China remains one of the world's fastest growing economies. It continues to intrigue and draw investors to it which began in earnest after 1979's Deng Xiaoping admonition "to grow rich is glorious." The high rate of economic growth has positive implications for investments opportunities. At the same time, high rates of growth create inflationary pressures which can quickly cause turmoil and losses for linked equity markets.
Many pundits believe China's growth has led to inflation currently and excess speculation in real estate markets has created a bubble they say. Over the past 18 months, Chinese authorities have acknowledged this concern by tightening bank reserve requirements to reduce speculative lending. Plus, many bearish pundits believe a break in the real estate bubble will bring China's economy down. However, as this is being written, Chinese monetary authorities are now easing lending restrictions and adding liquidity to reinvigorate lending to the economy.There still remains a level of regulatory and corporate governance mistrust among some investors questioning the accuracy of accounting standards and enforcement. From a personal view, when I visited the recently opened stock exchange in Shanghai in 1992 our little group had a private session with the exchange Chairman. He was queried about this concern and responded by just saying: "We will adopt American rules." Well, that may not give us much confidence. There aren't many established ETFs beyond our list of 10. Those that do exist are new and have yet to be seasoned. Without question there will be many more issues coming forth as time passes and issuers create new products especially linked to new sectors. We rank the top 10 ETF by our proprietary stars system as outlined below. If an ETF you're interested in is not included but you'd like to know a ranking send an inquiry to support@ETFDigest.com and we'll attempt to satisfy your interest.
Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity
Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average We feature a technical view of conditions from monthly chart views when possible. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach. Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions. For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from ProShares and Direxion and where available these are noted.
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