Chinese shares have been in a brutal bear market since April 2021 but we believe this market’s fortunes are about to change. Some of the reasons we’re bullish include:
- People’s Bank of China are increasing liquidity into the financial system.
- The nation’s sovereign wealth fund has been ordered to support the stock market.
- The Chinese 10 year government bond yield has hit a record low of around 2.5% which makes stocks look very attractive relative to bonds.
- The Chinese economy is growing at a very strong rate of 5.3% with a very slim likelihood of recession.
- Chinese blue chips are trading at a significant discount to international peers. Alibaba for example trades at a very low forward PE of just 7.6 times earnings v’s Amazon of 57.4.
- Some Investors will take advantage of markets trading at record highs in the US and other parts of the world and look to allocate a portion of funds to China.
A great way to get exposure to China is via the ASX listed ETF with the ticker IZZ. This ETF offers investors exposure to 50 of the largest Chinese stocks that trade on the Hong Kong Stock Exchange.
Below is a list of the sector allocations of the fund and the top holdings.
The IZZ ETF hit a record high of $70.56 back in 2021 and has now fallen over 50% to last trade @ $32.90.
BUY before the Chinese BULL returns!