This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

China's President Boosts China Stock ETFs

NEW YORK ( ETF Expert) --Scores of personalities have gone on the record, insisting that China will be the epicenter for the next housing collapse. Most of those analysts have never lived in Hong Kong, Taiwan or China; I spent four years in the region.

Nevertheless, others have continued to highlight "ghost towns" and "unsustainable" property prices as a means to highlight irrational exuberance in the world's second-largest economy.

Perhaps billionaire hedge fund manager Jim Chanos has been the most vocal naysayer over the last three years. If one looks only at the buy-n-hold performance of a volatile fund of real estate investment trusts (REITs) like Guggenheim China Real Estate (TAO), it would certainly seem that Chanos got it right. On the other hand, if one employed a simple mechanical trading approach of buying TAO when its 50-day moving average rises above its 200-day, and selling TAO when the opposite occurs, one pocketed remarkable profits.

In essence, success always comes down to understanding when to sell.

Courtesy of StockCharts.com

For those like myself who believe that China is better positioned than most nations and regions to manage economic challenges in the years ahead, you may have been encouraged by President Xi's latest remarks. Xi said, "China must boost the housing supply at all costs..." Moreover, he did so without any mention of rising home prices.

Predictably, China financial stocks as well as ETF benchmarks with heavy financial weightings found themselves at the top of the leader-board lThursday. The apparent implication of Xi's commentary is that the government is willing to tolerate rising prices at the higher end of the real estate spectrum, as long as builders are supplying affordable homes as well.

De Facto Stimulus in China?
Approx 5 Day %
Global X China Financials (CHIX) 4.7%
iShares FTSE China 25 Fund (FXI) 3.7%
iShares MSCI China (MCHI) 3.0%
SPDR S&P China (GXC) 2.2%
Guggenheim China Real Estate (TAO) 1.7%
S&P 500 SPDR Trust (SPY) 0.7%

It is certainly true that China's government has imposed tight controls on the real estate sector for roughly three years. Learning from U.S. mistakes (e.g., no-money down, interest-only loans, no documentation of income, etc.), homebuyers in China have had to come up with higher down payments and, in many cases, have not been permitted to buy second properties. Lately, however, China's commitment to 7.5% GDP has meant recognizing the critical contribution of housing to the overall economy's growth.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $132.54 0.88%
FB $80.54 0.07%
GOOG $540.11 -0.44%
TSLA $247.73 0.86%
YHOO $43.48 -0.44%

Markets

DOW 18,232.02 -53.72 -0.29%
S&P 500 2,126.06 -4.76 -0.22%
NASDAQ 5,089.3620 -1.4320 -0.03%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs