China is cheap for sure, but there are some pretty significant structural issues in the economy, which make a sustained bull market unlikely IMO. The main issue is the deflating property bubble that Xi is unwilling to address heads on (as any solution comes at a cost - such as devaluation - which is unacceptable for now), but there are also broader issues of rule of law, and capital flight. Wealthy Chinese often have one objective - to put their assets in a safe jurisdiction abroad, as they are potentially at risk in China. If Jack Ma can be sidelined and blackmailed, so can anyone else. These phenomena are not new, but have intensified.
I have traded China & HK stocks successfully earlier this year on the long side, and there will surely be more trading opportunities, but this is not the beginning of a sustained bull market IMO.
I know BABA's buybacks and FCF generation look great, other companies are cheap too, but I'm not sure being cheap is enough given the scale of the challenges at hand.
China is cheap for sure, but there are some pretty significant structural issues in the economy, which make a sustained bull market unlikely IMO. The main issue is the deflating property bubble that Xi is unwilling to address heads on (as any solution comes at a cost - such as devaluation - which is unacceptable for now), but there are also broader issues of rule of law, and capital flight. Wealthy Chinese often have one objective - to put their assets in a safe jurisdiction abroad, as they are potentially at risk in China. If Jack Ma can be sidelined and blackmailed, so can anyone else. These phenomena are not new, but have intensified.
I have traded China & HK stocks successfully earlier this year on the long side, and there will surely be more trading opportunities, but this is not the beginning of a sustained bull market IMO.
I know BABA's buybacks and FCF generation look great, other companies are cheap too, but I'm not sure being cheap is enough given the scale of the challenges at hand.