There is hope for China equities

dchua1969 Updated   
BATS:FXI   iShares China Large-Cap ETF
One of the most hated market currently and some called it uninvestable, the China market has plunged more than 60% from its peak. We are now at an inflection point again, reaching the upper side of the decreasing channel.

I believe the property market will take some years to recover , with excess supplies to clear and consumers continuing to adopt a wait and see approach in buying as prices continue to fall......

Probably, 2nd to 3rd Quarter of this year , will we be able to see some recovery. Currently , it is still weak although the government has injected billions of dollars to shore up the stock market, clamping down on short sellers, etc.

Prices can continue to tumble even if it breaks out of the channel as the stimulus is not strong to begin with and consumer confidence has not returned to the market. Job market remains soft in China and people are tightening their wallet to spend unnecessarily. With no additional stimulus from the government, people are using their own savings to continue travel and do their shopping but at a more cautious approach.

So long as the US interest rates remain high at 5 over % , the international players would continue to support the US market which makes business sense.

Time is of essence as people who invest in S&P 500 index can easily gain 8-10% profits a year so there is no reason to park funds into China equities even it is undervalued and the downside is very little. Nobody can tell for sure how long this will last as it can go sideways for a long time. Those who knows how to stock pick individual China shares may benefit from certain themes which I have covered some months ago like Travel sectors.
Nice, it has finally broke out of the bearish channel with a nice bullish candle. Time to accumulate slowly......
It is said that the President Xi is beginning to realise that the economy is not moving to the direction he expected or how deep the underlying fundamental issues like the property sector has drag down the entire economy. Loans are at all time low and corporates are not biting the bait to take up more loans , thus lesser R&D, hiring , resulting in lesser wages increment, lean team (more firing, lesser vacancy), consumers tightening belt even more (spending on necessity) and save more for rainy days. The inclination to invest in the stock market is not as strong and it will take time ......

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