Investing in China's Falling Stock Market

In a follow-up to my article, A True China Bear, I recommend investors to set their sights on China since there may be tremendous upside in the emerging economy. The Shanghai Composite Index (000001.SS) has fallen to 2868 from a high of 6124, a drop of over 50%. The drop below 2900 marks a new 52-week low.

For the long-term, I’ve written that China may follow and overtake the performance of the Hang Seng Index (HSI).

HSI has returned over 15x times its previous value. As we can see with the HSI chart, these opportunities to invest when the market falls don’t come very frequently. As history has shown the market has always rallied to new highs.

Investors can consider purchasing the Morgan Stanley China A Share Fund, Inc. (CAF) or the iShares FTSE/Xinhua China 25 Index ETF (FXI). CAF and FXI trade closely with the performance of the Shanghai Composite Index.

*Disclaimer: The author does not own a position in any of the stocks above.

Comments

[NOWHEREMAN:]

still falling, no real support anywhere close.

Hang seng might be supported just below 20,000 but the composite has broken down completely, only support appears to be around 2,000.

2008 Jun 17 05:26 AM

[xhtt:]

Chinese domestic investors are considering the shanghai composite index to down further to 2500. However, when every one is expecting the same thing, that is something not happening.

2008 Jun 17 07:52 AM

[User 96391:]

An article with little content and value!!

2008 Jun 17 08:34 AM

[Did U Think...:]

FXI is a mania chart. Think south sea trading company and tulip mania. Manias always end lower than where they started which is about 50 for FXI. Things will get much much worse before they get better but after FXI retraces all the way back to 50 then it will be time to buy it again and abandon most USA stocks until the US decides to start actually manufacturing again in a cost competitive way.

2008 Jun 17 12:39 PM

[David Hunkar:]

Whats the point of this article? Does anyone know?

2008 Jun 17 05:21 PM

[Raw Greed:]

The article is a follow-up to an older article, "A True China Bear". CAF and FXI are prime investments to consider when you believe the Shanghai Composite Index may have reached a bottom.

2008 Jun 18 10:47 AM

[PF Chang:]

I no understand premise of this writing today. No wisdom or value imparted to me. I only know that China make good food products. Tasty.

2008 Jun 19 04:48 PM

[MikeeMike:]

Why do you say that the market is falling. Just take a look at China Energy Recovery (cgyv). This stock is not falling at all. www.youtube.com/watch?...
Do you still think the same, eh?

2008 Sep 30 05:54 AM