TAIPEI ( TheStreet) -- Investors complain it's hard to choose stocks in China. They say the country's A-share market is just plain dodgy. Despite an increase in the Qualified Foreign Institutional Investor, or QFII, quota last month, China still doesn't give foreign investor status to just anyone, meaning a lot of us couldn't buy shares of Chinese companies even if we dared to.
Now China is saying its turn has come as other Asian markets fall on prospects of reduced economic stimulus in the United States. That would mean relative stability for Chinese stocks as the Federal Reserve unwinds five years of quantitative easing measures to stimulate an economy that's been sick for that long.
Round one of U.S. quantitative easing in 2008 and phase two in 2010 lifted Chinese A-shares, along with their peers around emerging Asia.
But A-shares, being state controlled, do not necessarily move up or down in concert with the other emerging Asian markets that are falling as the Fed talks about tapering QE. If investors were unwilling or unable to buy Chinese shares in the first place, they might have put relatively few assets in China following the flood of cheap stuff pumped out by QE.suspect the A-share market of poor transparency, spotty regulations and bad deals for minority shareholders, so I won't sit here and pick stocks. I know of some weary asset managers who make a living doing that. They're cynical people. To invest, look at the big offshore names getting QFII awards. BlackRock (BLK) received a QFII allocation of $100 million in March. Going back to the QFII policy's earliest days, Citigroup (C) and Morgan Stanley (MS) have been allowed to trade Chinese shares for the past decade, meaning they probably know a few things about which shares to pick. Watch for more household names to receive QFII status or increase their quotas as China said in July it would increase the overall QFII quota from $80 billion to $150 billion, a short-term liquidity boost for A-shares. Which leads me to another point: China isn't sitting back to gloat as tapering QE's impacts upon miss its markets. Railway financing reform and support for broadband development have lifted shares in "growth" sectors such as transportation and information, the national news agency says. state-driven shift from an economy reliant on exports and investment to one focused on domestic consumption. Finally, for now, the central bank has about-faced after stunning markets in June by refusing to inject liquidity to ease interbank lending. "Although the U.S. stimulus tapering will pose many challenges, China has the capability to withstand any financial crisis with stable economic growth and progressive restructuring," Xinhua says. I see no reason to doubt this forecast as long as the government keeps taking deliberate pro-market action. At the time of publication the author had no position in any of the stocks mentioned. Ralph Jennings is on LinkedIn. This article was written by an independent contributor, separate from TheStreet's regular news coverage.
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