Chinese stocks just erased over four years of gains, as foreign investors are running away from them as fast as possible.
China emerged onto the world stage in the 1970s by opening up their country to foreign businesses. Over the past half-century, we’ve witnessed double-digit economic growth, led by the dramatic expansion of their middle class.
But that growth appears to be waning, and there may be several reasons. I’ll quickly touch on three.
It all leads me back to the fact that Chinese stocks are getting thoroughly gutted. Don’t think the Chinese government hasn’t noticed. To help prop up their foundering stock market, the Chinese state fund announced they’ve been buying up exchange-traded funds and will continue to do so. The last time they purchased their ETFs was during China’s 2015 market crash. They must know something’s up, and it isn’t their stock markets.
Their dictator, Xi Jinping, just made his first-ever visit to China’s central bank, along with the People’s Bank of China and the State Administration of Foreign Exchange, and the nation’s sovereign wealth fund, trying to shore up confidence in his country’s market. He hasn’t visited those places in the ten years he’s held office, and suddenly he has a hankering to press some flesh at all four offices within a few days? Hmmm.
Discretion and secrecy surround China and Chinese companies, and all earnings reports, press releases, and articles, especially puff pieces, must be taken with a big grain of salt. But prices don’t lie, and the drop in Chinese stock prices the past few years, and more importantly, the past few months, has me running from them as fast as I can, maybe for good.
If you are concerned about stock performance or want more information about how Good Life Asset Strategies can help you create a portfolio that aligns with your investment goals, schedule a free 30-minute consultation.
The views expressed represent the opinion of Good Life Asset Strategies, LLC. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness.
Schedule a complimentary 30-minute consultation.