Is it 1982 in China?
Courtesy of Joshua M Brown
This weekend’s must-read comes from Kopin Tan, who left the US last year as part of Barron’s new push to court the burgeoning stock market investor class in China. His timing could not have been better, it turns out, with a massive bull market in Chinese now underway after years of stagnation. Chinese stocks have made us some money over the few months, but the best may be yet to come if there is truly something structural and secular underway…
Now here’s the scariest part: Economists and strategists suggest that this bull market has just begun, as China begins to open its stock markets to global investors. At 4442, the Shanghai Composite Index still is 27% below its 2007 peak of 6092. This means long-term investors with horizons of more than three years may need to hold their noses and look to pullbacks to build their Chinese portfolios.
“Despite the run-up in equity markets, this is just the beginning,” says Helen Zhu, BlackRock’s head of China equities. “Structural-reform progress, rather than cyclicality in economic growth, has played a large part in driving the strong returns, and by reducing the tail risks that have been associated with China.” Chuck Clough, CEO of Clough Capital Partners in Boston, which manages several funds including one focused on China, agrees. He thinks the Chinese are just starting to buy stocks again for the first time in recent years. “China is at the beginning of a big movement from savings toward stock investing,” he says.
Kopin’s article is this weekend’s must-read. Head over at the link below:
