as part of our
China has what I like to call a "high quality problem."
The Chinese economy grew by 7.4 percent in the third
quarter. This was the country's worst quarter since early
2009, but it was in line with market expectations.
Only in China would 7.4% growth constitute a severe
slowdown. I don't have to tell you that this is
above the growth rates of any other country of any real size.
China may not be growing like it used to, but it's still the best
show in town among major world markets.
Sentiment on China remains awful-just this past week, Coca-Cola
) joined the long list of Western firms blaming lackluster growth
on the Chinese slowdown-but the data is mixed and showing signs of
life. Releases o n fixed asset investment, retail sales
and industrial output all beat expectations.
All of this rotten sentiment has translated into some pretty
horrendous stock returns for Chinese investors. Chinese
stocks have been in almost continuous decline for the past two
years-at least up until last month.
I recommend investors take a look at the
iShares FTSE China 25 Index ETF ($ FXI)
. I like what I see here. Chinese stocks appear to be
starting a new uptrend, even while sentiment towards them remains
If the Chinese economy maybe-just maybe-doesn't end up being as
sick as everyone seems to think it is and we see some signs of life
in the next few months, sentiment can shift if a hurry. And
when it does, I expect FXI to enjoy a quick boost.
7.4% growth in a slow-growth world isn't half bad, and
eventually investors will reach the same conclusion. In the
meantime, we're getting access to an index that trades at 8 times
earnings and yields 2.7% in dividends. Not too shabby
This article first appeared on TraderPlanet. Sizemore
Capital currently has no positions in any securities
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