While Waiting For U.S. Correction, Try These China Names
Summary
- U.S. will be correcting soon.
- But opportunities abound outside U.S.
- Today we are putting on these position trades in Chinese companies.
January 20, 2021
We are expecting some form of market pull-back in the coming days or weeks. Over the recent few years, the period from end January to April has been problematic. Obviously last year we had Covid. In 2019, markets were fine because we got a big sell-off in December 2018. In 2018 we had a major drop in the S&P 500 both at the end of January and the end of March. 2017 was fine, but this was coming off the pre-election low of 2016. In January to March of 2016, we got a -12% correction. And so forth. Bottom line, we are not going to be looking aggressively for new positions, but we continue to run the models and look for “one-offs”.
Today we did find a stock that we’d buy right now: PetroChina.
Fundamentals are excellent:
And the chart is compelling:
We’ll load up BOTH the Natural Resources strategy and QES strategy with PTR. We need more Energy exposure in both strategies.
Another stock that we really like is Sinopharm.
Fundamentals: check
Chart: check
We’ll put Sinopharm in the QES. The ADR (OTCPK:SHTDY) is liquid enough for a position trade.
Another China phama, Shanghai Pharma, looks very similar: great fundamental score and price chart re-accelerating from lows.
The ADR is less liquid, but we’ll look at the bid/ask on the open and make a decision to add this one as well to the QES. The shares in Hong Kong are super-liquid, but in our QES Master Account at Interactive Advisors, we cannot buy the foreign shares.
A third stock we’ll buy pre-correction is WH Group.
WH’s chart is in the lower-mid portion of a stable multi-year range:
We’ll add this Staple to the QES via the WHGLY. The 4.5% dividend paid semi-annually is enticing.
Still on the China theme, we will add two transportation stocks. This is a “Covid is so overpriced” trade.
Guangshen Railway is C-H-E-A-P.
The chart is more hopeful than a typical wipe-out stock chart because we now see the rising bottoms on the oscillators.
Guangshen Railway’s ADR (OTCPK:GSHHY) will be our choice, even if we have to pay the bid/ask.
The other transportation stock is China Southern Airlines. Price is holding above a rising 200-day MA.
The fundamental numbers look good:
We have a 3rd China transportation stock that we recommend buying for accounts that take HKD. We just bought in our company trading account Shenzen Expressway :
The ADR was de-listed, but the 0548.HK trades well.
Again, for trading on Hong Kong, we’ll also be buying this utility:
A final China stock is Huaneng Power, which is a Value stock. The dividend paid is questionable because of a Payout ratio above 100% (hence the Strong Sell on Yield Rating).
The chart of Huaneng is hopeful, with price cracking above the 200-day MA. The shares trade on the U.S.
Otherwise, we are noting daily signals of Watch List in our Excel real-time sheet. In the event of a pull-back on no news (thus likely small), we’ll use some of these names in our portfolios.
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