Chinese market a buy???

18th Feb by N0vice1Nvest0r

7 comments 412 reads

I know the Chinese market is struggling, but surely it's getting to the point where we're close to the bottom. I looks like the market will be pumped with government cash (unless ive missed some latest news), with JD.Com (NSQ:JD) , Baidu (NSQ:BIDU) and Alibaba Holding (NYQ:BABA) all at or very close to historic bottoms, all holding vasts amounts of cash, should these be considered a buy?

Or would the safer option be to buy the Chinese market ETF?

I feel with a decent strategy there could be decent gains made, "be fearful when everyone is greedy, and be greedy when everyone is fearful."

I do appreciate this market could be extremely volatile and the potential for the Chinese market to get worse. But with my investment head on, I'm itching to slowly drip into the market.

What am I missing that should put me off?
Why aren't we close to the bottom?
Is anyone else considering this move too?

As a novice investor I'm open to all opinions and reasoning, I need to understand why I could be about to make a big mistake. But this *could* be a huge opportunity that investors like Michael Burry are also tempted by.

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doctor dave

18th Feb

I do agree. Everyone hates the Chinese market for valid reasons so I've been contemplating this....

BnB

With its combination of deflation and anaemic growth, China now resembles Japan since the turn of the century. What has worked in the latter market is a focus on companies with strong balance sheets and very high cash flow generation. If you take that template there are reasonable odds of doing well in a bounce and far less badly if the slump continues. I would not buy the market as institutions are happy to ignore it and will likely continue to do so.

ShoeShineBoy

Whenever I hear Nick Greenwood of Migo Opportunities Trust (LON:MIGO) interviewed on the Money Makers podcast, he says China is uninvestable due to the fact the economy is controlled by the Communist party.

You only have to look at the decisions made around private education companies a couple of years back to see how the value of whole sectors can be effectively written down to almost zero. Why get involved ?

There are better options out there if you want exposure to Asia. I hold Schroder Oriental Income Fund (LON:SOI) and I'm keeping an eye on the Indian market to see if that market will get cheaper at some point. UK small caps and Japan are more appealing to me than China.

SSB

BenHazz

Would investing is some of the unloved commodities that have underperformed be a safer play? Such as copper and iron ore. If China does well then they will bounce with it, if it doesn't you can still get good divis and possible sp improvement from elsewhere.

N0vice1Nvest0r

All great points thanks. All duly noted, I will have a market review Monday. I may have a dabble in Chinese stocks, but you guys have highlighted excellent fundamentals to make me re-assess the % of my portfolio it will hold. Thanks again

StrawberryDreams

Geopolitical discount risk has only increased imo.China invading Taiwan is still a risk.Although to be honest, if that happens all markets will be affected and that would be the least of our worries.I know institutions don't like China currently and Munger held some Alibaba Holding (NYQ:BABA) in his personal accounts.A Chinese hedgefund manager who recommended BYD Co (HKG:81211) did great for Berkshire Hathaway (NYQ:BRK.A).I haven't followed the filings closely but i think Buffett has sold down 60% of Berkshire Hathaway (NYQ:BRK.A) 's stake there lately from a Business Insider article last November.They made the initial investment well over a decade ago.

Surely China can be seen as a valueplay now, but whether it's a value trap i'm not so sure. I know the Alibaba Holding (NYQ:BABA) cloud spin off isn't happening anymore, and the Chinese government are involved deeply in the Chinese megacaps now.So perhaps a Chinese etf might be wisest, unless you know what to pick.

However, PDD Holdings (NSQ:PDD, which owns Temu, has had a decent run still lately and momentum often begets momentum.But Xi could decide to do whatever he wants at any time.I'd rather still pick India, even though some commentators are calling it expensive, as sometimes companies/sectors/countries are expensive and remain expensive for a reason.

AlanJenkins2

20th May

It isn't really communist,more totalitarian capitalist.

Chinese market a buy???

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N0vice1Nvest0r

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