{"id":48900,"date":"2014-03-24T22:50:31","date_gmt":"2014-03-25T02:50:31","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=48900"},"modified":"2014-03-24T22:50:31","modified_gmt":"2014-03-25T02:50:31","slug":"buying-into-chinas-economy-while-investors-panic-over-the-crash","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2014\/03\/24\/buying-into-chinas-economy-while-investors-panic-over-the-crash\/","title":{"rendered":"Buying Into China\u2019s Economy While Investors Panic Over \u2018The Crash\u2019"},"content":{"rendered":"

By MoneyMorning.com.au<\/u><\/a><\/p>\n

It’s an obvious point that the mainstream financial media missed: China’s Economy<\/a><\/strong> has already crashed, the bounceback is still to come.<\/p>\n

\n

Sorry, but we agree with pascoe<\/strong><\/h2>\n<\/p>\n

It’s a pretty rotten day when your editor finds agreement with Michael Pascoe. Yet that’s the position we’re in this morning.<\/p>\n

In an article for the Age<\/em>, Pascoe pours cold water on the latest data coming out of China. The mainstream is getting into a bit of a fluster that China’s economy could be slowing down.<\/p>\n

This will apparently lead to an almighty crash. But Pascoe makes a good point, which in all honesty we can’t argue against:<\/p>\n

\n

‘As the Chinese economy is almost twice as big now as it was in 2007, growth of 7 per cent is a similar increase in real economic activity as 13 per cent growth was seven years ago. China will still overtake the US as the world’s biggest economy before the end of the decade.<\/em>‘<\/p>\n<\/blockquote>\n

Actually, we can make one small point to counter it. Whether it begins a big point is anyone’s guess. The issue isn’t so much the rate of growth but the growth that businesses expect.<\/p>\n

In other words, if businesses have invested by buying new machinery and materials on the expectation of 7.5% growth and the growth is ‘only’ 7%, then it would have an impact.<\/p>\n

A comparison is if an individual starts spending money based on the expectation of a 5% pay rise but only gets a 4% pay rise. It may not be a huge difference but it would likely impact that person’s spending for the following year.<\/p>\n

It’s not a perfect comparison, but you get the point.<\/p>\n

\n

First the China bubble burst, then the ‘bounceback’<\/strong><\/h2>\n<\/p>\n

But either way it’s also important to remember something we’ve tried to bang home for the past few months.<\/p>\n

Those holding out for a Chinese economy crash may not realise that in stock market terms it has already happened. The following chart of China’s CSI 300 index makes that clear:<\/p>\n

<\/a>
\nSource: Google Finance<\/strong>
\nClick to enlarge<\/a><\/em><\/div>\n

Since late 2007 when China’s market hit the top, it has fallen 62%. It’s a big fall…a very big fall. So it’s somewhat laughable for some folks to say China is still a bubble.<\/p>\n

So is now the time to buy back into the China Economy<\/a><\/strong> story? That’s where we’re putting our money.<\/p>\n

It’s always dangerous to try and catch a falling market. Jason made that point in his latest issue of Diggers and Drillers<\/em> when he recommended a classic ‘bounceback’<\/a> story in the mining services sector. If Jason is right, a quick 50%+ gain could be on the cards.<\/p>\n

But as for catching a falling market, as a speculator we don’t mind the risk of getting on a story early. The fact is you can never be sure when the market will turn.<\/p>\n

We’d rather get in early with a small exposure and then add to it over time rather than waiting for the market to make a decisive turn upwards – by then you will likely have missed some of the big early gains.<\/p>\n

Cheers,<\/strong>
\n Kris+<\/a><\/strong> <\/strong><\/p>\n

PS:<\/strong> If you can’t make it to Melbourne for our World War D<\/strong> conference on March 31-April 1, don’t worry. We’ll be live tweeting the event throughout the two days. To get all the action live, follow us on Twitter @MoneyMorningAU<\/a> <\/p>\n

From the Port Phillip Publishing Library<\/em><\/strong> <\/p>\n

Special Report: ASX: 15,000<\/a><\/p>\n

Join Money Morning on Google+ <\/u><\/a><\/strong><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nBy MoneyMorning.com.au<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au It’s an obvious point that the mainstream financial media missed: China’s Economy has already crashed, the bounceback is still to come. Sorry, but we agree with pascoe It’s a pretty rotten day when your editor finds agreement with Michael Pascoe. Yet that’s the position we’re in this morning. In an article for the … <\/p>\n

Continue reading “Buying Into China\u2019s Economy While Investors Panic Over \u2018The Crash\u2019”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-48900","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/48900","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=48900"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/48900\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=48900"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=48900"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=48900"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}