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The Chinese government recently announced new stimulus measures aimed at boosting the nation's economy. This news has sent Chinese stocks soaring, with the rally continuing as markets enter the new week. Asking for a Trend host Josh Lipton breaks down the key details of these stimulus measures, exploring the potential pros and cons for U.S. investors.
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This post was written by Angel Smith
Chinese stocks are soaring today, building on last week's rally following the announcement of Beijing's economic stimulus plan. So is now the time to buy? Yahoo finances Josh Lipton joins me now to explain.
That's right, Ali. So many investors remember have thought of Chinese equities as almost uninvestable in recent years, but not anymore. They have piled in to Chinese stock. It is a big change in sentiment, and it's thanks to the Chinese government, which announced long awaited stimulus measures aimed at boosting their struggling economy, and that got investors excited. Check out the FXII, the ETF that tracks China large cap companies. It has moved sharply higher, up nearly 20% in just the past week, its best week ever, going all the way back to the start of that ETF in 2004. So looking ahead, is this a good time to buy Chinese equities? Well, some very known well-known investors are pounding the table that indeed it is. For example, billionaire investor David Tepper told reporters he is buying everything related to China. I thought that what the Fed did last week would lead to China easing, and I didn't know that they were going to bring out the big guns like they did. Tepper telling press last week, adding, we got a little bit longer, more Chinese stocks. And here on Yahoo Finance, we spoke with Anthony Sasin of Crane Shares, who echoed that same optimism, arguing that many Chinese stocks have been already been plenty beaten down. In other words, they have already priced in a lot of bad news in his opinion, and now do look attractively valued, primed to benefit as this new stimulus does kick in. However, there is another side of this trade too, of course, strategist who came on Yahoo Finance and urge caution, telling us that the jury in fact is still out.
So, only time will tell, but repeated attempts in recent years have not led to lasting gains. Now, of course, a potential 20% market rally could boost Chinese consumer sentiment in the near term, but that might be offset by the continued weight of the property market on confidence.
So Kleintop's bottom line there. Yes, these recent moves by the Chinese government do represent a positive step, but it is unclear right now, he would argue, how long lasting an impact that's really going to have on the Chinese economy and markets, Ali.
All right, Josh, thank you so much. Certainly something to keep in mind as we move forward. Appreciate it.
