10 Reasons to Buy China
  1. China is universally hated, despised, trashed. No one owns it. There is a large structural short in China.
  2. There are China bear funds all over the place. Where are the Brazil or Russia or India bear funds? There aren’t any, even after atrocious multiyear performance, endemic corruption, appalling mismanagement, and mounting bad debt problems in India, Brazil and Russia. Wait until the Russians get the $50bn bill for the Sochi Olympics.
  3. It is naive to think the China MUST induce a recession to rebalance growth when it does not need to do so. Federal and large metropolitan coffers are full, and current account balances exceed $200 bn. Net foreign assets are second only to Japan globally. China must fix the aircraft while it is in the air. This is the plan.
  4. The upcoming AMC listing is well-received by cornerstone investors and should do very well. Indicative demand exceeds $3bn China knows this MUST succeed.
  5. The upcoming Plenum should deliver plenty in the face of low or no expectations. Think about how important the 1993, and the 2003 Plenums were.
  6. The recent page 1 story in the Intl. New York Times (October 28, 2013) “Forging an Art Market in China” is bottom of the market stuff — everyone knew about fraud in the art market a long while ago.
  7. The government knows it must clean the capital markets up if the next Five-Year Plan is to work, so severe discipline is being imposed and a real crackdown on corruption is in the offing.
  8. The degree to which the government is allowing Tencent and Alibaba to spread their wings in the private sector in just about every area is worth watching.
  9. The government is spending a fortune on environmental cleanup, a legitimate infrastructure investment which is bullish for growth.
  10. As long as China has current account surpluses, the PBOC has complete control over the interbank market and interbank rates. It can hike and drop them as it sees fit. Neither India nor Brazil has this luxury. Rates must rise in both countries.

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