Heading into 2018 the Chinese markets rose significantly, pushing through their GFC high, into an all time high. Below is the chart of the Hang Seng, which is the top 50 stocks listed in Hong Kong.
China has been growing at a phenominal rate since 2008. China’s GDP has grown approx 166% in the last 10 years. Yet we still havn’t seen there markets recover and hold above the GFC highs.
We can see the rate of GDP growth slowed between 2015 and 2016 but jumped in 2017. Over 2015 – 16 we saw their market track sideways, but it took a strong rally into 2017 – 2018. If it weren’t for the recent tensions with China and US trade, we would likely have seen the Chinese markets hold up near their all time high at 33,484. Instead we have seen a 21.6% fall from the 2018 high to the current 2018 low.
Technically, the Chinese market is now in a down trend and with the increasing pressure from Donald Trump and no resolution to the trade issues in sight, we could see much further downward movement to come. At some point though, we will see buying come back into the Chinese markets, as the country is still growing strongly.
The big question is, will Donald Trump’s trade war slow Chinese growth and by how much?
There are two ways you can play the volatility in the Chinese markets.
First, you can wait for a resolution to the trade dispute, or a change of trend back to bullish. If one or both happens, and China’s economy is still growing strongly, you can look at buying a Chinese Exchange Traded Fund (ETF). This allows you to get exposure to China, trade through your broker in Australian dollars and settle in CHESS.
Code: CETF – VANECK VECTORS CHINAAMC CSI 300 ETF, will give you exposure to 303 of Chinese top company’s in one Equity transaction. https://www.vaneck.com.au/funds/cetf/Holdings/
Second, if you are looking to trade the short-term movements up and down, you can use a Mini Warrant. These are derivatives that give you a leveraged position to trade upward and downward movements on Hang Seng Futures with no margin calls. This option is far riskier as it is leveraged and will only preform as well as you can time the short-term movements of the Hang Seng index.
If you have a Traders Circle trading account, you can trade both above ASX instruments through us. We have a team of advisors ready to help you place the order and give you general product advice and their view of the markets.
Furthermore, we run education seminars to teach people how to trade markets. No matter your experience levels from beginner to experienced trader we have Trainers and Advisors that can help you.
More information: https://www.traderscircle.com.au/trading/
Or call one of our advisors on 03 8080 5788