14.03.2022
When China sneezes...
Renewed lockdowns, ongoing regulatory worries & fears supplying Russia would incur Western sanctions. The hits keep coming for corporate China.
That’s reflected in Qi’s snapshot of China across asset classes where every model is cheap to macro. That’s most acute for large cap China FXI; least acute for pan Asian High Yield KHYB & Rare Earth ETF REMX.
The only redeeming feature is that the recent sell-off has left Chinese assets having absorbed a fair degree of bad news, at least in macro terms. Qi’s China multi asset watchlist will give real-time updates on the relative leaders & laggards.
The only redeeming feature is that the recent sell-off has left Chinese assets having absorbed a fair degree of bad news, at least in macro terms. Qi’s China multi asset watchlist will give real-time updates on the relative leaders & laggards.
For domestic Western investors the critical question is what are the implications? Chinese tracking GDP is a core input in every equity model. In the chart below we show those US & European sectors in regime & their sensitivity to Chinese growth.
Three are especially reliant on Chinese growth. European Retail has a slight advantage in that it’s modestly cheap. US Energy has the commodity dynamic but European Travel & Leisure displays the highest sensitivity &, relatively speaking, starts from a rich valuation.
Three are especially reliant on Chinese growth. European Retail has a slight advantage in that it’s modestly cheap. US Energy has the commodity dynamic but European Travel & Leisure displays the highest sensitivity &, relatively speaking, starts from a rich valuation.
