In spite of an exceptionally rough start to 2013, and in spite of significant under-performance over the last 2 1/2 years, China ETFs have been looking rather sharp over 1 month, 3 month and 12 months. Here are some of the more popular exchange-traded investments:
Why should investors think about China ETFs when the U.S. market boasts a “never-say-die” uptrend? One reason is that the U.S. equity uptrend may be losing steam. The three “higher highs” that have occurred since May have done so with less stocks above long-term 200-day moving averages. The percentage of S&P 500 stocks above the key trendline has been declining since May; waning participation may be a signal that the upside is limited.
In truth, the time it takes for U.S. politicians to forge a temporary agreement on the budget and the debt ceiling will likely drive market direction, even more so than upcoming earnings. Nevertheless, China ETFs are cheap relative to U.S. stocks and political headwinds do not exist in China today. For new money, you may wish to consider exposure to China.
Gary Gordon is president of Pacific Park Financial, Inc.