New China’s Bull Market

Posted on Posted in Daily Blog Post

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Many western analysts are calling for the collapse of China’s economy since 2 years ago but I always reiterate the chances of a complete Chinese economic collapse is a remote possibility.
Last Friday, famed fund manager Mark Mobius of Templeton was predicting that that the China’s stock market will rally at least 20%. Mr Mobius manages $40 billion Templeton Emerging Markets’ funds. He likes
Mr Mobius is particularly bullish on state-owned banks and PetroChina
China Bull is coming! This is evident from the charts of the SSEC (Shanghai Composite Index) below, which is showing up very obvious breakout of the long decline.
I remain of the view that this breakout is long term bullish and it is just the beginning of a long and sustained rally in view of economic reforms and stabilising growth under the new leadership.

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The Chinese stock-market is very much undervalued and in fact The SSEC (composite index) is trading on about 8 times forecast forward earnings, which is far less than the S&P500 which carries about 19. Therefore, increasing inflows of capitals (that drives the index up) into China market is picking up the pace.

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