(Bloomberg Markets) -- Herald van der Linde’s journey to becoming head of Asia equity strategy at HSBC Holdings Plc started with a backpacking trip. After his first year at university in 1990, he left the Netherlands to travel almost every corner of Indonesia and China, learning Indonesian and Mandarin along the way. He returned to Europe, earned a degree in macroeconomics, and quickly made his way back east. He worked odd jobs, including a stint as a tour guide in Beijing, before he became an analyst at UBS Group AG’s Jakarta office in 1995. A decade later, van der Linde joined HSBC in Hong Kong, where he now considers himself a lifer—though he also feels at home in Jakarta, where his wife’s family lives. Working through the Asian financial crisis in the late 1990s made him wary of market bubbles, so he was an early skeptic of China’s internet boom. He says one of his boldest calls now is that local retail investors are ready to dominate Asian markets. Van der Linde, 51, who’s written three books—on markets, history, and wine—spoke with Bloomberg Markets in December about the spending power of China’s empty nesters and a wine that a young Mao Zedong could’ve tasted. The interview has been condensed and edited for clarity.
JEANNY YU: What calls do you think the market will know you for?
HERALD VAN DER LINDE: Everybody loved China internet 12 months ago. We began cautious on Nov. 17, 2020, and then we reiterated that on Jan. 6, 2021, in a report called Peak China Internet. To be honest, November was a bit early. So in December and January we got criticism. But then eventually you see that the markets went the opposite direction.
We knew at the time already that regulations might become an issue. The valuations were very high. Everybody was overweight. Everybody thought this was to go on. And we’ve seen before that this can, in particular in Asian markets, come down very quickly.
So one of the lessons you learn over time is that you need not only to look at the numbers, but you need to learn to read the sentiment as well. If everybody loves something, you’re going to be a little bit cautious.
JY: What are your boldest calls at the moment?
H vd L: The Asian markets will increasingly be dominated by Asian retail investors. In the past, Asian stock markets were dependent on global investors that invested in emerging markets. That meant if something went wrong in Argentina, people would sell the Philippines or China. But if you have Asian investors buying in Asia, if something happens in Argentina, we don’t really care about it. So that connection between Asia and other emerging markets is disappearing because we have our homegrown investors in the region.
Another big call is the “empty nester.” That’s a defining trend over the longer run. It’s effectively looking at Chinese households. They had a one-child policy. It means that as they age, their children are over 20 years old and leaving their homes. So you have a shift in the structure of Chinese households, in the way people live. Actually, a lot of these people can be in a financially very nice situation. Their spending power is really good.
JY: What brought you to Asia?
H vd L: I bought a ticket for the equivalent of €850 ($960), an economy-class ticket to Bali. I went from Bali to eastern Indonesia and later to Jakarta and western Indonesia. I had a phenomenal experience, and I loved the place. I went to China and backpacked there. I decided that this was where I wanted to go and live. When I graduated from university, I never looked for a job in the Netherlands or in Europe. My first job was actually as a tour guide in China.
JY: What got you into analyzing stocks?
H vd L: My first real job in the finance industry was in UBS. I became an analyst in Indonesia. Their head of research, Rick Loo, hired me and taught me how to become an analyst. The equity market was not something I’d looked at in detail, but he taught me everything.
JY: How has Hong Kong as a financial center changed, especially after the national security law?
H vd L: No doubt Hong Kong is changing. But again, over the 30 years I’ve been [around] here, people always said that something is going to go bad with Hong Kong. But somehow Hong Kong always comes back with this almost incredible flexibility that you have in Asia. It is able to react.
This [city] will remain a unit that is separated because that offers benefits to China. Hong Kong will find out its new special place, as it has done so before in its own history.
JY: What is the most unusual wine that you have bought or tried?
H vd L: One of the most unusual but interesting wines is called Madeira. The big thing with Madeira is that it will not change, because of a particular kind of production process. You can buy a Madeira from 1850 and drink it now.
[In December] we had a dinner with some clients. I was able to find some bottle here from 1927. So I talked a bit about what happened in 1927: Charles Lindbergh flew over [the Atlantic]; Volvo’s first car; in China there was a revolution going on. All these things happened in history. And then we opened up the wine and drank it.
You might like it or not. But you think, wow, this has been in this bottle for almost a hundred years. You drink something that young Mao Zedong or Charles Lindbergh could have drunk, right?
Yu is an equities reporter at Bloomberg News in Hong Kong.
©2022 Bloomberg L.P.
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