The end of China Stocks rally?
$NIO Inc(NIO.US$ $Alibaba(BABA.US$ $PDD Holdings(PDD.US$ $JD.com(JD.US$ $Futu Holdings Ltd(FUTU.US$ $iQIYI(IQ.US$ Firstly my views and opinion are not a professional view, so following blindly may make you lose alot of money.
How long will this inflation end?
No one could predict how far this inflation will go but base on the latest indexes. From Manufacturing, Oil inventory, oil price etc etc, we are looking at data that may suggest a slowing economy. I would think likely this following prediction would at least happen in the month of July.
I would think 70%-75% Chance inflation rate will fall below or at worse meet forecast in July report.
Remembering decision will be made in July meeting with regards to 0.5 or 0.75% interest rate. I would believe that there is a 45-50% chance US fed may choose to retain a 0.5% interest increase instead of 0.75% in July.
And if this happens, likely we are very near the bottom of mass dumping of stocks. There will be renewed optimism in the stock market. But this does not mean the stock market is any less volatile in the near future nor are we heading back to bull in the US.
No one could predict how far this inflation will go but base on the latest indexes. From Manufacturing, Oil inventory, oil price etc etc, we are looking at data that may suggest a slowing economy. I would think likely this following prediction would at least happen in the month of July.
I would think 70%-75% Chance inflation rate will fall below or at worse meet forecast in July report.
Remembering decision will be made in July meeting with regards to 0.5 or 0.75% interest rate. I would believe that there is a 45-50% chance US fed may choose to retain a 0.5% interest increase instead of 0.75% in July.
And if this happens, likely we are very near the bottom of mass dumping of stocks. There will be renewed optimism in the stock market. But this does not mean the stock market is any less volatile in the near future nor are we heading back to bull in the US.
Is the US market a buy now?
I think the US market is still not very attractive if you are looking at it from a medium term perspective. US Stocks that likely you are expected to sell within 6 months to a year in general not going to do that good. Even if as I believe we may hit the very near the bottom of the drop, the tightening policies and shrinking market are going to eat in revenues and earnings of companies. In months to come there will still be alot of volatility. Many US companies may not do that well or mediocre at best at their quarterly reports. Especially when Europe and many parts of asia are not spared from economic woes.
I think the US market is still not very attractive if you are looking at it from a medium term perspective. US Stocks that likely you are expected to sell within 6 months to a year in general not going to do that good. Even if as I believe we may hit the very near the bottom of the drop, the tightening policies and shrinking market are going to eat in revenues and earnings of companies. In months to come there will still be alot of volatility. Many US companies may not do that well or mediocre at best at their quarterly reports. Especially when Europe and many parts of asia are not spared from economic woes.
Does this also mark the end of China stock bull as well?
I think no. As you can see from the graph of SP500, when inflation pressure is pushed down, there seems to be no support among the SP500.
I think no. As you can see from the graph of SP500, when inflation pressure is pushed down, there seems to be no support among the SP500.
As for the HSI, we can see that when inflation pressure is pushed down, strong market support is holding it up. This is reflected in almost all China major stocks listed in America.
Gloomy sentiments are generally diminishing over time unless renewed gloomy affirmation from economic data, politics or macro economics.
These China companies now operate in a market recently shrunk by lockdown and with China's policy to push the economy they will experience good momentum and an expanding market economy. This would likely translate to good revenue, earnings, valuation and growth in the near future. And likely you will see alot of cherry blossom quarterly reports.
Beside a positive outlook, there is a strong uptrend market sentiment in HK and China that may pull the China stocks along.
Of course the China business community is expecting more push from the Chinese government to expand and calls to stop the exodus of foreign firms in China. But anything on speculating on possibilities should not have too much weight until conclusive.
Even so, China stocks seem very attractive in the short to medium term. As for the long term, it's all about individual company valuation.
These China companies now operate in a market recently shrunk by lockdown and with China's policy to push the economy they will experience good momentum and an expanding market economy. This would likely translate to good revenue, earnings, valuation and growth in the near future. And likely you will see alot of cherry blossom quarterly reports.
Beside a positive outlook, there is a strong uptrend market sentiment in HK and China that may pull the China stocks along.
Of course the China business community is expecting more push from the Chinese government to expand and calls to stop the exodus of foreign firms in China. But anything on speculating on possibilities should not have too much weight until conclusive.
Even so, China stocks seem very attractive in the short to medium term. As for the long term, it's all about individual company valuation.
In conclusion, I am very optimistic about China stocks but I like to remind you. If you are buying stocks, always know that there are good stocks that perform well in the bear market and bad stocks that perform badly in the bull market. A market trend is a general trend. Stay safe investing 💪👍
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