/biz/ - Business & Finance

China shares are at 13 P/E and all y'all are still playing with 20 — 25 P/E stocks on the cusp of a recession, magical internet beans, or even worse zero-growth European securities.

The yuan is only going to strengthen against the dollar over the coming decades, China A-Shares buy & hold seems to me like the best strategy for all small investors. In Shanghai you'll get quality assets at a discount because U.S. banks aren't entering China due to political risk and retail investors don't eye Chinese assets, whereas in NYC you'll get junk assets at a premium because all the banks and retail investors have crowded the market.

It just makes sense. You're not only taking advantage of your freedom of movement as a retail investor compared to large institutions, but also riding an enormously favorable forex movement with baseline economic conditions that yield 4 — 5% GDP growth every year.

If you bought yuan-denominated bonds and securities, could you theoretically profit immensely from the appreciation of the yuan against the dollar after CNY foreign exchange is liberalized?

Invest $1k in ¥7k assets at 1:7 exchange rate. China liberalizes the yuan and exchange rate becomes 1:4. Your ¥7k assets are now worth $1.75k yielding a profit of 75% just from foreign exchange alone, not counting appreciation. Even bland government bonds would have massive returns.

China itself will eventually have to ease off the dollar in the next 30 years and it seems that opening up exchange rates is a universally acknowledged prerequisite for global adoption of a currency. Researchers estimate that CNY forex restrictions cause the currency to be undervalued as much as 50%.