Three Reasons Chinese Stocks Will Soar
Many are worried about China Stocks.
Some find it hard to trust Communist China. Most just hate investing outside of their home country.
This is a mistake because the opportunity in China is massive.
Three Reasons Why:
Potentially a trillion or more U.S. dollars will flow into China A-shares over the next five years, whether Chinese stocks are a good deal or not. Investors who track benchmarks such as Pension funds, Insurance companies, Mutual Funds have to stay within certain investment ranges as the global stock indexes add China A share exposure.
China has a pension problem which is not fully funded to support its aging population. It needs to earn higher returns to catch up with the best place for higher returns being Stocks. Every population has a home country basis and China is no different. These Pension funds will invest heavily into their local stock markets.
Relative to U.S. stocks, Chinese stocks are dirt cheap. The average trades at a 50% discount to U.S. counterparts. The last time this occurred in 2014, Chinese stocks soared 150% in about a year.
Don't miss the opportunity of a lifetime.
The best way to make the investment is the KraneShares Bosera MSCI China A Fund (KBA). It suggest buying during uptrends and protect from losses or lock in gains using trailing stop losses.
Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.
Chinese stocks are definitely trading at a dicsount due to political risk. I have looked at some of the stocks including Tencent, Baidu and China Mobile. Do you have any individual stocks you have looked at?
Tencent is the only individual stock that I have studied and think is attractive at this time. I have not focused much attention on the individual names and instead trying to understand the big picture and benefit with the overall trend.
The problem with a lot of individual Chinese stocks available to U.S. and other International investors is the fact that you are buying ADRs of the Entity listed on the Hong Kong Exchange. The local A Shares are not available internationally and those have a larger discounts verse world stocks. The Fund companies such as Krane have special permission / allocations of the actual A share China stocks which is why I have been focusing on using the ETF instead of individual names.