Do Chinese Stocks Have Potential In 2014?
For investors who have been “burned” in the Chinese markets over the last several years, it may be received with a hint of skepticism to think of China’s emerging market as an investment that is expected to exercise its greater potential going into 2014. A slowing economy over the last several years has contributed to poor market performance, and currently many of the more popular Chinese companies including the iShares China Large-Cap ETF are down 43% since 2008. That being said, a New Year is the prime opportunity for a portfolio makeover, and the emerging market is once again showing great potential going into 2014.
2014 Could Be A Better Year For The Chinese Economy
In spite of years of poor economic performance, the Chinese economy is finally starting to make a turn around. Lately the Chinese GDP has been steadily on the increase. This year, China is projected to make its target of 7.5% in economic growth. Gains in manufacturing and exports have been the greatest factors contributing to the improving economic situation. Another marker pointing towards an improving Chinese economy is the HSBC’s Chinese Flash Purchasing Managers Index. The numbers projected by the index are indicative of overall Chinese economic performance, and any number above 50 shows an expanding Chinese economy. The last few quarters we have seen a steady increase in the numbers with the most recent numbers at 50.8.
Chinese Reforms To Aid The Recovering Chinese Economy
Even though the manufacturing and exporting improvements have been positive for the Chinese economy, the improvements don’t stop there. In addition to these other positive indicators, China’s leaders have also introduced widespread reforms that will help improve the structure of China as a whole. Some of these changes include putting an end to the one child policy, and measures to improve and strengthen the Chinese banking system to improve things for Chinese depositors. Some of the price controls on necessary items like water and energy will also be reduced, making it more affordable for the average Chinese individual. Additionally, inflation remains low, and the Chinese housing market has improved creating an economic environment that is absolutely primed for investment success.
Buy Low And Sell High the Principal Applies To The Chinese Markets
With any investment, the risk is considerably lower and the profit much greater when you can get involved when the prices are low, and turn them for a profit when they begin to climb upwards. The improving economy is indication enough that things are looking up for the Chinese markets, but the market prices are still considerably low after several years of the “doldrums”. If you compare the largest Chinese stock index the Shanghai Composite’s to the S&P 500 it is on average 44% cheaper. Thus, the opportunity to invest is right before you looking ahead into 2014.
Due to the current indicators in the Chinese economy, now might be an important time to consider investing in the Chinese markets as part of your portfolio. For more information on which Chinese investments hold the greatest profit potential in 2014, speak to a Redhawk Wealth Advisor near you today. .