China’s stocks have turned around. From the start of 2010 through 2016, SPDR S&P China (symbol GXC), a popular exchange-traded fund, returned an annual average of a little more than 2%. So far in 2017, the fund has returned 42.7%, about three times as much as the U.S. market. (Prices and returns are as of September 29.)
China’s sparkling performance comes despite having been a prime target of President Trump, who has criticized China’s trade practices and its $347 billion surplus with the U.S., China’s largest export market. Chinese stocks began their dramatic rise late last year, shortly after Trump was elected. Investors must believe either that the Trump administration will not erect trade barriers or that the action won’t have much effect.
Or maybe the Chinese stock market is simply playing catch-up. Investors were spooked when China’s economy began to decline in 2011 from a doubledigit annual growth rate to between 6% and 7% now. They worried that domestic unrest would increase if the economy faltered and failed to absorb enough new workers. But unemployment is just 4%, and according to the Economist, China will grow 6.8% this year—the second-fastest rate (after India) among the 57 countries the magazine tracks. Next year’s projection for China, 6.5%, puts the country again at number two. Inflation is under control at less than 2%.
Still, pessimism about Chinese economics and politics troubles investors, and so do a lack of transparency and a surfeit of government intervention, both in the economy (especially banking) and in financial markets. In June, index provider MSCI announced that starting next summer it would include mainland China stocks in its regional, global and sector indexes, which determine the composition of popular exchange-traded funds such as iShares MSCI Emerging Markets (EEM). But as evidence of its concern about the integrity of China’s markets, MSCI is moving warily, including only the largest and most liquid mainland stocks and weighting them at just 5% of their market capitalization (shares outstanding times price) rather than 100%.
Economic powerhouse.
Diese Geschichte stammt aus der December 2017-Ausgabe von Kiplinger's Personal Finance.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent ? Anmelden
Diese Geschichte stammt aus der December 2017-Ausgabe von Kiplinger's Personal Finance.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent? Anmelden
FREE HELP FOR COLLEGEBOUND STUDENTS
This program’s mentors assist applicants as they fill out the FAFSA, write essays and more.
WHAT YOU SHOULD KNOW ABOUT SPOUSAL IRAS
You typically need earned income to contribute to an individual retirement account, but a spousal IRA provides an important exception to this rule.
SELLING SHARES? HERE'S HOW TO MINIMIZE TAXES ON YOUR GAINS
ET'S say you've been regularly buying shares in a booming tech company over the past few years, but now you want to start taking some of those profits, perhaps to rebalance your portfolio.
Strategies for Novice Investors
AS part of a lifes kills program for young, single mothers, I was asked to teach a class on how to get on top of your finances.
ANSWERS TO YOUR 529 PLAN QUESTIONS
Thanks to recent policy changes, families have more options for what to do with money sitting in these tax-advantaged accounts.
Rate-Cut Winners and Losers
NOW that the Federal Reserve has cracked the interest rate ice, the next development will be to separate winners from losers.
SHOULD YOU BUY THESE RED-HOT FUNDS?
Covered-call ETFs are popular but come with plenty of caveats.
DIVIDEND STOCKS ARE READY TO REBOUND
Our favorite dividend payers are poised to benefit as falling interest rates lure investors back.
IS A 55+ COMMUNITY RIGHT FOR YOU?
These age-restricted developments appeal to older adults seeking abundant amenities and an active lifestyle.
AT LONG LAST, RATES ARE DROPPING
Consider these portfolio moves now that the Federal Reserve has cut its benchmark interest rate.