Opinions

Drummond Brodeur iShares Xinhua China 25 ETF FXI-N PAST TOP PICK Sep 26, 2008

(A Top Pick July 24/07. Down 21%.) This was a way to get into Asia in a diversified way. If you want an ETF into China this is a pretty good entry point if you feel China will grow.

Drummond Brodeur

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TOP PICK

Based on a thesis that the trade war is going to wind down and US-China will reach a deal. So buy something in China.

COMMENT

Asian markets are looking attractive. This covers the top 50 Chinese companies, trading at 8x forward PE. It's trading at a discount. This ETF has been outperforming the S&P since October. A contrarian buy. China could be very strong in 12 months, especially if the US-China trade war ends which he expects will end.

TOP PICK

This'll benefit from a US-China trade deal, which he thinks has an 80% chance of happening. Something will get signed.

DON'T BUY

Speculate on this? He wouldn't take a position here. China's real economic growth has decelerrated since 2007 and underformed the U.S. China is not competitive in anything. There is nothing positive about the Chinese economy.

DON'T BUY

It has been making lower highs since 2018 and it has traded back down to significant lows. He thinks this is poised for another sizable push lower. The trade war between China and the US is crazy and is creating too much uncertainty to be investing here. Stay away.

BUY

Chinese large caps. It is off shore. He prefers ASHR-Q. FXI-N covers more of the old economy stocks. China has moved away from being an export lead economy to stimulating their own domestic consumption.

PAST TOP PICK

(A Top Pick Nov 09/18, Up 7%) This will break out, has serious upside, and he expects a US-China trade deal.

DON'T BUY

Production is still not entirely back on in China, the epicentre of the coronavirus. Car sales there in February plunged 92%; China is the world's largest car market. Wrong time to get into FXI, and has not performed well in the last five years.

COMMENT

Likes the ASHR market. The question is whether the risks around the tech cold war with China is fully priced in. China relative to the rest of the world is pretty fair value. Plays China through KBA and nibbling away at it.

BUY

options It's the big China ETF. They bought 10,000 December $33 calls. It's now $29.30. This is a big bet. He bought and will upside calls against them as it rallies.

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Drummond Brodeur iShares Xinhua China 25 ETF FXI-N PAST TOP PICK Sep 26, 2008

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