by FS
FS Insider recently spoke with Variant Perception’s Tian Yang on whether China’s recent stimulus measures will help to stabilize economic growth (see Leading Indicators and Liquidity Declining, Says Variant Perception’s Tian Yang).
China’s Shanghai Index is up 25 percent year-to-date and investors are hopeful for more growth based on recent stimulus measures by the Chinese government. What is your outlook?
“Overall, I think the market is front running the policy easing a little bit. I think the hope with the China rebound is that we get a 2016-style massive reflation where they open the taps, liquidity floods into the system and they do a lot of easing on the fiscal side as well. You get infrastructure investment and then that drives a global risk rally or reflation trade. What we’re seeing today is not quite that. The government is making a lot of noise and they seem very serious about taking action to support growth but on the liquidity side, things are actually a lot tighter than before… When you look at the balance sheet of non-bank financial institutions in China, it’s still actually contracting, it’s just the pace of contraction has slowed down a lot… I think because the policy objectives from the government are slightly different this time, investors are probably going to be disappointed by the magnitude of the reflation that’s going to happen…”
In that case, would you say you are neutral or bearish on China?
“In terms of stance, I tend to think about three main components. First, the macro component we talked about which right now is somewhat neutral. The second component would be market dynamics and seeing whether China is oversold or overbought, these kind of momentum metrics. The third component would be valuations—ultimately what is the expected return? And when you look across these components, overall, are things in China cheap? It’s not as cheap as before the rally, but they’re not too expensive. If you look at the market dynamics, I think it’s getting a bit more overbought than oversold now and the macro is kind of somewhere in the middle. When you net all that out, a neutral stance is probably more warranted.”
Log in to listen to Yang’s full interview with FS Insider where he also discusses the message coming from leading indicators and liquidity measures and the implications this has for various global markets, inflation and more. Not a subscriber? Click here for a free trial.
For more information about Financial Sense® Wealth Management and our current investment strategies, click here.
- Here Is Why 37 Percent Of U.S. Farmers In The Western Half Of The Country Are Killing Their Own Crops
- IT’S HAPPENING! MULTIPLE COVID19 LAWSUITS AND WINS.
- Fully Vaccinated Mike Tyson, says he was beaten into submission taking covid vaccine says he’s about to die now in wheelchair
- The Curious Case of Adam Bies Who Was Arrested for Threatening the FEDs After Posting on GAB
- Crime is exploding everywhere. Fake solutions abound
- AN AUTUMN WITH EPIC COLLAPSES OF STOCKS, DEBT, CURRENCIES, MUCH HIGHER INFLATION – LEADING TO POVERTY & SOCIAL UNREST
- The Chinese economy is experiencing a near-complete collapse…
- Pfizer is Funding Facebooks Fact-Checking Partner.
- Too Little, Too Late, Countless People Already Died a Horrible Death!
- Video: Women Tie Themselves in Knots While Attempting to Define “Woman”
Views: 5