Time To Buy Chinese Stocks?

Here's a look at the Shanghai Composite over the past 10 years:

Here's the Chinext, which went higher with the tech stocks in America.

Chinese stocks offer solid dividend yields in some cases, and that's not accounting for faster growth than in the developed markets. Chinese stocks should do well in a yuan devaluation scenario as well. Except, importantly, when the devaluation begins, since it tends to accompany great uncertainty.

Here's two conflicting headlines on real estate (though one is residential and the other commercial).

Templeton Braving China Home Bubble With Bet on Cheap Shares
“We found a couple of these very good, strong property companies focused on very key markets and we have invested in them,” Dennis Lim, a money manager at Templeton who helps oversee more than $50 billion in emerging markets, said in an interview yesterday from Singapore without naming specific companies. “Everyone talks about a housing bubble in China but it’s not one homogeneous country.”

Soho China Sells Shanghai Buildings Amid Deepening Office Glut
Soho China Ltd. (410), the biggest developer in Beijing’s central business district, will sell two office buildings in Shanghai as an office glut deepens in the country’s financial center.

The company signed an agreement with Financial Street Holdings Co., a developer of Beijing’s central business area, to sell its entire equity stake in Soho Hailun Plaza and related loans, and Soho Jing’an Plaza for about 5.23 billion yuan ($853 million), it said in a statement to the Hong Kong stock exchange today.

“We’ll optimize our assets by selling some projects at relatively non-prime locations and buy better ones at an appropriate time,” said Chairman Pan Shiyi in an e-mailed statement today. “The company’s long-term strategy of holding and operating office buildings Shanghai and Beijing’s prime locations will not change.”
Soho is shifting to a REIT model, so they'll need to put that money to work......at an appropriate time.

Overall, Chinese shares are starting to look attractive again. It has been a long time since I considered investing there, but there will be great opportunities even in a scenario where the Chinese economy grew at 0% for a few years. There will be great losses in some sectors, but this will be offset by great gains in others.

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