I want to give you a truthful look at what's happening in the single most underestimated, misunderstood, and perpetually disrespected country on earth: China.
We'll examine why China's stock market is creating an ideal moment to invest, how savvy investors are jumping in, and what steps you can take to join them (including three investments you can make today).
Here's everything you need to know…
Analysts Have Helped Create a $28.3 Billion Disconnect in World Markets
The latest "paranoid punditry" is coming from the head of emerging markets and global macro at Morgan Stanley Investment Management, Ruchir Sharma.
Speaking this week at the Global Private Equity Conference in Washington, D.C., he said he's of the opinion that the worst of the Chinese economic slowdown is still ahead because of the nation's debt. Specifically, he noted that whenever a country increases its debt to GDP sharply over five years, there's a "70% chance of a financial crisis and 100% chance of a major economic slowdown," as reported by Yahoo! Finance. The implication, of course, is that China's going to see the same.
Respectfully, I really wish guys like Sharma would crawl into a hole somewhere. Their version of doom and gloom just isn't true. China's latest market rally began in Q2/2014 and tacked on 128% through the end of April.
Sharma is essentially making the same argument that many others have made for the last 40 years… and for 40 years they've been dead wrong.
Here's where China's got key advantages.
1) Growth
So what if China's growth falls from 7% to 5%…? The United States will be lucky to do just 2% after spending trillions of dollars! You're still talking about a country with a growth rate that's double or even triple our own. Any central banker around the world will love to have those numbers.
Even if you can't mentally get past that point about growth – and lot of people can't for a variety of reasons – take a look at this chart.
2) Capital
China's got around $4 trillion USD in reserve. That means Beijing can recapitalize China's banking system several times over and still have change left. (Meanwhile, the United States is $220 trillion in the hole.)
There's no question China can "term out" the debt and take a page from our politicians by kicking the can down the road – a point Robert Petty of Clearwater Capital Partners made that echoes my own in response to Sharma's observations.
Keep the numbers you hear in perspective. Here's what I mean…
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About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.
Your colleague, Shah Gilani, has the opposite take on China. What gives?
I had same query your view and shah' are very different on China can one of you please provide clarity?
Also do you think Vale is a good proxy for the China story if bullish
very good