/biz/ - Business & Finance

The Hang Seng has increased 15.26% over the last six months, 1.83% over the last five days and 1.11% today. Beating the S&P 500 in all measures.

The iShares MSCI China ETF has increased 15.58% over the last six months 3.34% over the last five days and 3.08% today. Beating the S&P 500 in all measures.

What are we seeing? The very beginnings of a global 'run on China'. Why? Chinese stocks offer high growth at a low premium while U.S. stocks offer no growth at a high premium. Banks can no longer receive easy inflationary gains on the NYSE because the printer shut down. They desperately need to find real growth and real value.

Of course, the richest and most spoiled will resist. They hate China. They know at current valuations China could quickly deliver fourfold, fivefold returns. But they hate the notion of a state that they formerly colonized being independent and having its own foreign policy. China was just supposed to be their sweatshop, the Chinese their manufacturing slaves. So the notion of this people rising up and pursuing their own independent, contradictory foreign policy is a hard pill to swallow. They would rather wait for the government bailout instead than invest in this "terribly anti-democratic" "homophobic misogynist" "militaristic" "regimé", a.k.a. slave revolt.

But others don't have that luxury. Or the hurt feelings. Latin American banks, Southern and Eastern European financial institutions, the Gulf countries & their enormous sovereign wealth funds, and large Indo-Pakistani and Southeast Asian conglomerates, whatever banks African countries may have ... all are slowly, inevitably exiting the U.S. market and waltzing in to Chinese securities. Not that U.S. stocks are going to go away, not at all. But that Chinese securities will take up more and more of their portfolios to the tune of sweet billions and xx%+ YoY market index increases.

Buy China, hold China. Perhaps even ... long China?