. Markets have rallied, sentiment is shifting, and as Strategas likes to remind us, attitude follows price. There’s no all-clear signal, but the mood is different.
We picked up on it in meeting after meeting. Asset managers who were almost sheepish two years ago are now talking about flows. US institutions are finally showing interest again. Somehow, China is no longer “uninvestable.” And yet, the economy remains weak. So where is this new confidence coming from?
Technology, Identity, and the End of the Imitation Game
The first answer is tech. There’s a growing sense (and more than a little evidence) that China is now a real competitor to the US on the most important fronts. It’s no longer about cheaper knockoffs, but capability.
DeepSeek, a generative AI initiative that, despite being completely ignored by US markets, is alive and advancing, was mentioned in more than one meeting. And in alternative energy and electric vehicles, China is simply ahead. Plug-in hybrids with 1300 miles of range for $15,000 aren’t prototypes. They’re viable products. We’ll likely never see those cars in the US, but they exist. And they signal something bigger, with China’s lead potentially becoming insurmountable if the US continues to voluntarily retreat from its various advantages across science and engineering.
Global Perception is a Two-Way Street
The second driver of optimism? America.
Or more specifically, the way the current US administration is perceived abroad. One allocator told us that for years, Chinese brands struggled under a double burden of low quality perceptions and geopolitical stigma. But now, people around the world are just as skeptical of the US as they are of China. In that environment, Chinese consumer brands can finally compete on more neutral ground optically and ethically.
Will it stick? We’ll see. But there’s something ironic about American political dysfunction becoming a tailwind for Chinese equity narratives. We joked about going to the Luckin Coffee near our NYC office to test this theory firsthand, but every joke contains a kernel of truth.
Momentum Without the Macro and the Cost of Avoidance
It’s very important to note the Chinese economy is still weak and none of the optimism we heard was based on near-term growth. This was not macro-driven enthusiasm, but something subtler: the potential beginning of a broader psychological shift.
Markets are emotional systems pretending to be rational. When price momentum returns, people start to imagine a different future, and when imagination returns, flows follow. That’s what swagger is: not arrogance, not exuberance, but the return of belief.
Of course, not everyone sees it that way. On Friday, we got a call from a contact at one of our manager relationships. Their largest LP, a prominent US university endowment, is redeeming. Not because of performance or any manager-specific issue, but because their investment board (not the investment office) voted to eliminate all emerging-markets exposure. Full stop.
Why? Apparently, China was the problem. Or more accurately, the perception of China was the problem. But did they go to Hong Kong? Did they meet central bankers or entrepreneurs or builders? Did they try to understand how the world is evolving beyond the S&P 500?
Probably not. Most likely, they looked at past returns and made a decision that felt safe, even if it made their portfolio smaller, less informed, and more vulnerable over time. There’s a word for that, but we wouldn’t call it "fiduciary."
We don’t travel to be contrarian. We travel because you can’t know what’s real unless you go see it, and you can’t measure confidence on a screen. You have to hear it in someone’s voice. Hong Kong still has issues, while China as a whole has plenty. But there’s movement again, and more and more people are thinking forward. That alone is worth showing up for.