FXI: A Portfolio Capturing China Reversal And Secular Trends
China's risks seem apparent, but we can take a step back and see if the economic fundamentals are truly distorted amid all the challenges we've seen. A recovery is likely. FXI trades at a weak multiple of ~11x, which offers potential for a growth and a value trade if certain macro conditions are met in the near term. The property sector should not be compared to other systemic crises and recovery is a matter of time given long-term economic fundamentals and inventory pressure.
FXI: A Contrarian Investment Opportunity
iShares China Large-Cap ETF experienced a recovery of 20.7% to $26.80 per share in June 2024, outperforming the S&P 500. Chinese stocks have been in a bearish trend since February 2021, lagging U.S. and European stocks near record highs. Value investors like Charlie Munger saw potential in Chinese stocks due to growth prospects and the value of leading companies.
Time for China ETFs?
Although the Chinese economy suffered a lot on various issues in the past one year, the economy is slowly showing signs of a recovery.
Why This Could Be A Great Time To Buy China
China's government takes action to save property and stocks, leading to a bounce in struggling share prices. Investment managers are rushing back to China as fund launches reach a record high, capitalizing on the weak yuan. The iShares China Large-Cap ETF is outperforming the S&P 500, offering potential currency gains and exposure to consumer revival.
