Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
To me it's a somewhat troubling situation of a retail-saturated market (I mean, look at the chart of how many accounts were created there recently) where moves one way or the other seem to be exacerbated.
"To get a sense of the frenzy in China’s world-beating equity market, consider this: In a two-week span last month, the rally lured 2.8 million rookie stock pickers, almost the equivalent of Chicago’s entire population.
The number of new equity accounts surged to a record during the two weeks ended March 27, five times the average of the past year, data from China Securities Depository and Clearing Co. showed on Tuesday. About 4 million were opened in March, enough for every person in Los Angeles. More than two-thirds of new investors have never attended or graduated from high school, according to a survey by China’s Southwestern University of Finance and Economics."
Just the numbers of investors piling into these markets as they opened up is mind boggling. These early days are not indicative of how the markets will act once they mature.
To me it seems like the Chinese government was/is trying to push money from the traditional investment of real estate into the stock market, which is/was ultimately I think not a good decision from the standpoint of if you have people investing in real estate it is a lasting, tangible thing that cannot be flipped in two seconds. If you basically take millions of newbs and push them into the stock market for the first time, it's not surprising when the market starts to look like a seismograph during a fairly substantial quake.
Longer-term I'm still very positive on EM and have exposure to EM funds, but I think there are still appealing ways to play EM in the US - I've mentioned Abbott many times, which gets a very large amount of its revenue from EM. "Abbott’s diverse geographic mix is well balanced, with 70% of sales coming outside the United States, surpassing competitors like Johnson & Johnson (NYSE:JNJ). All told, among the large-cap healthcare companies, Abbott Laboratories has one of the largest shares of the emerging markets, on a revenue basis, generating roughly 50% of its revenue from fast-growing geographic regions." (http://investorplace.com/2015/04/abt-stock-abbott-laboratories-labs-emerging-markets/)
@Scott and Bee, these large number of new accounts came from novice investors. The propensity or love of gambling in the world of investing is a bad combination. Not sure if Chinese citizens can invest their $$ outside of China. Beware that the broader EN market indeces have over 20% exposure to China.
Actually the Chinese handle investing the same way as they gamble. If the salesman says that a stock will double its share price within a year or so they will throw all their money at that one stock.
As for real estate, the smart money has left the country and are buying properties in Australia, Canada and the U.S.
Comments
"To get a sense of the frenzy in China’s world-beating equity market, consider this: In a two-week span last month, the rally lured 2.8 million rookie stock pickers, almost the equivalent of Chicago’s entire population.
The number of new equity accounts surged to a record during the two weeks ended March 27, five times the average of the past year, data from China Securities Depository and Clearing Co. showed on Tuesday. About 4 million were opened in
March, enough for every person in Los Angeles. More than two-thirds of new investors have never attended or graduated from high school, according to a survey by China’s Southwestern University of Finance and Economics."
http://www.zerohedge.com/news/2015-04-01/chinese-retail-investors-open-enough-brokerage-accounts-march-every-man-woman-and-ch
Regards,
Ted
http://www.bloomberg.com/news/articles/2015-06-26/the-loudest-voice-in-china-s-stock-market-is-changing-its-tune
Regards,
Ted
Longer-term I'm still very positive on EM and have exposure to EM funds, but I think there are still appealing ways to play EM in the US - I've mentioned Abbott many times, which gets a very large amount of its revenue from EM. "Abbott’s diverse geographic mix is well balanced, with 70% of sales coming outside the United States, surpassing competitors like Johnson & Johnson (NYSE:JNJ). All told, among the large-cap healthcare companies, Abbott Laboratories has one of the largest shares of the emerging markets, on a revenue basis, generating roughly 50% of its revenue from fast-growing geographic regions." (http://investorplace.com/2015/04/abt-stock-abbott-laboratories-labs-emerging-markets/)
I like Mathews Funds when it come to rolling the dice in Asia.
As for real estate, the smart money has left the country and are buying properties in Australia, Canada and the U.S.