China: this crash is a buying opportunity

Investors should view this summer’s China stock crash as a good opportunity to invest, says Rupert Foster


We've seen a very fast rollover in the Chinese market from the decent 15% bounce from the bottom the extent of the move shows that investor confidence is still febrile.

There's every chance that the Shanghai and Hong Kong markets will return to the lows, and I can see them bouncing around like this until September. There is obviously a chance of going to a new low if this happens then a fall to 3,000-3,300 seems possible on the Shanghai exchange.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

However, on past experience, the government will react quickly. Investors should still view this summer as a good opportunity to research ways to invest in China, as I discussed recently in MoneyWeek magazine.

The flash PMI (purchasing managers' index) economic data out at the start of this week, showing weakness in the manufacturing sector, was not good. But it's a volatile, early data point. At worst it will bring on more monetary easing and fiscal stimulus, and at best it will be revised up when the official data comes out.

Advertisement - Article continues below

I do not believe China is slipping into recession. The property market is bottoming, as is other consumption data.

Meanwhile, Goldman Sachs estimates that $700bn-$800bn in capital has left China in the last year. This sounds unnerving, but reflects the newfound ability for the Chinese to move money without as much censure, plus the anti-corruption drive.

This movement has fanned property markets from Sydney to London, and will continue to do so. China is still running a big current account surplus so its foreign currency holdings are still rising.



Stock markets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
Stock markets

There are lots of reasons to be bearish – but you should stick with the bulls

There are plenty of reasons to be gloomy about the stockmarkets. But the trend remains up, says Dominic Frisby. And you don’t want to bet against the …
17 Jul 2019

Good news on jobs scares US stockmarkets

June brought the best monthly US jobs growth of the year, but stockmarkets were not best pleased.
11 Jul 2019

Trade-war ceasefire boosts stockmarkets

Stockmarkets sighed with relief after the G20 summit in Japan brought a handshake between Donald Trump and Xi Jinping.
4 Jul 2019

Most Popular

UK Economy

Britain has a new chancellor – get ready for a major spending splurge

The departure of Sajid Javid as chancellor and the appointment of Rishi Sunak marks a change in the style of our politics. John Stepek explains what's…
14 Feb 2020

Money Minute Friday 14 February: The latest from RBS, Britain's state-owned bank

Today's Money Minute previews results from RBS – Britain’s state-owned bank – and from pharma giant AstraZeneca.
14 Feb 2020
Silver and other precious metals

You should all own some silver. Just don’t expect it to make you rich

Silver is cool, beautiful and immensely useful. But for investors it's the most frustrating of metals. Dominic Frisby explains why you should own some…
12 Feb 2020

Is 2020 the year for European small-cap stocks?

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, on why he believes European small-cap stocks are performing well.
12 Feb 2019