Don't believe the hype. China is full of skeletons. The backbone (factories) of the economy are wondering abroad. Consumers saving rather than spending. Shrinking population. Construction sector is a house of cards that still hasn't fully collapsed yet (artificially being held up). Debt at local government level is much too high (the recent help they got is not enough). Wages rose too fast (not sustainable). |
Gustav Rhenman: This is why China will return 15-20% in 2025
Elite Investor Gustav Rhenman tells Citywire Elite Companies that fears about a global tariff war are overblown and why he expects China to deliver strong returns this year. |
The clue is in "out of favour"More will become clear soon. Just be patient. |
Not specifically related to FCSS but a short clip of why the fund manager of the Fidelity Asian Values fund favours China over India essentially because India is very much in favour at the moment and China is out of favour with the forward PE's in India 3.5 times the amount in China and he currently sees much more value in China than in India or Taiwan. |
Any China fund without stamp duty in uk ? |
https://x.com/business/status/1854800254278729900?s=46BREAKING: China approves a $839 billion program to refinance local government debt to support the economy |
China pumped on usa election result. Nearly 5% gain on main index |
With the second most inverted yield curve compared to any other meaningful country (only beaten by Germany, the sick man of Europe) and the 10 year yield at barely over 2% ... Things should be very clear. Bond markets would collapse (and yields would rise) and the yield curve inversion would unwind if there was any chance of China getting itself out of this mess anytime soon. (Always trust the bond markets view more than that of the gullible and hopeful stock market). |
 If China don't step in and do some serious fiscal stimulus things will get much worse. Relying on a central bank to bail out the economy will not work in the situation that China is in. And handouts and tax cuts won't work (they will be just used to pay off debts - which doesn't stimulate or grow an economy). The government needs to ensure that that all these uncompleted apartments are finished and sold (unlikely to happen). Fiscal stimulus 1..And the central bank needs to take over the debts from all the heavily indebted local governments to allow them to continue to spend (like they were before). This will take ages to happen. Fiscal stimulus 2. PS Had the local governments not been spending heavily China would have been in trouble since 2016 (but local government spending delayed the collapse and camouflaged the problems that were already there).And the biggest threat is if the USA adopt a weak usd policy (which it will probably be forced into soon). And due to China running already a huge trade surplus - there is going to be (there already is) huge opposition to China exporting it's way out of trouble. And the emerging economies that China might be able to sell a few cheap EV's and TV's to won't fill enough of the gap. Consumers and companies paying off debt (rather than spending). Bad for GDP (if too many are doing this at the same time - which is what's happening). Lending is collapsing..Plus factories are moving out of China (to move to cheaper countries). Another gdp drain.The conclusion is simple: Things are very ugly. Hold Chinese stocks at your own risk, |
Ruffer ups China: ‘This could be just the start’
Portfolio managers Duncan MacInnes and Jasmine Yeo lifted exposure to China to 10% last month, reflecting growing confidence in the local recovery and cheap valuations. |
https://www.cmegroup.com/insights/economic-research/2024/can-chinas-stimulus-boost-commodities-like-in-2009.html |
https://x.com/mayhem4markets/status/1845823585908105597?s=46? |
"Trust Watch: A great China bargain if Beijing fires its bazooka again
Discounts widen across the sector with the biggest and best China investment trust trading on an unusually large margin below asset value despite the recent Beijing bounce.
...
‘Cheap’ Fidelity China
With Chinese officials reportedly set tomorrow to spell out the next wave of economic stmulus to pull China out of its post-Covid slump, the sight of Fidelity China Special Situations (FCSS), the biggest and most liquid of the three listed China funds, atop our ‘cheap’ list on a 16% discount and 4.3 Z-score is intriguing.
Down 25% over three years, shares in the Dale Nicholls managed trust have actually taken less of a hammering than its two rivals and have provided the strongest 10-year return of 127% under the manager that trounces the 72.5% gain of the MSCI China index.
Should the recent raft of measures by Beijing prove a turnaround, then this could be a good time to buy a cheap market through a cheap trust.
Some context on the Numis figures though, which on our last two tables are at Thursday’s close as normal.
Fidelity China’s discount is calculated with the 221.5p closing share price compared against the broker’s estimate of NAV per share of 264.3p, not the 258p NAV published by the trust yesterday. Using the latter reduces the discount slightly to 14%, still significantly wider than the 9.9% average of the past year so still ‘cheap’." |
The article concludes: -
"But the country still accounts for 19 per cent of the global economy, and for some investors it may simply be too big to ignore. FCSS investors certainly own an asset that is markedly different from a simple Chinese stock tracker, with unlisted businesses, chunky gearing, and a range of different market caps. The trust is primed to spring back, as evidenced by 30 per cent bounce in the shares in the past month, and still trades at a double digit discount to NAV, which suggests there is still value to be captured.
Advice Buy
Why Cheap trust with differentiated approach and respectable record" |
China could well be the number one economy in the world at some point. Safely sitting at number two. Why would you not have some exposure to China?
Are people underestimating the problems ahead for the US and UK also? |
I hope some of you got out on that dead cat bounce. The handouts won't work (they won't be spent). Those in debt\negative equity will use it to pay off the debt and the others won't change their spending habits due to the handouts because they didn't need it in the first place. The Chinese have turned into big net savers. Handouts will barely have any effect.Heading straight back down again. |
Can see this over £3 soon. Don't underestimate China! |
Good call, will soon be a favourite short if possible. |
I am starting to take some profits now. One of my best timed investments. |
Trust Watch: China funds rally as Beijing intervenes
Hard-pressed China investment trusts jump as the country's stock market enjoys its best week in 16 years. |
On face value that's correct however China is highly automated now. I've travelled there 20 years. The difference pre and post Covid is stark. The factories are running on higher revenue with far less people. It's eerie. There is also the deeply ingrained infrastructure of secondary and tertiary supply chains and transport links. Moving the goods negates the benefit but the productivity is night and day. The tariffs remain a problem but it shows the difficulty in supply chain diversification. The only other country of note is India. The rest have little chance except in pockets where abundant local resources give them a competitive advantage |
Now back up at 200p - Nice! |
Domestic consumption: screwed And can't export it's way out of trouble. Invest in China at your own risk. |
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