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I put this out for your perusal. For those of you who have watched Wall Street Week this weekend, compare the bullish opinion of the Schwab Perspectives writer to the opinion of Jim Chanos. Mr. Chanos expressed caution in his view of China and its economy.
Chanos has been negative on China for probably about as long as Kyle Bass has been short Japan. They both may eventually be proven right (although I'd think Bass/Japan is considerably more likely) but in the meantime...
At any given time,one can be very right or very wrong in E M markets. World Markets Weekend Update: The Rally Accelerates, Dominated by China May 23, 2015 by Doug Short All eight indexes on our world watch list posted gains over the past week, with China's Shanghai Composite surging 8.10%, the largest one week gain for any of the eight indexes in 2015. A Longer Look Back Here is the same chart starting from the turn of 21st century. The relative over-performance of the emerging markets (Shanghai, Mumbai SENSEX and Hang Seng) up to their 2007 peaks is evident, and the SENSEX remains by far the top performer. The Shanghai, in contrast, formed a perfect Eiffel Tower from late 2006 to late 2009. http://www.advisorperspectives.com/dshort/updates/World-Market-Snapshot.php
M* Volatility Measures AEMGX 15-Year Trailing Standard Deviation/ Return 04/30/2015 AEMGX 24.11/10.94 MSCI EAFE NR USD 17.34/ 3.52 Category: EM 22.53/7.88
When Predicting China Stocks There’s Only Wrong and Very Wrong Bloomberg 11:35 AM CDT May 25, 2015 Surging participation among individual Chinese investors is helping fuel the market’s breakneck climb. Individuals comprise about 80 percent of equity trading and stock accounts with non-zero balances are rising at the fastest pace since at least 2008, according to data from the China Securities Depository and Clearing Corp. “There’s so much money in the market,” Li said. “It’s a bit embarrassing to re-rate companies at this point.” China Railway No major company highlights the difficulties of forecasting in the current market more than China Railway Group Ltd. A year ago analysts expected a 12-month gain of 19 percent. The stock has surged 707 percent, boosting its market capitalization to 377 billion yuan ($61 billion), in line with some of the biggest U.S. companies such as Hewlett-Packard Co. and MetLife Inc. http://www.bloomberg.com/news/articles/2015-05-25/when-predicting-china-stocks-there-s-only-wrong-and-very-wrong
Medtronic (MDT -1%) C E O Omar Ishrak says "We're completely bullish on China. It's a numbers game. This will be the largest market and it's not a debate. It's a matter of when."The firm intends to increase its annual top-line growth in emerging markets to 15% from today's 12%. According to London-based consulting firm L.E.K., China will become the world's third-largest medical device market in 2018, displacing Germany and behind the U.S. and Japan. http://seekingalpha.com/news/2543816-china-a-top-priority-for-medtronic
@Scott, Thanks for that insight. I do not follow Chanos so I was not aware of his bearish attitude towards China.
Another topic that was talked about on WSW was the liquidity factor in the markets. This was agreed upon by everyone. At some point there will be a day of reckoning.
From the one five+ years ago: "In December, he appeared on CNBC to discuss how he had already begun taking short positions, hoping to profit from a China collapse."
I respect Chanos a lot, but he's kind of Hussman-ing (using silly things like theory, logic and research to bet against a "reflate or bust" attempt by the government, whether here or in China or elsewhere) in respect to China.
I think liquidity could be an issue if the next crisis goes in one direction. I'm not sure if it's an issue if it goes in the other.
Strictly my own point of view but I've given up playing many foreign emerging markets except possibly as a day trader and I would not leave any positions open over night. We talk about the Fed manipulating the uS market but they can't hold a candle against many foreign governments (e.g. China, India, Russia) who feel righteous taking over companies on a whim. Bribes and insider trading - where do we start?
Comments
World Markets Weekend Update: The Rally Accelerates, Dominated by China
May 23, 2015
by Doug Short
All eight indexes on our world watch list posted gains over the past week, with China's Shanghai Composite surging 8.10%, the largest one week gain for any of the eight indexes in 2015.
A Longer Look Back
Here is the same chart starting from the turn of 21st century. The relative over-performance of the emerging markets (Shanghai, Mumbai SENSEX and Hang Seng) up to their 2007 peaks is evident, and the SENSEX remains by far the top performer. The Shanghai, in contrast, formed a perfect Eiffel Tower from late 2006 to late 2009.
http://www.advisorperspectives.com/dshort/updates/World-Market-Snapshot.php
M* Volatility Measures AEMGX
15-Year Trailing
Standard Deviation/ Return
04/30/2015
AEMGX 24.11/10.94
MSCI EAFE NR USD 17.34/ 3.52
Category: EM 22.53/7.88
When Predicting China Stocks There’s Only Wrong and Very Wrong
Bloomberg 11:35 AM CDT
May 25, 2015
Surging participation among individual Chinese investors is helping fuel the market’s breakneck climb. Individuals comprise about 80 percent of equity trading and stock accounts with non-zero balances are rising at the fastest pace since at least 2008, according to data from the China Securities Depository and Clearing Corp.
“There’s so much money in the market,” Li said. “It’s a bit embarrassing to re-rate companies at this point.”
China Railway
No major company highlights the difficulties of forecasting in the current market more than China Railway Group Ltd. A year ago analysts expected a 12-month gain of 19 percent. The stock has surged 707 percent, boosting its market capitalization to 377 billion yuan ($61 billion), in line with some of the biggest U.S. companies such as Hewlett-Packard Co. and MetLife Inc.
http://www.bloomberg.com/news/articles/2015-05-25/when-predicting-china-stocks-there-s-only-wrong-and-very-wrong
Medtronic (MDT -1%) C E O Omar Ishrak says "We're completely bullish on China. It's a numbers game. This will be the largest market and it's not a debate. It's a matter of when."The firm intends to increase its annual top-line growth in emerging markets to 15% from today's 12%. According to London-based consulting firm L.E.K., China will become the world's third-largest medical device market in 2018, displacing Germany and behind the U.S. and Japan.
http://seekingalpha.com/news/2543816-china-a-top-priority-for-medtronic
Another topic that was talked about on WSW was the liquidity factor in the markets. This was agreed upon by everyone. At some point there will be a day of reckoning.
http://money.cnn.com/2012/02/16/news/economy/china_chanos/
More than five years ago:
http://www.nytimes.com/2010/01/08/business/global/08chanos.html?_r=0
From the one five+ years ago: "In December, he appeared on CNBC to discuss how he had already begun taking short positions, hoping to profit from a China collapse."
I respect Chanos a lot, but he's kind of Hussman-ing (using silly things like theory, logic and research to bet against a "reflate or bust" attempt by the government, whether here or in China or elsewhere) in respect to China.
I think liquidity could be an issue if the next crisis goes in one direction. I'm not sure if it's an issue if it goes in the other.