Investing in China - Index Tracker

[M3Driver]

Hi

I'd like to know the best way to invest in the Shanghai Stock Exchange and/or the Hong Kong Stock Exchange via an index tracker. I currently have a Fidelity Stocks and Shares ISA.

I know there are general 'Emerging Markets' trackers which include a few countries such as China, but I'd like to specifically invest only in China just now.

Thanks

[davepoth]

China's a falling market, and quite rapidly at the moment. It's coming off the back of a bubble. Are you looking for a dumb tracker, or something a bit more active?

[M3Driver]

Do you think we've a way to go before seeing the bottom?

I'm a passive investor, so just a basic low-cost tracker will suit me fine. I can hold off for a few weeks / months if it continues to fall, but I don't want to miss the opportunity to get a couple of thousand in while it's down. I'm looking to invest for the long term.

[davepoth]

Based on the history:



I'd guess (and it's just a guess) that it could stabilise around 3200 or so. It could go right back down to around 2500 though. So much of the market is based on small investors borrowing money to buy stocks that it's jumping all over the shop.

[Pillskii]

If I was investing in China I'd be going down the active management route rather than passive. many of the listed companies have little transparency, questionable fundamentals and some quite frankly look almost completely bogus. A good active manager may be able to steer you away from these types of companies, in fact in the very recent collapse most active managers that I follow in China have outperformed their index benchmark by quite some way (albeit all still losing some scary numbers).

Investing long term I'd still be positive on China, short term it's anyone's guess and you'd have to brace yourself for the possibility of a continued downtrend and some big paper losses.

[davepoth]

8.5% down today. I think I'd be inclined to keep my cash under a mattress until the market bottoms out.

[Mermaid]

davepoth said:

8.5% down today. I think I'd be inclined to keep my cash under a mattress until the market bottoms out.

The Government manipulation is not working. People are going to be mighty angry.

[GingerMunky]

It is complete chaos, small investors borrowed heavily to buy in to the market before the crash (much like the Wall Street crash in 1929), and now major companies and institutional investors in China are banned from selling their holdings to prop up the market. It is suggested that the cumulative cost of propping up the market to the Chinese government and Chinese institutional investors has been $0.8Tr in the last month! Almost as much as the US Fed pumped into QE over a few years!

International investment companies are suggesting polar opposites of 'sell now' (its going to get worse) and 'buy now' (its all under valued). Personally I haven't bought a China active fund for almost 18 months, and would be very reluctant to increase my stake right now. There is no controlling this highly volatile beast, fundamentals have almost nothing to do with the market. Chaos.

[Mermaid]

http://www.davidmcwilliams.ie/2015/07/30/chinas-cr...

China & its impact on neighbours

[shigs]

Hi OP,

I'd stay well clear unless your risk profile suits.

China is a gov fuelled mess! Chinese are incredible savers, the wealthy save in excess of 70% of their income, even the poor save a large percentage of there income. Chinese love property and the majority of these savings went straight into the property market creating a huge bubble, 25% of properties in china are vacant. For over a year now, it was very clear that the property market was a bubble waiting to burst which has created a wave of unsophisticated investors pumping money into the stock market as a result the following has happened.

China’s stock market went up 159% in one year
Gaining 30% in just two months
Has lost over 40% in the last 30 days
Gov have imposed a six-month ban on big shareholders selling stocks.

As suggested by a Pillskii if you are hell bent on getting involved, go down the active route.

[Fittster]

shigs said:

Hi OP,



As suggested by a Pillskii if you are hell bent on getting involved, go down the active route.

Is there any evidence that an active fund out performs a tracker in a volatile market over the medium / long term?

[shigs]

Fittster said:

Is there any evidence that an active fund out performs a tracker in a volatile market over the medium / long term?

Hi Fittster,

Not the standpoint I was taking in my post, and considering the variables surrounding your question it's not something that can be easily answered. I was merely highlighting some ugly facts about the situation in China, personally I would only look at China (which i'm not) with short set ups in mind and if i was going to go down the active route that's what I'd expect to hear from my advisor.

With any "correction" there's a lot of money to be made, but as I said prior, your risk profile really needs to suit and you must have a very clear view and understanding of the global conditions (not just china).

Junk bonds in the energy sector are just as dangerous as the situation in China, we have fracking companies surviving off credit as most need oil prices between $55 - $85 just to cover cost.

[Fittster]

I think I come from the position that unless there's a huge body of evidence to support active managers then go with passive tracker.

I'm not sure what, if any passive trackers are available to a private investor, especially if you want to hold the investment in a ISA/SIPP.

Anthony Bolton was a active manager superstar in the UK but his China fund was a bit of flop. Has that fund managed to ride the recent boom but avoid the current crash?