Author: admin

BTC vs US insterest

I have a theory recently.

From US gov perspective, BTC is actually a threat to USD dominance and potentially US treasury demand.

Thus, US gov actually wants a volatile BTC market that is not very trustworthy.

How to do that?

BTC is designed to be decentralized, and there is no one single entity to tackle down.

MicroStrategy is the answer.

Well many people would be confused. Isn’t MicroStrategy one of the biggest buyers of BTC?

Sure.

But that is designed to be the case, as MicroStrategy needs to be influential in the first place.

However, MicroStrategy needs to add volatility and reduce credibility of BTC.

How to do that?

MicroStrategy added leverage to the game and used dividend tools like STRC.

BTC holders don’t have any obligation. But MicroStrategy now has dividend obligations, supported by a zero-yield asset.

In short, MicroStrategy adds a lot of risk to the system and makes BTC more like a Ponzi game.

That is exactly the goal of US gov.

Maybe that’s why Saylor and Trump are close.

The end of a cycle of liquidity for Chinese ADR and overseas listed companies

Investors rediscovered China mostly after the policy shift in Sep 2024.

However the ADRs and overseas listed companies still sold off in the subsequent month and the “924” effect nearly reversed.

The second wave of enthusiasm came with the famous “DeepSeek moment” in Feb 2025.

However, the entire world including Chinese ADR and overseas listed companies sold off with Trump’s liberation day in Apr 2025.

The current cycle is the third one and it plays out longer.

While the previous two cycles are fundament driven (policy and tech), the third cycle is a liquidity one I believe.

The most obvious sign is the near zero HIBOR (HK over night interest rate), starting in May 2026.

Meanwhile, there are various short-form videos, social media posts and anecdotes about mainland Chinese people go to HK to open bank accounts and brokerage accounts.

The troubling sign emerged probably when IBKR rejected mainland Chinese to open accounts in Oct 2025.

The Chinese ADRs and overseas listed companies peaked about that time with subsequent AI bubble worries etc.

As the stocks had risen for quite a few months and are at quite elevated levels, it also took time for it to come down.

Iran war accelerated this.

And the Futu/Tiger/LongBridge news in May 2026 marks the end of the cycle.

While it can take some time for remaining selldown to happen, it seems still manageable and valuation is not demanding.

Chinese AI may be good at agentic tasks, but…

In 2024, OpenAI talked about five levels of AI.

  1. Chatbot/Conversational AI
  2. Reasoners
  3. Agents
  4. Innovators
  5. Organizations

We are at level 3.

Chinese AI could be good or superb in the second and third level.

Chinese people are good at solving problems (think about exams) and doing tasks (think about how efficient Chinese workers can be at repetitive work ).

However, if Chinese AI needs to at level 4 and 5, and if it’s truly “Chinese”, then Chinese people need to evolve.

True innovation is scarce in China. Chinese society currently doesn’t reward true innovation. It’s like “solving news problems with new ways”. That is not the natural motivation. Chinese AI may stuck at level 3 if we don’t do innovation right.

It’s another problem at level 5. Most Chinese people don’t know how to organize themselves.

So it’s hard for me to see how Chinese AI can do this right either.

They may struggle for a while.

Or they might become a different animal.

The memory shock to investing

The explosive rise in memory prices has profound impact.

One is in investing and valuation framework – you now have several memory names (like SK Hynix, Micron, SanDisk) that is trading at single-digit or 10x current year P/E with expected high earning growth into the future.

And these companies are large enough to absorb tons of capital.

The indirect impact? Other companies’ valuation now looks absurd!

The previously dirty cheap companies lose investors. For 10x P/E, you can buy memory names with much stronger growth!

If the only reason to long is undervalued, then it becomes harder to justify the buy.

Additionally, those companies with reasonable moat, single digit growth, 20-30x p/e also lose – 2-3x PEG looks absurd now.

This hits many consumer or healthcare names.

No delta, no acceleration in growth = no interest.

Focus on OPEX

While the last few years AI investments are correlated with companies’ capex, I think the next stage is to focus on opex.

As customers of LLMs and agents, how many tokens are consumed and what is the cost of that? That will show up in operating expenses.

This will be supportive evidence of strong revenue growth for companies like Anthropic etc., just like looking at Meta’s capex comments for Nvidia’s revenue growth.

The 5-year cycle in China investing

Every five years, China will have a new Politburo Standing Committee.

There are 7 members now, which are considered the most politically powerful people in China.

Not all members are new, some can stay for 2-3 term.

But the fight for becoming a new standing committee member can be quite intense.

There can be ripple effects across other areas in China.

Stock market can be quite sensitive to unknowns and turbulence.

To avoid uncertainties, it’s wise to stay away from it.

To compensate for staying on the sideline for about one year, the previous year can be quite a good year.

That seems to the case for the last 2 terms – 2017 and 2022 were the year of new committee selection. The “fight” could start in 2016 and 2021. Thus the “good” years were 2015 and 2020.

The next term is 2027. The “fight” could start in 2026 and 2025 was the good year. That seems to be the case so far.

 

How high can ads ARPU go?

Bilibili, a younger Chinese user focused video website generates advertising revenue at about 7.5 rmb per DAU per month, slightly above $1 ARPU per month.

That is less than half of Kuaishou, which is above 16.5 rmb per DAU per month, or about $2.4 ARPU per month.

Kuaishou’s DAU size is near 4x Bilibili, so ads revenue is nearly 8x larger.

But these are nothing compare with Meta, which commands about $30-$40 ARPU per month in North America.

So Kuaishou is only like 1/10.

Douyin is the highest in China.

Using $50bn pure ads in China and 800mn DAU gives about $5 ARPU per month.

On top of that there are e-commerce, local services, payments, live-streaming etc. so overall Douyin app ARPU is a lot higher than pure ads.

Just comparing ads revenue: Douyin DAU 3-3.5x Meta NA but ads ARPU is 15% of Meta, which will give you about 50% of Meta NA ads rev of ~$100bn.

PE multiple

PE multiple is not only a reflection of earnings quality, earnings growth/cagr, etc.

It’s also an encouragement or discouragement for value creation.

If $1 of profit is worth 10x in HK and 50x in A-share, companies could be more encouraged to create more value for A-share shareholders.

The same rationale also applies to upstream or downstream players – PE multiple can influence whether revenue or profit should sit more or less in supplier or customer etc.

Japan before Meiji vs Qing Dynasty

Japan before Meiji vs Qing Dynasty have many similarities:

1/ both are agrarian based economy that is not industrialized as western peers at the time

2/ both faced challenges and threats from the west. Qing has the Opium Wars from the 1840s; Japan encountered Perry’s Black Ships in 1853–1854.

3/ both had a structured military class – Qing with 八旗 and Japan with samurai. Both had become partly hereditary status groups living on state stipends. Many were no longer effective soldiers.

The Meiji Restoration 明治维新 and 百日维新 Wuxu Reform / The Hundred Days Reform are similar and usually compared together.

The results are vastly different though.

Why?

Shogunate is politically easy to target. Reformers can support the Emperor Meji. Meji and Tokugawa are separate.

However, Guangxu, the Qing Emperor had “invisible enemies” inside – Cixi or other Manchu noble.

The political situation difference had another profound impact – the support of armies.

Meji had key army support from Satsuma 萨摩, Chōshū 长洲 which are clearly anti-shogunate.

Guangxu didn’t have army. Guangxu had Kang Youwei who had ideas but no real power.

Military forces at that time were still loyal to the Qing court on the surface. Whether it’s 袁世凯 or 湘军/曾国藩 or 八旗, no one is clearly anti-Cixi. People could be dissatisfied but Cixi was still the powerful core of Qing court.

Yuan was likely the most possible choice for Guangxu back then, but Yuan chose not the take the risk / help a coup etc.

Yuan Shikai 袁世凯 did not have a clean, rightful banner to be openly anti-Cixi.