Investing in China: The River Runs Bloody
By Ian Cooper
The saddest but truest Wall Street categorical imperative is to buy when the blood runs through the streets. When every one is terrified, running ears covered, eyes shut to the exit doors, you wait for the blood flow to turn to trickle, and you buy everything that’s been slaughtered.
As I said the other day, Chinese indices are waiting on the upcoming parliamentary session, which could end with suggestions for rate hikes. With that in mind, we’re confident in saying that a continuation pattern of the recent melee is likely ahead of the parliamentary sessions, which begin this Monday.
Rate hike speculation spiked after central bank governor Zhou Xiachuan, as quoted by MarketWatch.com, said, “‘If inflationary pressure increases, the central bank should consider monetary policy action, including interest rate policy. The central bank must take action to curb inflation and maintain a stable yuan. This is our responsibility.’”
We’re taking a wait and see approach to buying anything right now. We have to wait for the 12-day parliamentary session to wrap up.
Investing in China: Also on parliament’s agenda…
According to Reuters, “Parliament is set to pass China's first law on property rights, after years of ideological battles over wording that gave equal protection to private and state-owned property”;
“Parliament could consider a shake-up of the way China manages its $1.066 trillion stockpile of foreign currency reserves, the world's largest, which are now invested mainly in low-risk, low-return bonds”;
“Policy makers propose a new agency that could put money into higher-yielding assets such as shares, property and natural resources. Such a diversification could rock global markets if handled clumsily”;
“After a tumultuous year which saw Shanghai Communist Party chief Chen Liangyu sacked and lose his Politburo seat over misuse of a 10 billion yuan social security fund, China's top judge and prosecutor will detail corruption crackdown plans on March 13”…
Stay tuned to Early Alert Trader for “blood in the streets” buying opportunities.
Take care,
Ian L. Cooper, Editor, Early Alert Trader