First. China’s long-term fundamentals look very good. However, the short-term fundamentals look poor. China’s debt has ballooned from $6 trillion in 2008 to $28 trillion at the end of 2016.
Today debt is a staggering 260% of GDP! The IMF has even called their debt levels - “dangerous”
Opening Of Markets - China’s A-Shares
Still, there is great opportunity in China’s A Shares market. These are the shares previously closed off from investors, the A-Shares allow investors to invest in local Chinese blue chips…
These markets are underdeveloped and without a market culture. They are extremely volatile, but also a value investors paradise!
Tomorrow’s Tech Giants
Global investors can also no longer ignore Chinese tech. China’s tech groups receive support from government, for example huge subsidies for AI.
The Surge Of The Wealthy Middle Class!
These tech groups serve the 1.3 billion or so people in China. Even though they are similar in value in US tech, they serve a market that is many multiples the size of the US! China’s wealthy middle class are bigger than the entire population of the US!
This demographic can no longer be ignored!
Lack Of Regulatory Threat
Another thing, the Chinese communist party now that big tech is crucial for their growing prosperity! Unlike the west, where the regulatory winds are moving against big tech, china is more than likely going to support their FAANG equivalents, meaning that Alibaba and JD.com are going to he here to stay!
It’s important to note that China is a high-risk play. In the short-term, they are very shaky. But in the long-run, China is the future.