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INVESTMENT: Chinese Stocks Finally Look to Rebound
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Chinese Stocks Finally Look to Rebound
By Anthony

BT 201710 INVESTMENT 04      近期,股市“意见领袖”如高盛与摩根大通对美国、日本等发达国家的股市评估有所改变,不少分析人士认为年初时大家高估了美国股市的“牛市”前景,一些新兴市场如印度、菲律宾等国家的股市也同样被高估。那么大家在投资国际股市时当如何着手呢?投资国际股票最方便的方式之一是通过ETF。ETF又称“交易型开放式指数证券投资基金”,简称“交易型开放式指数基金”,又称“交易所交易基金”,是一种跟踪“标的指数”变化、且在证券交易所上市交易的基金。ETF属于开放式基金的一种特殊类型,在交易方式上结合了封闭式基金和开放式基金的交易特点,既可以在交易所买卖交易,也可以进行申购、赎回。ETF最大的作用在于投资者可以借助这个金融产品具备的指数期货、商品期货的特性套利操作,有助于提高股市的成交量。

      回看中国市场,虽然中国经济出现冷却迹象,但是中国大陆的股票从2015年以来表现优于公司债券。另外,中国正在准备10多年来的首次美元主权债券发行交易,规模20亿美元,,业内人士称,投行正纷纷寻求参与该交易;金融市场依然看涨。

BT 201710 INVESTMENT 02It seems that the general consensus surrounding global equity markets appears to have significantly shifted over since the beginning of the year. Analysts are finally asserting that perhaps the US stock market is too overvalued and even those who believe US equities will continue in the bull market, such as equity leaders at Goldman Sachs and J.P. Morgan, suggest that they are expensive. So too is the case for Japan, much of Western Europe and other developed economies. This even includes some emerging markets like the Philippines, Indonesia and India. Individual reasons surround each country’s individual overvaluation when it comes to price to earnings ratios.
 

However, no longer is the case for Chinese equities which have borne much of the geopolitical risk surrounding North Korea’s recently flouting of global international security norms. Analysts over at Seeking Alpha have confidently claimed that Chinese equities are being sold at a significant discount as compared to other major global indices.
 

But how could one capitalize on the recent advantage Chinese equities are poised to enjoy? One of the most convenient ways to invest in international equities is through targeted ETFs. ETFs are relatively tax efficient and are liquid. Unlike open-end mutual funds, ETFs trade during the day at a price determined at the time of the trade rather than at market close (at a price unknown at the time that the trade is made). Also, unlike most equity Closed-End Funds, ETFs generally trade at "Net Asset Value" (or NAV), or a price very close to NAV.

BT 201710 INVESTMENT 03In some foreign markets, there are legal limits that prevent typical retail investors from owning some shares or some types of shares. ETFs generally offer investors an avenue for exposure to these investments. One leading ETF that offers exposure to Chinese equities is the Deutsche X-trackers MSCI All China Equity ETF (CN). CN is a smaller ETF with $10.5 million in assets that offers investors exposure to a diverse set of stocks in the Chinese economy.
 

While Chinese growth has taken quite a hit this month and various individuals in the chattering class point to imbalances that are firmly established and long-lasting in the Chinese economy, economic growth in China is still relatively higher than in the United States. Just this month, China announced gross domestic product growth of 6.7%, up from 6.5% in the first quarter. With about 15% of worldwide GDP, China now accounts for one-third of global economic growth - more than the US, Japan, and Europe combined.
 

Chinese stock markets have a bewildering set of share types and classes and foreign investors are generally restricted from owning A-shares. CN offers exposure to A-Shares. In fact, CN's largest single position (36.3%) is Deutsche X-trackers Harvest CSI 300 China A-Shares (NYSEARCA:ASHR), which is another Deutsche Bank ETF which owns A-shares in the Chinese market.
 

BT 201710 Investment 01The Chinese stock market has been part of the success story of the economic policy engineered by the government. A dramatic decline in share prices denominated in local currency might provoke political unrest so the government would take aggressive action to limit any sharp downturn. In the short to intermediate term, this dynamic is probably a plus because it protects against a large correction. In the long term, a market artificially levitated by government action does raise some troubling issues. Investors in CN should continue to follow developments in China closely.
 

After reaching an all-time high of 6,124.044 points on October 16th, 2007, the benchmark Shanghai Composite Index ended down at a record 65% mainly due to the impact of the global financial crisis which started in mid-2008. The index never fully recovered. With most global markets reaching new all-time highs month-after-month during 2017, most notably markets in America and in Europe, the Shanghai composite index is still very far from reaching new highs.
 

China’s economy may be showing signs of cooling off, but in financial markets the signals are still decidedly bullish. Stocks traded in mainland China are outperforming corporate bonds by a wide margin since 2015 when it comes to yield, as investors bet economic momentum will bolster company earnings, while Beijing’s deleveraging drive continues to dog debt.
 

Central bank efforts to keep liquidity tight - part of its wider push to tame credit growth - are being primarily felt in the bond market, with a gauge of Chinese sovereign notes set for a fourth straight quarterly drop. The Shanghai Composite Index, meanwhile, seems impervious, on track for its best three months in almost two years. Overall, we may be witnessing the beginning of a bull market in the Middle Kingdom.
 

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