Deutsche X-trackers Harvest CSI 300 China A-Shares (ASHR-N)

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.

He loves this. 300 of the most liquid and largest chines shares. China has all the things you want to see as a global investor. Low valuation, cutting taxes, easing monetary policy.

(A Top Pick Sept 20/16. Up 19%.) In the last 5 years, China has been everybody’s favourite whipping boy. His view has been completely different. 40% of the holdings are Chinese banks. China is making some good progress towards economic rebalancing. The rise of the Asian consumer is the biggest macro story of the next decade. He just sold this today as it had become very overbought.

China is looking good for now and is under owned and under loved. He does not see a crash in China. The market on the mainland had come down so much and is so cheap now. You don’t want to be overweight Chinese industrials, but most funds concentrate in financials.

(Top Pick Sep 20/16, Up 2.88%) The main land Chinese Market. The macro story continues to excite him. He thinks China is doing what they said they would do. They are rebalancing away from exports. He loves the Chinese stock market.

This tracks the A shares in China which is the onshore market. There is also a B shares, but much smaller. There is also the H share market which are Hong Kong listed stocks. What she likes about some of the onshore market in China is that there are certain sectors that are not well represented outside. Because it is predominantly a retail market in China, the volatility is typically higher than the Hong Kong side.

(A Top Pick July 22/16. Up 1.25%.) Probably his most controversial pick and relates to perceptions of the marketplace that China is about to embark on an economic crash and are going to devalue their currency. His view is that the slowdown was coordinated by policymakers. China is on a longer running slow down, and he can see it going down to 3% GDP in the next few years. The market has really punished the stocks there, particularly the Chinese banking sector. This is a multiyear hold.

Feels the China story is so important. The market is getting it wrong. Chinese stocks have so many positive benefits in the long term.

There is a lot of misinformation on China. Everyone is trying to interpret the Chinese economy through a Western prism. If you are going to understand the Chinese economy, you have to look at the directives of the government. There was a big bull market from 2002 to 2011 that was driven by exports. Now the government is wanting to rebalance to stimulate the middle class. 40% of this is banks, which are trading at very, very cheap valuations. The worst crash possible is already priced in.