2024-06-21 04:39:38 ET
Summary
- 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.
- Over-conservative Chinese banks (~30% of FXI) yield opportunities from a reversal in credit sentiment.
- Overall favorable macro and discretionary investment policies with FXI poised to benefit.
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For further details see:
FXI: A Portfolio Capturing China Reversal And Secular Trends