180 degrees turnaround for China Stock Read these articles here , here and here
It is fairly difficult to predict if the price of 60.55 on 7 Nov 2022 was the bottom for GXC ETF. If option 1 happens weeks/months later, then on hindsight we can said so. However, there lies another option (which imo is more likely) and that is more sideway movements first.
Can it come down to the support level at 70.30 and below ? Of course , though I think at this juncture is less likely. WHY ? Coz from these articles, we can see how the government of China is moving its gear to spearhead the confidence of its people to spend more, be it on EV or household appliances. Inbound tourism is picking up especially after few years of lockdown in Covid and this can be a good catalyst.
Digital economy remains a major industry for China, for now and the future so I am still banging on the tech sectors to be the first to rally (Alibaba recent share price is a good testament).
The elephant in the room is still the property sector and though no specific measures have been announced, I believe it is in the pipeline and the government will release it to boost the confidence of its people.
Option 1 is optimistic , riding on the recent news and believing people are buying into it and pumping money inside or hedge funds caught wind of more insider news and start accumulating.
Option 2 is cautiously optimistic but giving time to the market to respond. People need time and there will always be early adopters and late laggards coming into the market. Also, there are people who had lost lots of money in the stock market in the last 2 years and may take more time to heal and make a comeback. Lastly, there are options for these investors as well. Take a look at the US and other Asian markets that are giving much better returns. Why would they want to park money in their homeground when it remains uncertain and bleak ?
What will I do ? Slowly accumulate this ETF , more weightage on tech sectors (3067) and selective companies. The risk/reward ratio is pretty good from a longer term perspective as the fall of 60+ % is damaging enough and quite unlikely to exacerbate further. Thus, the upside remains two to three fold compared to the downside. Of course, this is my conjecture and nothing is certain until it happens. So, take it with a pinch of salt and DYODD.
