Tags: china | stock | rally

Experts See New Life in China Stock Rally

By Dan Weil   |   Wednesday, 14 Oct 2009 12:35 PM

China stocks may have slumped in the third quarter, but they’re headed higher now thanks to the country’s surging economy.

So say experts such as Peter Schiff, president of Euro Pacific Capital, and Robert Froehlich, senior managing director at Hartford Financial Services Group, Bloomberg reports.

The Shanghai Composite Index may jump as much as 32 percent in the fourth quarter, according to the average estimate of three major Chinese brokerages surveyed by Bloomberg.

Already the Shanghai Index has rebounded 4.8 percent from its 6.1 percent third-quarter drop. That decline was the worst among emerging markets.

But it only set up China for further gains, many say.

“They are the best value equity play anywhere in the world,” Froehlich said. “Valuations and the Chinese consumer are a one-two punch.”

As for Schiff, he said, “China is where we are putting most of our money out of the BRICs (Brazil, Russia, India and China). … That is where the growth and profits are going to be.”

The premium of the Shanghai Index’ price-earnings ratio over the MSCI EM (Emerging Markets) Index PE ratio stands at its lowest level in a year: 10.25 percentage points, according to Bloomberg.

Emerging market legend Mark Mobius of Templeton Asset Management likes China for the long run.

"Short-term, however, investors should be extremely cautious because markets today are very volatile and large corrections in this ongoing bull market could be substantial," he told The Wall Street Journal.

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China stocks may have slumped in the third quarter, but they’re headed higher now thanks to the country’s surging economy.So say experts such as Peter Schiff, president of Euro Pacific Capital, and Robert Froehlich, senior managing director at Hartford Financial Services...
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