Is it a Good Time to Invest in China? | ET Money
ฝัง
- เผยแพร่เมื่อ 22 พ.ค. 2024
- China’s mega cap stocks, especially the Internet based ones, are beginning to show signs of life. Stocks of Alibaba, Meituan, JD.com & Baidu have all jumped by over 40% in the second half of March. And what’s really helped spruce up the Chinese stock markets were a series of statements made by China’s top economic officials assuring investors that the crackdown on Internet companies was nearing its end and it was their government’s intention to stabilize and support the capital markets. But having said this, a government-engineered reversal cannot remove the many macroeconomic headwinds that remain in play.
Chapters
00:00 INTRODUCTION
01:02 WHY IS CHINA A FOREIGN INVESTMENT MAGNET?
03:44 WHY INVESTING IN CHINA KEEPS GETTING HARD?
05:53 VALUATIONS
07:44 INVEST OR NOT - WHAT MARKETS SAY?
11:01 SUMMARY
WHY IS CHINA A FOREIGN INVESTMENT MAGNET?
Investing in China is not always easy, but there is no other country that can replace it. China is the world’s second largest economy with a GDP of 18 trillion dollars and a population of almost 1.5 billion making it a huge market for investors. China continues to offer a unique and irreplaceable environment for manufacturing. Chinese businesses are now challenging global players based in the United States, Europe and Japan in terms of innovation and experimental business models.
In numbers, China spends about 2.5% of its GDP on R&D which then helps them spawn enterprises in areas like robotics, artificial intelligence, etc. It’s a combination of these three factors & president Xi Jinping’s personal ambition of attracting foreign capital that has seen investors flock into China.
Now all FDI or foreign direct investment is not the same. The FDI that the United States receives is mostly in the form of M&A while the FDI that comes into China is mainly from greenfield investments which involves the building of new factories which serves well for that country.
WHY INVESTING IN CHINA KEEPS GETTING HARD?
The Chinese government & President Xi Jinping’s efforts to regain the trust of international investors face some serious hurdles. Firstly, the sudden crackdown on the country’s most profitable companies on what can be loosely defined as “disorderly capital” met with almost everyone’s disapproval.
This strangulation of Alibaba, Meituan, Didi Chuxing & others led to massive confusion and even until today, the regulators are yet to follow through on their recent promise of making policies more transparent and predictable.
The second hurdle is the geopolitical situation. The on-going trade friction between the US and China and China’s “positively skewed but neutral ties” whatever that means to Russia. A third hurdle facing investors is the re-emergence of the Evergrande crisis. And finally, there is Covid and China’s hard-line “zero Covid” strategy with complete lockdown of cities.
VALUATIONS
There is little doubt that Chinese assets are cheap with the MSCI China Index of stocks currently trading at its biggest discount to global peers in more than two decades. In contrast, the MSCI All-Country World Index trades at 2.8 times price-to-book which brings forth a compelling valuation argument in favor of China.
But if you look at it the other way, cheap valuations are cheap for a reason and in China’s case, it has a lot to do with the downsides. This last point is very interesting from a valuation standpoint.
INVEST OR NOT - WHAT MARKETS SAY?
The investment analyst community remains divided on the outlook for Chinese stocks. While Credit Suisse and Goldman Sachs have released thick reports on the investability of Chinese stocks, firms like Morgan Stanley & the Bank of America aren’t as optimistic as they continue to remain neutral for now. Now on the positive front firstly there is a lot of momentum going the way of Chinese stocks. What I mean is barring a handful of research houses, a recovery in Chinese stocks is one of 2022’s most popular calls being made amongst global investors. There is still the question of how much will the markets recover but China’s broader themes of a thriving consumer sector, green energy and becoming the world’s largest economy over the next decade are still intact.
A second positive I see with China is it’s going through a rich bout of inflation and the Federal Reserve is committed to raise interest rates about 5 to 6 times this year. Beyond monetary policy and economics, a third reason that gives China an advantage is a lower level of geo-political risk. The United States is a lot more deeply involved in global issues like the Russia-Ukraine conflict as compared to China which continues to play the neutral card
![[สปอย] มหาเวทย์ผนึกมาร 261 "ร่างโกโจโดนขโมย" ชายที่อยู่ตรงหน้านี้เขาไม่ใช่อาจารย์โกโจตัวจริง!!](http://i.ytimg.com/vi/u5GTa2Mpp_E/mqdefault.jpg)
Can you share an another video comparing with last one year activities in China? Do you still think it is safe to invest in Chinese stock market?
Would ET money recommend me to stay invested in Axis greater china FOF? It's been a year i am invested and still doing sip....
Is it good to invest in Hong Kong Tech Index ETF?
I am glad some one made a video on Chinese market. I was able to grab BABA and JD stocks from HK Exchange last month when fear of Chinese stocks getting delisted from NASDAQ erupted again which resulted in further fall of stock prices. Charlie Munger believes in BABA numbers, Ray Dalio believes in Chinese market and so do I. I don't care if the market further falls down as long as my thesis is correct. These companies are almost debt free, buying back shares and with great fundamentals. Buy, sit tight and keep emotions away.
Thank you, glad you liked our content & thx for sharing your views
Sir what about the edelweiss greater china Shor off fund??
So have been investing in the Edelweiss greater China fund for some time now, like i started in Mid 2020 and it had stellar 6-8 months of performance, however then due to govt clampdowns esp on the internet sector, later on the housing market (evergrande) crisis made matters only worse...now their almost pro Russia stand and ongoing trade war with US , ageing population all are the risks which have brought down returns from whopping 55% xirr to -25% xirr after 2.5 yrs of sip investment, but somehow I feel that China has to grow for the world to grow , after all it is second largest economy after US.
Are you planning to exit ???
@@vikasgarg9614 no, it would be leaving too early, will continue with sip ..anyways 6 more months left. I feel like once the lockdowns are removed, China is bound to grow, so these investing now is like helping in bringing down average nav.
@@anujoybardhan Hi how's your current portfolio is performing, have you exited if yes whey and if no why? Can u tell as I am also planning to invest in same
@@subhgoyal4538 So very recently I have returned to profit in EGCF, but the XIRR is still at a low 3%. Please do note that I have made a few small lumped sum investments in the fund in the past year and a half in addition to the ongoing SIP which I have continued till Dec 2026. So to answer you, no I havent exited this fund but rather have continued my SIP and even added additional units when NAV was lower. I believe that China continues to have a clear advantage in many critical industrial sectors and barring a massive geopolitical upheaval on account of Taiwan , this investment should yield return XIRR>15% in years to come. 🤞🤞🤞 [ But please note that my exposure in China is quite limited and I have added it for purpose of diversification on account of low correlation with Indian equities on which I am much more bullish]
30% fall in hang Seng since the video was released. I'm going all in now
Very informative. Pls cover more on Chinese stocks which are low risks to invest.
Thanks
👏👏👏👏
Baba all the way! 700 pps in 5 years
with the help of ET money can we invest in china , due to SEBI , every thing is blocked .....so when we can do this
Hi. That's still a problem due to the RBI ban. But try buying the HANGSENG ETF from your trading account, that might work
@@ETMONEY Isn't low trading volume in these ETFs a problem?
@@abhijith19931 What's the benchmark for low volume? The answer will depend on that.
@@ETMONEY I mean I am afraid if there would be enough buyers when i would want to sell at a high
@@abhijith19931 Sorry, meant: do you have a number in mind like 10,000 orders a month etc.? These facts will give you a better idea of low volumes or not .. afterall, there being no buyers when one wants sell happens everyday with a number of stocks.
How can I invest in China directly?
Don't!
@@MINATOYELLOWFLSH2005 yes I won't but I just wanted to know.
Make a video on how to invest in china too either via MF or directly….and which indian fund house is offering MF into Chinese markets maybe via HK exchange or US listed ADR
Don't need a video for this. Simply goto ET Money and in the search bar write "China" and the options will pop up. That's it
@@ETMONEY Tried the exact steps you mentioned but nothing comes up.
Has the market priced in China's invasion of Taiwan?
Pls read the reports by Credit Suisse, Bank of America, Morgan Stanley and others for a better grasp of this
@@ETMONEY thank you sir for guiding. I will check them.
Lol
When is this "temp" ban going to go away? This is the right time to invest in China and we are being robbed of this opportunity.
We need to completely ban all business with china
Please Hindi language
हमने हाल ही में एक हिंदी TH-cam channel शुरू किया है। कृपया लिंक पर क्लिक करें और हमारे हिंदी चैनल को subscribe करना न भूलें
th-cam.com/channels/zWtyDo9KmEC1JoAqa1LIEw.htmlvideos
Please Assamese language
Investing in china is as risky as investing in crypto. But crypto having more return potential