David Ji, director, head of research and consultancy of Greater China at property consultancy Knight Frank says the Chinese property market is stabilizing and in early recovery stage.

In this episode of China Money Podcast, guest Dr. Marc Faber, renowned investor and publisher of The Gloom, Boom & Doom Report, speaks with our host Nina Xiang.

Dr. Faber shares his thoughts on why China's economic problems are solvable, explains the reasons behind his belief that China is likely to keep its currency stable, and rebukes the argument that capital may be flying out of China for a lack of confidence in the world's second largest economy.

Read an excerpt or watch an abbreviated video version of the interview. Be sure to listen to the full interview in the audio podcast. Don't forget to subscribe to China Money Podcast for free in the iTunes store.

Q: We are in your spectacular house in Chiang Mai, Thailand. The walls are covered with pictures from China's Maoist era and the Cultural Revolution. From where you stand, how is the Chinese economy doing?

A: In order to understand China, you have to go back in history. After the revolution and the opening up, the growth during the 1990s up until now has been mind-boggling. In 1980, China consumed 2% of the world's industrial commodities. By 2000, it was 12%, and now it is 47%.

Now the growth in China is obviously slowing down. But if you look at the U.S., there were 19 recessions during the 19th century, then the Civil War, World War I, the Great Depression, World War II, the Korean War, the Vietnam War, and the country continued to grow.

So, I wouldn't be too worried about the problems in China for the near term. I think it's solvable. Hopefully, it is painful because the society needs some pain from time to time, then the economy takes off again.

Q: Where do you think the pain will be specifically?

A: Obviously, in the property market. There are a lot of property developments that will not have positive returns. There is also over-capacity in some basic industries, steel and other basic materials. That's where pain will be.

Q: What is the biggest risk the economy faces?

A: The biggest risk is that credit has grown far more than economic activities. The debt-to-GDP ratio has increased dramatically. Essentially, China is borrowing economic growth from the future. Once the debt reaches a level where it's difficult to maintain the pace of growth, the economy automatically slows down.

But what is frequently missing in the discussion of credit is what is credit used for. If you look at Korea and Japan in the 1950s to 1970s, credit was used for capital spending, infrastructure, plants, education, research and development. That credit generates cash flow, which can repay the debt.

The worst credit is what the U.S. has, which is consumer credit. People borrow to buy a car or a washing machine. That does not generate income and becomes burdensome to the household.

Some people argue that China has overbuilt roads, tunnels, bridges and trains. But I don't see it that way. In the U.S. during the 19th century, the country constructed lots of canals and railroads. All the canal companies, including the Erie Canal, went bankrupt. About 95% of the railroads had to be refinanced or went bankrupt. But the network facilitated the country's trade and commerce significantly. So China is doing the right thing.

Q: Sounds like you are not too worried about China's elevated debt level?

A: We live in a world with excessive liquidity created by money printing of central banks. That liquidity flows into real estate, stocks, bonds, art and commodities from one place in the world to another.

Relative to the U.S., China's stock market has become inexpensive. So, we had recently this huge bull market in Chinese stocks with colossal speculation. It doesn't mean that the whole thing will collapse and make new lows. But after this burst of volume, we could easily see a significant correction.

I bought China Life Insurance at HK$21, and now it's close to HK$40. It almost doubled in less than six months. I think it can easily drop 20% to 30%.

Q: The U.S.

In this episode of China Money Podcast, guest Benjamin Fanger, co-founder of Chinese distressed debt investment firm Shoreline Capital, talks to our host Nina Xiang about the changes he saw in the distressed debt investing space over the past ten years, where he sees future opportunities, and how his firm controls downside risks in a highly specialized investment arena.

Read an excerpt below, but be sure to listen to the full episode in audio. Don't forget to subscribe to the podcast for free in the iTunes store.

Q: Can you first give us some background on Shoreline Capital?

A: I co-founded Shoreline Capital with my partner, Zhang Xiaolin, in 2004 when we were still studying at the University of Chicago Booth School of Business. Currently, we manage around US$650 million investing in distressed debt in China, with over 30 people in the company.

Q: And, you are currently raising a third fund with a US$500 million target?

A: That's correct.

Q: During the past 10 years, how has the distressed debt investment space changed in China?

A: It has changed significantly. Back when we started the firm, it was not clear what would happen in courts if you were trying to enforce debt. Since that time, the legal environment has improved significantly.

The types of investments you can do have also expanded. Ten years ago, there were probably opportunities only in the non-performing loan (NPL) space. Today, there are other types of investments given the decelerating economy.

Q: How has China's legal environment improved, specifically? In 2007, China enacted a new enterprise bankruptcy law, but the new law hasn't been tested that much?

A: I think the more relevant laws for what we do are creditor rights enforcement, not bankruptcy laws. Creditor right enforcement in China has much more predictability nowadays than before.

Let's say if you could do ten things in courts in London or New York to enforce your rights as a creditor, you could only do three things with predictability in China ten years ago. Today, you could probably do four or five.

Q: Can you give an example of the things you can do now but couldn't before?

A: I'll first say some things that a creditor has always been able to do in China. They include doing searches for titles of a borrower's assets, putting liens on those assets, and taking the borrower to court. You could also auction certain types of assets off the borrower, things that are not sensitive in the eyes of the local government.

An example of some new things you can do as a creditor in China is pursuing fraudulent conveyance. In a developed court, if a borrower transfers all its assets to another borrower, creditors can sue that (second) borrower as well. Ten years ago, courts in China were not very familiar with fraudulent conveyance. But today, it's more predictable to pursue this in Chinese courts.

Q: But there are still many things beyond your control. How do you manage that risk?

A: We price those things that we cannot do with predictability in Chinese courts to zero, and give value to the few things that we can do.

But in some cases, Western courts would be less predictable than in China. Let's say I have a borrower who has defaulted on a loan. I have a complete set of loan documents that I have bought from the bad banks in China. If I go through due diligence and find that the borrower owns an office building, but it's not my collateral, then I can go to a court in China and do a pre-trial attachment of that asset and essentially become a secured creditor. In essence, putting a second-lien on that asset.

This is a very predictable process in courts in China. But this process could be quite difficult if there are counter-claims or other complications in courts in developed markets.

Q: Your business initially was to invest in NPLs in China. Can you explain how did it work?

A: We would buy a portfolio of NPLs from the Asset Management Companies (AMCs),

In this episode of China Money Podcast, guest Eric Solberg, founder and CEO of Asia-focused private equity and wealth management firm EXS Capital, talked to our host Nina Xiang.

He discussed how he is preparing to invest in China's property sector in its downturn, and why he thinks there are attractive investment opportunities in the Chinese steel sector.

Read an excerpt below, but be sure to listen to the full episode in audio. Don't forget to subscribe to the podcast for free in the iTunes store.

Q: You resigned from Citigroup Venture Capital International Asia in 2007 and started EXS Capital. What was your consideration behind that decision?

A: In early 2007, private equity deals in Asia were very expensive. The average public market PE multiple was 60 times. CVCI has raised a US$4.3 billion global emerging markets fund at that time. As all partners, I was required to invest a very large portion of my net worth, in fact, Citi was going to loan me a lot of money, so that I can make a large personal investment in this fund.

But I was concerned that valuations were too high. So I resigned. I withdrew all my money from the fund and sold my Citi stock at US$54, which went all the way down to 97 cents. That turned out to be a lucky decision.

Q: What happened to that fund?

A: In my understanding, the fund invested very aggressively in 2007 and 2008. That fund was sold recently to a much smaller group. I am no longer involved in that fund, but my guess is that the fund didn't lose a lot of money, also didn't make a lot of money. It did get investors the type of performance they were hoping for.

Q: Give us more background on EXS Capital. What does the name stand for?

A: It's a play on the initials of my and my son's name, which is Xavier. But we call it "excess" capital, because we think everybody needs "excess capital"; it's our private joke.

Essentially, we believe that the volatility in the Asian markets makes the typical closed-end, finite life private equity funds difficult. So if you can have either permanent capital, or can do this on a deal-by-deal basis, we think Asia is the best place to do private equity.

Q: Your firm did try to raise an evergreen fund, but it wasn't successful?

A: We did try to raise a permanent capital vehicle around 2011. At that time, investors are putting a lot of money into domestic Chinese or Indian funds. There weren't the appetite for that new type of vehicle.

Some day, we may go back to that idea now that we've built a longer and stronger track record. But in the meantime, our deal-by-deal basis approach has given us a great deal of flexibility.

Q: Chinese private equity firm Capital Today is planning to raise a private equity fund with a 28-year fund life. What do you think will be its biggest challenge?

A: Frankly, I don't think that's a right way to do it. Taking a standard private equity fund model, and just making the fund life very long, doesn't solve the problem.

If you look at more sophisticated evergreen funds such as Golden Gate Capital and General Atlantic, they have rolling mechanisms to allow investors in and out, and to periodically realize investments. That more creative approach is a better solution.

Q: Can you tell us more about a deal you did in China, which was a buyout of a distressed shareholder in a Chinese residential project called Project Byblos?

A: We were working with a developer who had a single project with a 3900-unit residential project in Southern China on the coast. This developer was originally financed by a Southeast Asian group, which got into trouble after the global financial crisis.

The developer saw this as a good opportunity to buy out this Southeast Asian group. We raised some money for the developer, and structured the deal to give incoming investors minimum IRRs (internal rate of return), as well as sharing the upside with the developer. That worked out well.

In this episode of China Money Podcast, senior strategist for Greater China at BNP Paribas Investment Partners Chi Lo, talked with out host Nina Xiang about the future policy direction of the Chinese central bank; why he believes the biggest risk in the Chinese economy is a property correction and its knock-on effect on banks and other sectors; as well as his advice for investors on building exposure to China now.

Read an excerpt below, but be sure to listen to the full episode in audio. Don't forget to subscribe to the podcast for free in the iTunes store.

Q: Earlier this month, the People's Bank of China (PBoC) announced a selective bank reserve requirement ratio (RRR) cut of 0.5%. Now the big question on everyone's mind is: Will the Chinese central bank extend the RRR cut to all Chinese commercial banks. What's your view?

A: It depends. I think the PBoC's policy move will be data dependent in the next few months. It will depend on how the economy reacts to the selective RRR cuts and also the mini-stimulus packages implemented in the past few months. If the numbers react well, then I don't think there will be a need for a universal RRR cut or an interest rate cut.

We think the PBoC is taking a universal RRR cut and interest rate cut as a last resort. Our base case forecast is for the Chinese economy to recover during the second half of the year. Therefore, no major further monetary loosening is needed.

Q: Which economic indicators do you think the Chinese government will focus on to determine if the economy is responding well to their policy measures?

A: I think they will focus on bank credit, because that's a key leading indicator. They will also focus on electricity power output, transport volume growth, as well as the property market. Depending on how deep the property market correction will go, the authorities will decide how much easing they want to put into the economy.

Q: Some economists argue that an across-the-board RRR cut will not stimulate bank lending that much. Do you agree?

A: Overall, I do. The smaller and rural banks in China have about 7% excess reserve above the official minimum bank reserve requirement ratio. For the other banks, they also have excess reserve ratio of 2% to 3%, which means they are already putting aside 22% to 23% of reserves, above the official 20% official RRR. So it's hard to tell if the RRR cut will be effective.

The problem with the Chinese economy is that the system is too used to bailouts when something goes wrong. This time around, Beijing has been holding off any significant bailout because its policy objective has changed from "growth quantity" to "growth quality". It's not easy. It's painful.

Q: So you see there will be more pain, more bankruptcies in the economy?

A: You already see property developers and corporates jumping and yelling that there is not enough liquidity. But the truth is that the amount of liquidity now is just less when compared to past cycles, but it's still (ample). When you look at the total aggregate financing numbers, there is still a lot of money being pumped into the economy. This is a normalization of liquidity growth in China.

Q: In another word, it's China's own tapering?

A: You can say that. Actually, China tapered much earlier than the U.S. Federal Reserve. China started tapering about a year ago.

Q: How should China manage the process of injecting market disciplines in the economy, but also not to go too far to cause unwanted social pressure?

A: On a macro level, a growth rate of 7% to 7.5% is what I call the "pain threshold." China's Premier Li Keqiang recently reiterated that he wanted to see 7.5% GDP growth this year. I don't think they will be very strict about the 7.5% objective. As long as there is progress on structural reforms, Beijing will be okay with growth lower than 7.5% but above 7%.

Bankruptcies will also rise, and this is part of Beijing's game plan.

In this episode of China Money Podcast, returning guest and legendary investor Jim Rogers, chairman of Rogers Holdings, spoke with our host Nina Xiang in Singapore.

Mr. Rogers shared his views on the world economy and markets, in particular, why people should be concerned about tough times ahead as the unprecedented artificial liquidity comes to an end. He also discussed bitcoins, and why he missed the best opportunity to invest in the virtual currencies. He shared some personal experiences about returning to his hometown of Demopolis, Alabama, and the joy of seeing his daughters excel in the Chinese language.

Read an excerpt below, but be sure to listen to the full episode in audio. Don't forget to subscribe to the podcast for free in the iTunes store.

Q: What worries you the most in today's world and economy?

A: What worries me the most is that for five or six years, all the major central banks have been printing huge amounts of money. It's the first time in recorded history that we have the Japanese, British, European and Americans all printing money at the same time. So we have this artificial ocean of liquidity, which is making markets do well, but it's not doing much for the economy worldwide. When it ends, we will all pay a terrible price.

Q: What's your assessment of the current geopolitics risks?

A: There is always geopolitics risk. We have had wars since the beginning of time, and we will have more. Politicians have always made foolish mistakes throughout history. They will make mistakes again, and we will all pay for it.

Q: Do you see that any potential conflict will be limited to regional and small-scale ones?

A: Let's hope so. Unfortunately if you look back at history, all wars started with small incidents. I would expect we'd see bigger conflicts in the next ten years.

Q: In China, we have seen more frequent terrorist attacks and mass protests lately. Just last week, there was another bombing in Xinjiang province. How big a threat do you see this type of turbulence pose to the economy?

A: Whenever there are bombs going off, people become worried. People tend to get more aggravated or agitated when things slow down. China is slowing down at the moment. But will this mean the end of prosperity in China? I doubt it.

Q: What is the best way for the Chinese government to handle this?

A: Normally, the best way is to try to provide some kind of accommodation, so the Chinese and the Uighurs can be satisfied. Killing each other doesn't usually solve the problem.

Q: Do you think the Chinese government will be able to keep stability and avoid the dramas that are currently going on in countries like Thailand?

A: China will see more social unrest going forward, but I don't see the Chinese government failing.

In fact, we are going to see more social unrest throughout the world, because we are in this artificial situation where a lot of money is being printed, but many people are not participating in the recovery. We are going to see more turmoil in the next decade.

Q: Strangely, I also have this vision that I'm going to experience starvation one day, or worried about being trapped in dark rooms...

A: That's what a lot of people are going to experience, because we are in this artificial liquidity. So, you should go back to that dark room, if you can find it, and put some food in the closet. So when that period comes, you have some extra food, or a flashlight. If it doesn't happen, then it doesn't matter.

Q: You have always said that the RMB will continue to appreciate much more in the long term. So the 3% depreciation of the Chinese currency this year is only a temporary adjustment, right?

A: The market has 3%, 13%, 23% correction all the time. So it's good that the Chinese currency is starting to fluctuate. That's how the markets work. If it's only going up, it's artificial.

Q: Have you invested in virtual currencies like Bitcoin?

A: No,

In this episode of China Money Podcast, guest Bing Lin, portfolio manager at Hong Kong-based US$1.4 billion-under-management Keywise Capital Management, speaks to our host Nina Xiang about why he believes there are still many major overseas listed Chinese companies with fraudulent accounting practices, and how 2014 will be a great year for shorting certain overseas-listed Chinese stocks.

Read an excerpt below, but be sure to listen to the full interview in audio, or watch an abbreviated video version. Don't forget to subscribe to the podcast for free in the iTunes store.

Q: China announced plans to launch a Shanghai-Hong Kong stock connect pilot program in six months. How will this impact hedge funds investing in the Greater China region?

A: In general, I think it's good news. We will see the valuation gap among large cap stocks between the two stock exchanges close up.

Also, for some small- and mid-cap stocks listed in Hong Kong, their valuation might increase. While for some domestic Chinese small- and mid-cap stocks, they will see negative impact because of their relatively high valuation.

Q: We did see the Hang Seng China AH Premium Index, a measure of the valuation gap between the A-share and H-share market, rise to 95 on the news. That's very close to the 100 level that signals parity between Shanghai and Hong Kong listed shares. What type of trading opportunities does this create for hedge funds before the program's official launch in about six months?

A: We are buying high quality names (based on fundamental research). For example, there are many small- and medium-sized companies listed in Hong Kong that are generating earning growth of 20% to 30% year after year.

But they are traded at single digit multiples. The reasons are that there is little (research) coverage on these stocks, and big institutional investors and local Hong Kong investors tend to buy mostly big-name stocks.

In China, the small- and mid-cap stocks are trading around 30 to 40, over even higher, multiples. So with the current regulatory change, we think it will serve as a catalyst for value to be realized.

Q: The Shanghai Composite is valued at 7.6 times 12-month projected earnings, compared with five-year average multiple of 12.1. Do you see the market sentiment turning any time soon?

A: The Chinese macro environment is weak, and the stock market is undervalued. But it's hard to time the market. If the macro issues in the Chinese economy, including bad loans in the banking sector, risks in shadow banking, over-supplies in the property market, are dealt with, they might provide catalysts for the stock market to turn around.

Q: Now let's talk about Keywise Capital. Give us a brief introduction of the firm?

A: We are a Hong Kong-based hedge fund with US$1.4 billion under management. Our strategy is long-short equities. We typically buy high quality names at reasonable prices, and short those with broken business model or accounting fraud in the Greater China region.

Q: A short position Keywise engaged in was China Metal Recycling Holdings, which has been wound up because of accounting fraud. Do you still see many opportunities to short Chinese companies based on accounting fraud?

A: Based on my experience and observation, I think there is still widespread accounting abuse among listed (Chinese) companies, even some large ones.

There are no strong forces in Asia, in general, to go against those companies. Due to culture issues and regulatory framework, hedge funds here have not been aggressive in pursuing those opportunities.

Q: What type of accounting abuse is there?

A: For example, revenue recognition. We are seeing some companies booking revenue on a gross revenue basis, which will massively inflate their revenue.

A lot of companies also have unfair related party transactions, such as acquisitions. They may be paying inflated price to a small business,

In this episode of China Money Podcast, we feature guest Theodore Shou, chief investment officer at Cape Town, South Africa-based fund of hedge fund manager, Skybound Capital.

Shou talked with our host Nina Xiang about his projections for the development of China's hedge fund sector, why he is bullish for China-focused hedge funds' ability to continue to outperform global peers, and why fund-of-funds in emerging markets will remain relevant for limited partners for a long time.

Read an excerpt below, but be sure to listen to the full interview in audio, or watch an abbreviated video version. Don't forget to subscribe to the podcast for free in the iTunes store.

Q: What do you think are some new exciting policy initiatives in China that will spur the growth of the hedge fund sector here?

A: One is the Qualified Domestic Limited Partners (QDLP) scheme that Shanghai initiated about one and half years ago. But it's progressing behind expectations. There are six global hedge fund managers who have been granted the QDLP quota.

Also, fifty onshore domestic hedge fund managers are registered with the Asset Management Association of China (AMAC) last week. This is probably the first time that the Chinese regulators are recognizing private collective investment schemes. Previously, it was mostly long-only mutual funds who are recognized.

Going forward, I would expect most of the relatively big hedge funds to register with AMAC. Some of the smaller funds will choose not to register, so there will be sort of a differentiation between fund managers.

Q: Why do you think the QDLP scheme hasn't progressed as well as expected?

A: I think the largest drawback is the lack of transparency from the regulators. The QDLP program was launched some time ago for private equity funds. The rules relating to private equity funds were made clear almost on day one.

But when it comes to hedge funds, the effort was mainly led by the Shanghai Municipal Office of Finance Service. It's not at the central government level. No official rules have been laid out by any regulators, and you can't see the name of the six global hedge funds on any official website.

As to the six global hedge funds, they have been very quiet regarding their fundraising activities. From other sources of information, I learnt that the Shanghai government is encouraging and facilitating them to raise capital. But the actual situation is very opaque to the outside.

Q: What kind of new financial instruments do you think will be launched soon to facilitate hedging strategies?

A: In the past few years, we've seen the launch of stock index futures, which allow hedge funds to short the market. More recently, China introduced a pool of single equities that are available for shorting. This pool works very much like a central clearing mechanism, making it easier to monitor and track stock borrowings. That pool has been growing to cover more than 500 stocks.

I think single stock options will be launched this year. There are already warrants to retail investors now. Why not introduce better structure instruments for institutional investors.

Another key development will be more relevant to large cap and blue chip names. Currently stock trading is settled on T+1 basis, meaning that stocks you buy today will only be settled tomorrow. This year, we think the Chinese exchanges are likely to begin settling trades on a T+0 basis, at least for the top 500 stocks. This will improve the turnover of hedge funds' books.

Q: In 2013, China-focused hedge funds outperformed the Hang Seng Index, returning 16.1% on average compared to the index' 0.1% performance. China-focused hedge funds also outperformed global peers. Is this a one-time occurrence?

A: Not at all. I think this is a natural outcome from the developments of the Chinese markets and its macro economy. Nowadays, investors are flooded with negative news on China: concerns of a financial crisis,

In this episode of China Money Podcast, our featured guest is Goodwin Gaw, managing principal and founder of Hong Kong-based private real estate management firm, Gaw Capital Partners, which manages US$7.5 billion.

Gaw talked with our host, Nina Xiang, about where in the Chinese property market he sees price corrections this year, why his firm is staying on the sidelines investing in Hong Kong, and his thoughts on Gaw Capital's performance.

Read an excerpt below, but be sure to listen to the full interview in audio, or watch an abbreviated video version. Don't forget to subscribe to the podcast for free in the iTunes store.

Q: Are you concerned about the recent market jitters on the financial health of Chinese property developers?

A: In China, you have to go along with the government policy. The government policy now is actually to promote steady growth in the housing sector. Every time when the market goes up too much, the government puts the brakes on.

We are in this type of situation where the government is trying to take away excessive liquidity in the market, so that the (housing) prices may correct or slow down. There will be tightening in some of the developers' finances. It's actually a good opportunity for us to put capital to work in China.

Q: How big will this type of distressed opportunity be?

A: I think it could be quite big. This new government has strong resolution to change the economy structurally, which will create volatility in the market. Particularly in high-end homes in tier I cities where there are a lot of speculative investments, meaningful correction should take place.

Q: How big a correction?

A: For some of the high-end residential projects in Beijing and Shanghai, a correction of 10% is probably not excessive.

I'm less concerned about residential properties in tier II or tier III cities because they are still experiencing high growth. The government policy there is to encourage more supply and better housing to meet housing demand.

Q: But you believe that's where troubles in commercial property might be?

A: Yes. There have been massive investments in shopping centers and office space in a lot of these tier II and tier III cities.

The problem is that these cities are populated more by domestic companies, private entrepreneurs and state-owned enterprises. They historically would rather own their property than rent. So it's harder to build investment grade asset and fill them with enough multinational companies.

Q: Any predictions here about the scale of price corrections?

A: I would say for the big tier II cities like Chengdu and Nanjing, correction is less. But a 10% to 15% correction is not out of the question in the next five years.

(The bigger concern) is the retail property sector in certain cities like Shenyang. I've never seen so many shopping centers in one city. On top of that, Chinese consumers are quickly adopting e-commerce. As a result, there might be a shake up for these type of properties.

Q: With your projections in mind, what kind of impact will they have on Chinese banks?

A: It may be a little bump. Remember, China is a closed system. Municipal debt is central government debt. Banks are state-owned. Banks lend mostly to SOEs. So it's almost a test of the will of the central government. Do they want someone to fail? As a private businessman, you have to take a bet on the government's resolve.

Q: Your bet is that this government will let default happen?

A: If they believe it's not contagious, they will probably let some small firms fail. Just to set an example that they are not going to protect everyone. That's purely my own guess.

Q: For Hong Kong's property market, do you agree with the mainstream projection that a correction is coming this year?

A: Hong Kong's low tax environment, as well as it's currency being pegged to the U.S. dollar and the high-growth economy of mainland China,

In this episode of China Money Podcast, we feature guest Kevin Parker, CEO of New York-based investment management firm, Sustainable Insight Capital Management. From 2004 to 2012, Parker was the global head of Deutsche Asset Management, which managed US$750 billion as of January 2012.

Parker shares his thoughts on the growth of sustainable investing, explains why China is setting the global environmental policy this year, and how China is likely to lower the cost of electric vehicle productions going forward.

Read an excerpt below, but be sure to listen to the full interview in audio, or watch an abbreviated video version. Don't forget to subscribe to the podcast for free in the iTunes store.

Q: Let's start with something fun. You own and have run a bio-dynamic winery in Southern France called Chateau Maris Cru starting from the late 1990s. What's the best and the most difficult part about running your own winery?

A: The best part is drinking (the wine), of course. After a career on Wall Street with a telephone in one hand and sitting in front of a computer and moving money around, (it's nice) to make something tangible. Something that people can taste, feel and enjoy.

(Our) winery has been bio-dynamic, or organic, for 17 years. Being a sustainable farmer for 17 years gives me certain credibility (to discuss sustainability issues). But it takes about seven years to convert a vineyard away from the use of pesticides, fungicides and synthetic chemicals to a completely natural approach. You see that the soils really come alive. Being a New Yorker and naturally impatient, it taught me something about time and patience.

Q: You left Deutsche Bank at 2012, and Sustainable Insight Capital Management (SICM) started operation in February 2013. Tell us some background of your company?

A: Back in the early 2000s, many organizations such as the Carbon Disclosure Project, Investor Network Against Climate Risk, popped up to focus on sustainability. Today, there are signatories representing over US$90 trillion that have signed the carbon disclosure principles. There are almost US$40 trillion who have signed the United Nations' principles for responsible investing.

Our research shows that managements who are focused on sustainability outperform their peers (financially). But markets are inefficient and are not accurately pricing this factor. Therefore, SICM was founded to capitalize on this opportunity. We believe that the reallocation of capital based on sustainability principles is the only powerful source large enough to solve our environmental problems.

We are an asset management business with the backing of two prominent investors in the sustainable investing field. One is The Kresge Foundation; the other is a family office from Palo Alto, California. Currently we have about US$120 million under management.

Q: Is it a traditional asset management business?

A: At the moment, it is. But on our list of things to do is to introduce alternative (investment funds) as well.

Q: Your firm just published a report, in which it forecasts that China is going to set the pace of environmental policy this year. How?

A: I think China has been underestimated in terms of the (impact) of its environmental policy. China has created enormous problem for itself. In the theory of the tragedy of the commons, one of the players has to realize that the path they are on leads to their own destruction. Because China has the biggest problem, it leads to a necessity of leadership.

Q: And China is investing a huge amount right now. During the 12th Five-Year Plan, the environmental protection sector in China is going to reach RMB5 trillion in market size, and it will grow at about 15% to 20% a year. Are these reasonable projections?

A: We haven't looked at China specifically. But globally, it is around US$1 trillion a year (of investments in this sector) required. But during the last several years,