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Viewing entries tagged with 'Shanghai Composite Index'
China - are Chinese stocks now super cheap?
All
China growth this year is forecast to slip to about 7.7% before bouncing back into the 8% range next year depending on who you listen to, rates of growth that are just incredible for anywhere else in the world.(see…IMF Forecasts China Real GDP To Grow 7.8% in 2012, 8.2% in 2013. The World Bank forecasts growth in China’s economy this year is 7.7 per cent, and rebound in 2013 to 8.1 per cent.)
The RBA, who have about as much skin in the China game as anyone, continue to see demand from China staying (relatively) strong for another decade. As such the recent weakness in China related commodities is likely to have been largely an inventory cleanout rather than the end of an era.
Further, the Chinese authorities are already deploying substantial stimulus measures and have vast resources at their disposal in the form of $3 trillion plus in FX reserves.
Chinese stocks have been falling since the Shanghai Composite Index topped out at 6000 around 5 years ago. Today, Chinese equities are the cheapest in 15 years on an inflation adjusted basis.
Technically there is massive ‘bullish divergence’ on the medium term charts with the run down over the last 6 months not confirmed by the MACD momentum studies.
Fig 1 – Note the clear bullish divergence of the MACD momentum indicator
China Stocks – click here to view chart
Fig 2 – a Longer term perspective. China has been growing at 8-11% for the last 5 years and their stock market is 1/3rd of the price it was. Really?
China Stocks a longer term perspective – click here to view chart
There are numerous ways of capturing the China story via your BBY Online platform from individual companies lasted on various exhanges around the world to ETF’s that look to replicate/exceed the main index.
Regards G.
