Given all the negativity regarding China in recent months it’s nice to see that not everyone is a bear about the world’s biggest black box economy. Viktor Shvets, MD & Head of Research & Strategy, Samsung Securities says there is 20% upside in Chinese equities. His thesis is simple. China is going to implement a policy of great reflation in 2012 and 2013 as a response to the recent economic slow-down. He says the monetary and fiscal levers are going to open the floodgates as they did in 2008 and equities will be the primary beneficiary.
Ultimately, ee says there will be “bubbles everywhere”. The bottom line: emerging market equities and Chinese stocks will outperform bonds. What to buy in China? He says buy the eye of the real estate storm via real estate holdings, banks and commodities. My conclusion: ballsy. China’s a coin flip as no one seems to know the reliability of economic data or any other multitude of factors that give the region a very risky outlook. In my opinion, you’re better off spending a weekend in Vegas. You might lose all your money, but at least you’ll get a few free drinks on the way.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.