Should Investors Be Worried About The Sudden Boom In China Stocks?

Benzinga

Jeremy Schwartz, CFA, Global CIO at WisdomTree joined Benzinga's Premarket Prep to discuss the boom in China stocks like BABA and PDD.

Transcript

00:00Jeremy, what about this China trade?

00:03Because this has been nothing short of incredible.

00:06The comeback here in these stocks, you know, I almost feel it's unprecedented.

00:10I don't remember a 30% rally in a week in China for a long time, and I haven't traded

00:16in 24 years.

00:17I'm sure it's happened in there maybe during one of the crisis situations like the financial

00:20crisis or something, but just boom, like they come out, a little bit of stimulation happening

00:26over there for their stocks and bang, you know, 30% a week.

00:30Is this sustainable?

00:31Is this a real turnaround story or is this just another one of those rug pull situations

00:35where they rally for a few weeks and then they pull the rug out and they, you know,

00:39harpoon their own stocks somehow from a geopolitical perspective?

00:42What are your thoughts on the recent China rally?

00:45Now, you know, you'd say it's, it's, it's, mentality is like I'm about to relay that's

00:49why they're where they are.

00:51But I do think it's, it's a tough place to be a strategic long-term investor.

00:57You know, now this community might be, you know, be able to quick move in and out and

01:02ride these trends.

01:03You know, you have, if you have a more trading oriented mindset and you can get in and get

01:07out.

01:08I, you know, this, will there be a meaningful sentiment change?

01:13I mean, certainly you've got Tepper going on CNBC, say buying everything and that, and

01:18again, he's a very nimble investor.

01:20So, you know, he could be in and they could be out quickly.

01:23You don't know how long he'll be in the trade for.

01:26They certainly are, you know, depressed.

01:29BABA was like the premier growth stock when you saw it going back to 300.

01:32It was, you know, it was one of the, it was competing.

01:35All those China tech companies were competing with US tech leaders and actually outperforming

01:39them for a while.

01:41And then they had self-inflicted wounds where they started talking about common prosperity

01:44and the Chinese leaders were taking actions against them.

01:48They're going to have, you know, the, the Alibaba's fintech arm go public.

01:54They clamped that down.

01:56There's all these questions.

01:57Where's Jack Ma?

01:58All that stuff.

01:59I, I believe as a long-term play, I'd rather actually be in India and Japan.

02:05I mean, both for different reasons.

02:07Japan is just as much cheaper as a value market as a play on Asia, global growth, India, that

02:13long-term consumer best growth profile around be there for decades.

02:18India is where I really want to be over the long-term, it's priced that way.

02:22And so it's not a cheap market, but it's where I want to be in the long run.

02:26China is, we're not, we're not overly positive the stimulus will change their economy.

02:31You know, we think that they're trying to reverse the extreme pessimism, but they've

02:39got challenges both from an economic standpoint, geopolitical standpoint.

02:45There's a lot of uncertainty over the next few years.

02:47So I'm not chasing this trend.

02:49I'd rather probably lighten even on that move.

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