How the Chinese Market has Quietly Risen

[Chinese Dragon]

The question of whether to invest in China is one that engenders many polarizing opinions. For every bull out there arguing in favor of a rebound in the Chinese economy and stock market, there are an equal (perhaps greater) number of bears proclaiming that China’s economic data cannot be trusted and that the country is destined for a massive debt explosion that will end up crushing the global economy.

Without getting into every detail of the bull vs. bear debate on China, I will say that I think that there are good points to be made on both sides. In the bull camp, China is unquestionably the second-largest economy in the world, with a burgeoning domestic middle class that has a voracious appetite for all sorts of consumer goods literally from around the world. In the bear camp, China has done a lot of infrastructure building, such as those infamous “ghost towns” where much of the real estate still waits for occupants.

For now, however, let’s put the pro and con arguments aside and look at something that gives us a more objective take on China, i.e., let’s take a look at the price chart of the biggest stocks in the Chinese equity market, the iShares FTSE China 25 Index Fund (FXI).

FXI_052814

As you can see, since FXI fell to its March low, the stock has made a relatively quiet liftoff above the 50-day and 200-day moving averages not once, but twice. A late-March surge in China’s benchmark index saw FXI blast above the short- and long-term trend line, but that surge failed to hold in April.

Exclusive  ETF Talk: The Philippine Tiger Cub with a Roar

This month, however, stocks in China have been on a concerted uptrend, blasting past the 50-day and 200-day averages again. The logical question now is will this uptrend remain in place, or will this proxy for the China equity market fake us out again?

I suspect that given the recent improvements we’ve seen in China’s PMI metrics (the closely watched HSBC China Manufacturing Purchasing Managers’ Index came in at 49.7, well above estimates for just 48.3), coupled with the latest buying in other China-based ETFs besides FXI, that the short-term answer is that the gains in China will continue.

This thesis is one of the reasons why we have exposure to China in some of our newsletter advisory service portfolios. If you’d like to find out just how to take advantage of the quiet China liftoff, then I invite you to check out my Successful ETF Investing newsletter right now.

Thoughts on Defeat

“We may encounter many defeats but we must not be defeated.”

–Maya Angelou

The American poet and writer served up some great slices of wisdom during her life, but the wisdom in the above quote is one of her best. It reminds us that no matter how tough the struggle, we win if we remain undaunted.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Making Money Alert readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

Exclusive  Why China May Be Ripe for a Rebound

In case you missed it, I encourage you to read my e-letter column from last week about how global exchange-traded funds compare to domestic ones. I also invite you to comment in the space provided below.

Like This Article?
Now Get Doug's FREE Special Report:
The New Gold Rush of 2016-2017

With gold already up 20% in 2016, one of the best market timers in the business sees even bigger things ahead. His free special report will show you how to play the coming “gold rush” for serious profits.

Get Access to the Report, 100% FREE


img
previous article

The Indian market’s recent rise has propelled India into the ranks of the 10 largest global stock markets in the world.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen publishes 4 different investment newsletter advisories, including the award-winning Forecasts & Strategies, which has beaten the market over the last 15 years.

Product Details

  • Forecasts & Strategies
  • Skousen High Income Alert
  • Fast Money Alert
  • Five Star Trader
About Mark Skousen

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays. Bryan's four newsletter and trading services include:

Product Details

  • Cash Machine
  • Premium Income (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Instant Income Trader
About Bryan Perry

Nicholas Vardy

A Stanford and Harvard Law graduate, Nicholas Vardy scours over 40 different global markets every day to uncover new profit opportunities for subscribers. His 3 advisories and trading services include:

Product Details

  • The Alpha Investor Letter
  • Bull Market Alert
  • Alpha Algorithm
About Nicholas Vardy

Doug Fabian

A 30-year Wall Street veteran and famed market timer, Doug Fabian is one the nation's foremost experts on ETFs (Exchange Traded Funds). His two ETF-focused advisories include:

Product Details

  • Successful ETF Investing
  • ETF Trader's Edge
About Doug Fabian

Bob Carlson

In Bob's monthly newsletter, Retirement Watch, he provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

ABOUT BOB CARLSON

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research. Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

Product Details

ABOUT DIVIDENDINVESTOR.COM