Why Most Macro Indicators Are Fake News in Asia (and how to look for the real ones)

You’ve been there before. The most popular macro indicators from your most reliable sources turned out to be manufactured or wildly inaccurate.

I’ll tell you the truth. It’s an epidemic here in Asia due to a couple of reasons.

1. A Culture of Saving Face

The culture of “saving face” is an Asian way of living that upholds a person, family, organization or any identity’s social image at the highest level of reputation, dignity, and honor. It is a social value and standing that must be enhanced and protected at all costs.

The culture allows forgoing honesty in order to save face.

Of course, I don’t mean the anatomical face, nor the face-reading school of astrology in East Asia:

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I witness this cultural uniqueness in every facets of life here in the Far East. You can see it even on a larger scale, in governments and corporate environments.

Window guidance is often used by Asian governments to manipulate and manage their economies.

The government also controls what can be reported. And these reports often don’t tell the whole truth.

A good example of this blurred truth is China’s economy in periods between 2012 and 2015.

The country’s freight traffic, export values and power consumption all experienced either negative growth or flatness, yet reported annual GDP growth was between 6-7%.

This “save face” behavior goes from a national to a local government level.

Insiders such as Premier Li Keqiang infamously admit this behavior, in Li Keqiang’s case inspiring an independent index that tracks China’s economy more accurately (“The Li Keqiang Index”).

And so you know…

If you were members of our premium Capital Deployment Portfolio, you would know how to navigate this period of volatile Chinese stock market, which returned a whopping 100% in less than three years.

2. Outright Fraud

Cases of economic manipulation are well-documented in a fantastic 2018 documentary, called “China Hustle” produced by Dallas Cowboy’s owner Mark Cuban.

The documentary shows how Chinese fraudsters are exploiting the China hype, with promises of opportunity that has drawn in tsunamis of foreign direct investments for decades, thanks to potentially manipulated government-reported macro data:

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On the other hand, the gatekeepers in the West were either failing to catch or even colluding with these thieves.

Highly-respectable giants like KPMG and Price Waterhouse Coopers sign off audit reports done by their affiliates in China, which oftentimes fail to report financial fraud.

Remember when Longtop Financial and Sino-Forest were delisted? Their US auditors were Deloitte and Ernst & Young.

And many more fraud cases were exposed over the years. “The China Hustle” documentary listed 400 cases, and this is just what was reported.

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3. How to Avoid Being a Victim

Don’t worry. This is a very difficult challenge that even the most seasoned investors fall victims to when investing in Asia.

To avoid traps, there are three simple principles that I’d like you to remember, principles that were conjured from over a decade of investing and consulting in Asia, and they never been revealed to the public before. But today I’d like you to have them for free.

 

Do not trust any central banks or governments

This one is obvious. Separation between central banks and the state is rarely practiced in Asia, hence central bank guidance is not to be entirely trusted.

Why?

Because the government and her affiliates calculated these economic indicators, making them distorted.

In other words, central bankers are merely government puppets

Check multiple sources for information merit

There are tons of independently researched macroeconomic indicators out there, like the Li Keqiang Index that I personally use when checking on China’s health, along with our proprietary Capital Development Portfolio suite.

Or during Vietnam’s 2012 recession, when the true market value of the Dong was reflected more accurately in the currency grey market than in the fixed exchange rate set by the panicking Vietnamese government.

The pitfalls of this is that many of these indicators are they are either paid professional service or they are not easily accessible to remote investors. Some services may even cost you thousands of dollars to obtain.

You’ve got to know who to trust.

FYOM

Find your own macro indicators.

It sounds crazy, but I believe that this is the most reliable method in your arsenal.

It is the reason why I spent countless hours researching macroeconomic indicators, repeatedly testing my own, and perfecting them — all costing me precious times and capital.

Was it worth it? Absolutely.

I want to aid you in weeding out the good from the bad, and help you perfect your perspective… But without the struggle I had to go through when I didn’t have any reliable sources to trust.

Our Capital Deployment Portfolio (CDP) suite has the most advanced macroeconomic indicators and stock options that cover the most prolific growing global economies, including China, Japan, South Korea, Indonesia, Thailand and Malaysia.

Most importantly, CDP has made our premium members’ investing process both more efficient and profitable, all at a reasonable price.

I encourage you to check it out, along with our other products here.

Putting it to action

I want to aid you in weeding out the good from the bad, and help you perfect your perspective… But without the struggle I had to go through when I didn’t have any reliable sources to trust.

Our Capital Deployment Portfolio (CDP) suite has the most advanced macroeconomic indicators and stock options that cover the most prolific growing global economies, including China, Japan, South Korea, Indonesia, Thailand and Malaysia.

Most importantly, CDP has made our premium members’ investing process both more efficient and profitable, all at a reasonable price.

I encourage you to check it out, along with our other products here.

Peter Pham