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FXI- New Lows As China Deteriorates

Oct. 04, 2021 12:06 PM ETiShares China Large-Cap ETF (FXI)4 Comments


  • President Xi has China on a long-term path for global dominance, rejecting US leadership in the worldwide economy.
  • Evergrande is a Chinese property company defaulting on debt. China will most likely not let Evergrande go down. Debt and equity holders could find themselves out in the cold with worthless investments.
  • China looks long-term while the US and Europe take a quarter-to-quarter approach to economic growth- Immediate gratification versus the long view has been the core for Chinese success.
  • FXI is an ETF that holds the leading Chinese stocks. The share performance may not match the company performance as the regime in Beijing is the ultimate CEO suite.
  • We remain short the FXI in the APS portfolio as the trend has not changed.

USA against China Trade War and Sanctions

da-kuk/E+ via Getty Images

Chinese stocks have been under siege since mid-February 2017. Markets reflect the political and economic landscape, which has been bearish for Chinese stocks that trade on the US stock market. The latest all-time peak in the leading US

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Andy Hecht and Todd "Bubba" Horwitz are partners at Bubba Trading. 

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Analyst’s Disclosure: I/we have a beneficial short position in the shares of FXI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (4)

Barron's this weekend ran an article on an interview with an Invesco PM , Justin Leverenz, who is long term bullish on China. His argument is more (CCP) regulation is actually positive for the cash flows of large Chinese companies because of less "destructive competition", i.e. more focus on profits. Interesting take. He's probably a really smart guy. Given Xi and the CCP, investing in China would seem to not make much sense right now. Can capitalism thrive in a totalitarian state? History has shown it cannot. I wonder, though, if China will eventually find a way to make a form of "capitalism" work in its totalitarian state.
@truckster I don't know. China owns a lot of USA government debt. The USA is in debt, but China has a trade surplus. The problems of one company hardly effects a whole countries economy.
Its down a lot; maybe time to start accumulating?
How far off can it be? The Hang Seng is only 10% higher than its' five year low.
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