**China ETFs Attract Billions as Investors Hope Selloff Is Over**
**Fear of regulatory pressure wanes as government support underpins a market rally**
**By Eric Wallerstein, The Wall Street Journal, July 6, 2022**
**Chinese equities bottomed in mid-March after losing roughly half their value in a yearlong plunge, as a campaign of regulatory crackdowns, fear of stocks delisting from U.S. exchanges and demand-crimping Covid-lockdown measures created a risk environment some deemed uninvestable. With investor fears assuaged by a market-friendly speech from Vice Premier Liu He, known as China’s economic czar, equities have rebounded since....**
**Some tariffs may be rolled back...In conjunction with monetary and fiscal easing measures, China has begun loosening its regulatory grip on both consumers and businesses. The Chinese government has begun to reduce the stringency of its “zero-Covid” policy...**
**Chinese equities may not be for the risk-averse, though: China internet stocks are nearly twice as volatile as the S&P 500 over the past year...** [end quote]
Been down so long it looks like up to me?
Ready to lay money on it?
Some tariffs may be rolled back…In conjunction with monetary and fiscal easing measures, China has begun loosening its regulatory grip on both consumers and businesses. The Chinese government has begun to reduce the stringency of its “zero-Covid” policy…
Inflation in China…is it low?
While China gives more weight to clothes and food, which fits its status as an upper middle-income country, the US places more emphasis on shelter and transport, both of which are easily affected by global energy prices and domestic monetary conditions.
PPI and CPI used to have a strong correlation – consumer prices would follow suit if prices for production materials rose or fell. In China’s case, however, the correlation has been weakening in recent years because of hog and grain cycles.
China’s PPI fell 3.7 per cent in May 2020, but grew 13.6 per cent in October last year, while domestic consumer prices remained relatively stable.
Meant to say the Chinese government is holding the markets up.
That can be blown totally away by a failure in the swaps market.
The emerging markets ETFs are also interesting now. They tend to have around 30% Chinese/HK stocks. VWO is the main Vanguard one. I like the GMO 7-year asset class forecasts, and as of May 31 2022 the EM class was the only major one they forecast as having close to normal equity-like real returns. Chinese stocks have gone up a bit lately, but EM as a whole hasn’t, fwiw.