It was in June of last year that things appeared to be opening up in China, and the economy was in an upswing, and then by July another wave of infections hit, and the government went back to lockdowns. You can see in the chart above, the ETF that tracks large cap Chinese stocks (symbol FXI) broke to new lows.
Now we have a number of catalysts working in favor of Chinese stocks, including a number of monetary and fiscal stimulus measures over the past several months. Then the government scrapped its zero covid policy. And now it appears they are relaxing restrictions on their real estate market. Stocks are moving.
On China, as we discussed in my Jan 5 note, "a faster rate of change in foreign interest rates, relative to the U.S., means money will move out of the dollar (weaker dollar).
For those searching the world for value, with a catalyst, it can be found in emerging market Asia. If history is our guide, this is likely where we will see the best stock market performance in the world over the next few years."
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