Pro Perspectives 7/8/20

July 8, 2020

China kicked the week off with reports that the Chinese government wants to see a "wealth effect" from their stock market. 

So, let's take a look at how it's playing out. 

Here's a look at the Shanghai Composite …

You can see Chinese stocks are on the move.  The Shanghai Composite has jumped 14% since Tuesday of last week. 

And as you can see in the chart, if you scan back to the 2014-2015 period, the Chinese stock market can inflate, and can inflate quickly.

If the Chinese government wants it, they will get it.  Japan has, for some time now, been an outright buyer of Japanese stocks.  The Fed is now involved in the U.S. stock market, buying corporate bond ETFs.  China looks like it will follow suit, using stocks as a tool to promote economic recovery. 

With that, how do you play it?  

The top two (by assets) U.S. exchange traded ETFs on Chinese stocks are MCHI and FXI. Both are up over 15% since the middle of last week.