Is China investible?

Axis Greater China Equity FoF Direct Growth’s own expense ratio: 0.57%

The fund invests primarily in Schroder International Selection Fund Greater China X Accumulation whose expense ratio is 1.26%

IMO FoFs could do with a slightly lesser expense ratio as they are simply investing the money into another fund rather than doing their own research to buy stocks individually.

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Mentions that if u ask me the probability that china will double in 3Y then he has some level of confidence with china coz its so bombed wrt valuations. But u need ground level changes wrt chinese folks actually feeling that they should invest in economy which is right now missing

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China Tensions dominate TAIWAN polls. Geopolitical heavy event year across china and ROW

At the right price, everything is investable, even Ukraine. The sensex is selling at a PE of 25, so a yield of 4%, add 4-5% of growth and you get 8-9%, on average.

The Hang Seng is selling at a PE of 8, so a yield of 12.5%, add a few percentage points of growth and you are at 15%! Something like Alibaba has a market cap of $180 Billion, they have 50B cash and a FCF of about 20B, so you can get it a FCF yield of 6 - if that’s not value, I dont know what is. Plus the FCF is growing.

Of course, there are risks, but I dont care too much about a US or China recession. These things will happen at some point and they are difficult to predict! And recessions today are global because of interdependency.

If there is war between China and Taiwan, stocks are the last thing to worry about becuase the world will go to hell in a handbasket. People also say, oh chinese demographics are poor. Well, their population is similar to India’s and women’s labor force participation is 60+% compared to India’s around 25%. They will have enough workers for a long time.

With a GDP/capita of $12k compared to India’s of 2.5k, people have got a taste of the good life. Whatever political purges that might happen, China is not going back to Mao’s era.

Also, not to forget, China is about 20% of global GDP and approximately 50% of all Copper is consumed there. If you look beyond the noise, things in China are ok, bit of a slowdown, nothing else. When China is truly in a recession, I expect Copper to sell at $3, perhaps even $2.5 - we are far from there.

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NIPPON INDIA ETF HANG SENG BEES
Underlying: Hang Seng Index
Biggest Holdings: HSBC, Tencent, Alibaba, AIA Group, etc.

Axis Greater China FoF
Underlying Fund: Schroder International Selection Fund Greater China X Accumulation
Top Holdings: TSMC, Tencent, Alibaba, AIA, Mediatek, etc.
Expense ratio – 1.83%

Edelweiss Greater China Equity Offshore Fund
Underlying: JP Morgan Greater China Fund
Top Holdings: Tencent, TSMC, AIA, Meituan, Netease, etc.
Expense ratio – 2.37% as declared on 30-Nov-2023

Mirae Asset Hang Seng TECH ETF FoF
Underlying: Hang Seng Tech Index
Top Holdings: JD, Alibaba, Xiaomi, Kuaishou, Li Auto, etc.
Expense Ratio: 1.5%
Can be bought from exchanges directly

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Why not?
It’s available on most investment platforms. What am I missing?

Due to SEBI regulations on the quanta of money Indian mutual funds can invest abroad, Mirae is no longer accepting fresh subscriptions. See Mirae Asset Mutual Fund stops accepting money in overseas funds - The Economic Times
However, what’s already been trading on exchanges can change hands so one should still be able to buy it through an investment platform.

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I was not aware we could buy it directly via exchanges. I have updated the post along with the returns.

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The People’s Bank of China maintained the rate on its one-year policy loans — called the medium-term lending facility — at 2.5%, contrary to widespread expectations among economists that it would make its first trim to the rate since August.

Chinese government has really it’s own way of thinking. The country is going through a deflation but they are not ready to cut the rates.

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I use Hang Seng bees to invest in China, if it helps anyone.

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The actual index is down 40% while the ETF seems to have performed better. Does it get distorted due to low liquidity?

Yeah! Liquidity is super bad but if you’re investing for a big revival then it won’t matter much.

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Same for MAHKTECH:

Index/Instrument 10-Jan-22 16-Jan-24 Performance
HangSeng Tech 5619 3404 -39.4%
MAHKTECH 18 12.99 -27.8%
Delta 11.6%
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Does anyone know how liquidity creates such a large delta? Is there a difference in the ETF versus index portfolio construction?

If i can understand one thing about china, that is We are always in for a suprise.( may be too much of a statement !). I have often noticed analysts chasing flip floping policies.

Following is a summary of an article > China’s impressive commodity imports mask deeper complexities (msn.com)

  • Record Imports in 2023:
  • China experienced all-time highs in crude oil (11.28 million barrels per day), coal (61.8% increase), and iron ore (1.18 billion tons) imports, indicating rising demand.
  • Crude Oil Highlights:
  • Crude oil imports surged by 11%, reaching 11.28 million barrels per day in 2023.
  • Growth is moderated by a modest 1.8% increase in domestic oil production and continuous crude stockpiling.
  • Coal Surge and Changes Ahead:
  • Coal imports saw a remarkable 61.8% increase in 2023 (474.42 million tons) due to electricity demand and temporary factors.
  • Analysts anticipate a shift in 2024 as renewables rise, potentially reducing demand for thermal coal.
  • Iron Ore Performance:
  • Iron ore imports hit a record 1.18 billion tons in 2023, showing a 6.6% increase.
  • Despite challenges in the property sector, the steel industry thrived.
  • Outlook and Caution:
  • Forecasts indicate sustained steel demand in 2024.
  • Cautious optimism is advised considering sector complexities and potential shifts in energy dynamics.

and ultra long bonds > China weighs more stimulus with $139 billion of special bonds (msn.com)

Hope this adds value to discussion at this thread ?

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China fading: Money is fleeing China. Global investors want to de-risk from China. There’s so much geopolitical tension. Some of the growth drivers aren’t there anymore. Their population is shrinking, which is not great for economic growth or dominance.

Source: Ruchir Sharma’s top 10 trends for 2024

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