Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China and Hong Kong Stock Markets - Don't Bet Against China!

Stock-Markets / Chinese Stock Market Nov 21, 2007 - 01:23 AM GMT

By: Money_and_Markets


Tony Sagami writes: You'll have to excuse your portfolio if it's feeling a little dizzy. After all, the Dow shot up 320 points last Tuesday but then dropped 207 points the next two days. Yesterday, it had another awful time, falling more than 200 points.

Investors are worried about the usual suspects — subprime woes, a weakening dollar, and signs of a rapidly slowing economy that is suffering from $90-plus oil.

In fact, the volume of the recession-or-no-recession debate is growing louder and louder.

Meanwhile, all this uncertainty is taking other stock markets for a roller coaster ride, too:

  • The Hong Kong Hang Seng Index closed last Friday at 27,614, which is 4,000 points lower than its 31,638 peak reached on October 30. That's a 12% haircut.
  • The Shanghai Composite Index has dropped from its record high of 6,092 on October 16 to 5,316 — another 12% decline.
  • And the iShares FTSE/Xinhua China 25 Index exchange-traded fund (FXI) has done even worse, falling from $218 on October 31 to $178, an 18% drubbing.

This volatility, and the resulting pullback, have brought out a flock of China boo-birds proclaiming the end of the Chinese miracle economy and calls for a horrible conclusion to the Asian bull market.

Their squawking reached a crescendo last week when the ProShares mutual fund family launched a new exchange-traded fund (ETF) that can profit from falling Chinese stock prices.

Called the ProFunds UltraShort FTSE/Xinhua China 25 (NYSE: FXP), it's designed to produce twice the inverse of the FTSE/Xinhua China 25 index. In other words, if a measure of the Chinese stock market falls by a point, this ETF will rise by two.

But, that's a rather big "IF!"  

I Wouldn't Bet Against China Right Now!

In my opinion, betting against China is a fool's errand. In fact, it might just be the single worst bet you could make today.

That's especially true when you're talking about a fund that will magnify your losses if you're wrong. Remember, that two-to-one leverage works both ways. If China's market rises, the inverse ETF will fall twice as much!

That's a real risk. Especially because the big picture for China has never been more spectacular.

According to Lipper Analytical Services, China-focused funds were up an average of 65.47% this year through November 8 and a whopping 92% over the last 12 months! That is the best performing investment style or regional category by a wide, wide margin.

Translation: China has been the most profitable place to invest on Earth — PERIOD !

Nothing has fundamentally changed, either. The recent weakness is largely a factor of two things:

(1) The state-run China Securities Journal reported that the People's Bank of China has directed banks in Shenzhen to limit individual withdrawals in hopes of stemming the flow of money from mainland China to the Hong Kong stock market.

(2) There is widespread fear of another increase in Chinese interest rates.

But look, both of these concerns are just indications of how very strong China is! Heck, China's central bank may raise interest rates because their country's economy, unlike that of the U.S., is still growing faster than Jack's beanstalk.

Through the first nine months of 2007, China's GDP rose at an 11.5% annualized rate. Plus, 2007 will mark the fifth year in a row that the Chinese economy has expanded at a breakneck, double-digit pace.

China is still the world's workshop, and that's propelling its economy into the stratosphere!

China continues to be the workshop of the world. In the first nine months of this year, the country's exports increased 27.1% to $878 billion worth of products and it enjoyed a trade surplus of $185 billion, which is $75 billion more than last year.

That stunning economic growth is rapidly creating an enormous middle class. From January to September, the per-capita income of urban residents hit 10,346 yuan, a 13.2% increase over the same period last year. That's important because it means China is developing its own consumer-based economy and becoming increasingly independent from a U.S. slowdown.

So rather than try to go against the long-term trend in Asia, I suggest you ...

Take Full Advantage of This Lucky Break!

My point is pretty simple — treat any drop in China as temporary and use it as a buying opportunity because today's prices are going to look like bargain-basement prices a year or two from now.

I love to hear the boo-birds complain about a Chinese bubble. And I love seeing the what-have-you-done-for-me-lately crowd selling first and asking questions later. Why?

Because when they do, some of my favorite stocks often go on sale. My Asia Stock Alert subscribers, for example, had open orders to buy E-House, the largest real estate broker in China at $22 or lower and GPS giant Garmin at $81 or lower.

Sure enough, both orders were filled last week. Then, E-House jumped past $30 in just a couple days and Garmin zoomed to $97 last Friday. Do the math; those are spectacular gains and they were made in very, very short periods of time.

My subscribers couldn't have made those gains without the help of the China boo-birds. In fact, those very same people were probably the ones selling while we were buying!

I encourage you to put together your own wish list of great Asian stocks that you'd love to own. Then, place low-ball limit orders so you can buy them the next time they go on sale.

I think that's the better way to play any weakness in China's stock market. Reason: It allows you to profit from knee-jerk sellers and the fantastic buying opportunities they create for longer-term investors.

Best wishes,


This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit .

Money and Markets Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in