So, is it still worth investing in the country, or have we missed the boat? First and foremost, as yet there is no 'one' Chinese economy, whatever they may say. It is still a disparate mix, with an onshore and an offshore version of the yuan; Hong Kong, Macau and Taiwan existing as semi or totally independent entities; and a host of futures and stock markets.
Data for Hong Kong's Hang Seng index goes back a good 50 years, morphing as it shifts from British colony to an independently administered area of China. One of the first so-called emerging markets to really capture international attention, it saw some impressive rallies in the early 1990s and again in 2006-07. Consolidating in a massive symmetrical triangle since the record high, interim lows have been moving higher, suggesting an upside break is likely. We would target a return to the all-time high probably sooner rather than later.
There are two large stock exchanges on the mainland, in Shanghai and Shenzhen, the former's composite index being the biggest A and B shares of its market. First listed in 1990, price swings between 2006 and 2008 were vicious indeed, due in part to inexperienced but aggressive investors in a market finding its feet. A repeat performance at a smaller degree was seen in 2014-16, probably frightening off the unwary. Steadier price action since then suggests it has matured and further steady, if slow, progress is on the cards.
The CSI300 index, calculated by the China Securities Index Company Ltd, is capitalisation-weighted and covers the top 300 A-shares listed on both stock exchanges. Data only goes back to 2005, and like the Composite saw ridiculous volatility between 2006 and 2008 and again in 2014-16. We feel that, despite these terrifying moves, investors wanting to diversify portfolios will be forced to take positions in the index.
Finally, and probably more controversially, Taiwan's Weighted Index in Taipei was established in 1962 and contains all 809 companies listed on the exchange. In the three years to 1990 it soared over sevenfold - and promptly slumped. Stuck between 3500 and 10500 since then, this large well-established range could possibly be tested later this year. Looking ahead, we feel there is a good chance of further very significant gains to new all-time highs over the next three years or so. Not for the faint-hearted, and subject to political shifts in China and countries around the South China Sea, this index looks like the sort of broad band that had constrained stock markets in India, Indonesia, and to a lesser extent Turkey until vast leaps and gains were achieved by these economies.
Too much like hard work? See last week's selection of ETFs.
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