What Is The Best Rally Meaning In Stock Market?

Published Jul 05, 21
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Much of the hard work by Chinese technocrats and legal professionals in the past two decades to enhance the credibility of the stock market has gone to waste because of the rescue. Now, only punters who invest by guessing at the size of government intervention on a daily basis would want to wade into this market.

CHINA is certainly not the first country to try to prop up a falling stockmarket. The central banks of America, Europe and Japan have all shown form in buying shares after crashes and cutting interest rates to cheer up bloodied investors. But the circumstances and the manner of China’s intervention of the past ten days make it an outlier, worryingly so.

Yes, the stockmarket is down a third over the past month, but that has simply taken it back to March levels; it is still up 80% over the last year. Growth, though slowing, has stabilised recently. Other asset markets are performing well. Property, long in the doldrums, is turning up.

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The anticipated correction of over-valued stocks hardly seems cause for much anguish. Yet China’s intervention has screamed of panic. Had the central bank stopped at cutting interest rates—justifiable support for the economy when inflation is so low—that would have been reasonable. Instead, there has been a spectacle of ever-more drastic actions to save the market.

Chi, Next, an index of high-growth companies that is often described as China's Nasdaq, fell by 25%. Theories have flourished about why the government has waded in so heavily. The apparent desperation is, some believe, a sign that officials see a looming economic collapse, and are trying to staunch the wound before social upheaval ensues.

The failure of share prices to do their bidding is, in that respect, welcome. It shows that the Communist Party, powerful though it may be, cannot indefinitely bend markets to its will. Chinese leaders should heed that lesson and get on with the challenges of liberalising their economy. A relapse towards statism will not just set China back.

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The Chinese stock market has been crashing. Even though it is down by some 30%, there may be more damage to come. Do you short the Chinese market, or buy since there is already blood in the streets? I’ll tell you one thing for certain: Do not buy Chinese stocks.

He’s a movie producer who has done some work in China. He tells me that the theater owners there will skim money off the box-office and concessions for themselves, yet then report better-than-expected results to the Chinese government … because the government expects them to. If this is going on in the movie business, it may be happening in every industry for all we know.

In any event, the skyrocketing growth days for China are over. This is the same reason I advise people to generally avoid country ETFs. There’s just too much volatility and we never really know what each culture does with respect to corruption and proper reporting. So if you are going to invest internationally, you have to hand the investment over to managers with experience, and stick to widely-diversified ETFs and mutual funds.

What Is The Best Rally Meaning In Stock Market

There aren’t that many choices, however. For the conservative play, you can do what I did, and buy the This index shorts the 50 largest and most liquid Chinese stocks that are listed on the Hong Kong Exchange. I chose this ETF because it’s simple – 50 stocks that a lot of investors own.

I just don’t want to lose 20% in a single day, which could happen with other choices. A middle-of-the-road choice would be the . This is exactly the same as the previous selection, however, the fund uses derivatives to offer twice the inverse of the top 50 stocks. This leverage thus aims to double the downward performance of the index.

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Case in point: the next step up – . This is just like the other choices, except it looks to mirror the inverse of the 300 largest and most liquid Chinese stocks. You might expect an ETF that has more holdings to have less volatility. However, China isn’t like the U.S.

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Once we get into 300 stocks, we are getting into some specialized and smaller companies that are more volatile. So on a day like July 9, where the YXI ETF fell 4. 2%, the CHAD fell 21%. It’s not for me, but other aggressive investors may like it. Ordinary people across America are getting insanely rich.

She never earned more than $15,000 a year as a secretary. But by making one simple move, she was able to leave an $18 million fortune to a children’s hospital when she died. There’s many more just like her.

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The Shanghai Index is actually down over the last five years, and only up marginally over the past decade. That run of poor performance might give you pause before investing; after all, it's not like China is a newly discovered secret. It's been the world's fastest-growing major economy for years, and it boasts well-known companies like (NYSE:BABA) and (NASDAQ:JD).

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Image Source: Getty Images Chinese accounting standards still lag those in many other countries. Plus, there is little doubt that relations with the United States have soured under President Trump, and executive actions from the current lame duck White House could lead to short-term volatility. And even once President-elect Biden takes office, there is little indication that the incoming administration will take a softer tone toward China.

The state leaves many companies alone, provided they don't get involved in politics. But the recently cancelled IPO of Ant Financial serves as a reminder that the government can do whatever it wants. Ostensibly the IPO, which was to have been the world's largest, was cancelled because of "major issues" with the filing, but company founder Jack Ma's criticism of Chinese bank regulators also seems to have played a role.