Sean Darby, head of equity strategy at Nomura Securities, says China’s A shares are inexpensive right now. That’s because Chinese government wants to bring property prices down by squeezing liquidity. And the expectation of property price deflation has left local investors holding cash, Darby says.
“Foreign investors can buy A shares at cheaper valuations than H shares in many instances,” he writes in a report dated July 9. “In our view, mainland equity markets, because of the closed capital account, afford international investors protection against external credit shocks. They are uncorrelated equity markets while also inexpensive in absolute terms. The earnings integer continues to rise.” The Shanghai Composite Index rose 55 points to close at 2,470.
Personally, I think it is a good time to invest in China. I am looking to seek exposure through either the shares listed in my earlier blog or the ishares China50. The ishares 50 seems a better choice, since it affords me greater diversity.
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