fawnpass

Shares Could Be Signaling an Upward Turn for Chinese Economy

My advice is just the opposite of stay diversified regarding China. Certain Chinese sectors will rebound even as others languish and suffer. Do your due dilligence and if you are confident in your analysis, put your eggs in the basket you believe is strong.


On Feb 06 04:37 PM myWealth.com wrote:

> It's very hard for the average individual to invest in Chinese individual
> stocks and know what they are getting into. I'd suggest sticking
> with CAF (the ETF) or another ETF (seekingalpha.com/symbo...).
> My preference is the former.
>
> I'd always stay diverse in China and never isolate my money to their
> individual stocks or even just one sector over there...since people
> have such a hard time getting data from outside of China.
>
> Until they develop further and also have less controls on information,
> I'd stick to that game plan of ETF investing in China.
>
> You might ask a broker like Interactive Brokers that deals in so
> many international markets how to invest in their auto industry.
> But I'd never suggest doing so. Stay broad and diverse.

Opportunity to Sell Into China's Illusory Stimulus Package

This author, it seems, can't see the forest through the trees. He is correct in saying that the stimulus package is largely illusury, but his conclusion is faulty. The stimulus package is illusury in the sense that many of these projects, as the author stated, are already works in the pipeline. So, in essence, the Chinese government has labeled infrastructure projects that have already been planned as stimulus. This functions to reassure the world that the Chinese government will continue to invest large amounts of money on future growth even amidst a current downturn of manufacturing. It also serves to reassure investors in the chinese stock market, supporting the index. You must also keep in mind that as governments around the world infuse money into systems where large amounts of "paper" capital have vanished, in order to insure ongoing operations, the Chinese government's money spent is going into real concrete products, that will serve to create even more capital in the future.
Of course, short term rallies will offer opportunity for profit taking in such a volatile market, on this point the author is also correct. However, it would also be wise to take a long term investment position as well as a trading position in China at this time.