Chinese Stocks Are On Sale

Chinese Stocks Are On Sale
Reda Farran, CFA

almost 3 years ago1 min

Chinese stocks have done little but drop since the Year of the Ox began on February 12th, making them cheap by historical standards.

The blue line above shows the price level of the MSCI China Index as a percentage of analysts’ price targets – that is, their estimates of what the underlying stocks are worth. The difference between the two has recently widened to historically steep levels, with the MSCI China Index now trading at a 25% discount to analysts’ targets.

Over the past 10 years, the index only traded at a discount of 25% or more to analysts’ price targets 6% of the time. And, on average, the index went on to return 10% over the next six months after dipping below that level.

That could signal a potentially attractive buying opportunity for Chinese shares or exchange-traded funds (ETFs) that track the MSCI China index, such as the iShares MSCI China ETF (ticker: MCHI).

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG