A Reason for Confidence in the Chinese Economy

Contributed by Brad Sebion, Moneyandtrading.com, SGT Report: At the end of June, the Morgan Stanly Capital International (MSCI) global equity index gave investors a little more confidence to put their money in the Chinese economy. Starting in June of 2018, over 200 of China’s A Shares will be scaled into the MSCI index over a span of two years.

This process has been talked about for some time. Many in the investing world, rightfully so, question the authenticity of some Chinese companies and their accounting practices. Being added to the MSCI index will add credibility to these investments. With a large backing from Black Rock, this deal was pushed through.

Investment funds tracking this index will need to have some exposure to the newly added shares. For the average investor, now is the time to do your homework on the Chinese economy. As an example, there is an ecommerce company JD.com Inc. It put Wal-Mart out of business when it tried to compete in the same space. When Wal-Mart closed up shop, they actually took a 5.9% stake in JD. In October of 2016 it doubled its stake to 10.8%.

Steve Sjuggerud, a highly respected financial newsletter writer, has been pounding the table on the Chinese markets for some time. His previous calls on gold and silver, treasury prices, and the overall market have been extremely accurate. If he is looking at equities in China, the average investor should be too. One of his newsletters is “True Wealth China Opportunities” This is the best way I know to get up to speed on what is happening in Chinese markets.

Since the beginning of the year, China A shares have steadily trended to the upside. In the past couple of weeks this acceleration has intensified.

The greatest generation and baby boomers could have gained an incredible amount of wealth by saving and investing in all American stocks. It’s my opinion, for the generations that follow, it makes a lot of sense to spread your wealth in the US and internationally.

China has a high savings rate, a population who is self-dependent, and a silk road project that will connect it to Russia in the future. Guys like Jim Rogers are ahead of the curve. I think there is a strong probability that the Chinese economy will be the economic engine of growth for the next 100 years.

Brad Sebion

www.moneyandtrading.com

image credit: newsday.co.zw