![\"Image\"](\"https:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202402\/20240223-JMU-01.png\")
<\/p>\nChina is waking up.<\/p>\n
The Shanghai Stock Exchange Composite Index (SSEC) is up nearly 10% so far this month. Of course, most folks haven’t noticed because most folks abhor the idea of investing in Chinese stocks – with good reasons…<\/p>\n
Chinese stocks are risky. There are lots of fraudulent companies listed on the Chinese stock exchanges. Even the legitimate companies are prone to posting sketchy financial reports.<\/p>\n
The United States and Chinese governments are rivals.<\/p>\n
China’s government is known for manipulating its financial markets.<\/p>\n
And the list goes on… There are plenty of reasons NOT to buy Chinese stocks as investments.<\/p>\n
But, every now and then, a low-risk\/high-reward setup appears – where it can be quite rewarding to TRADE Chinese stocks.<\/p>\n
Today is one of those times.<\/p>\n
Right now, the Shanghai Stock Exchange Composite Index (SSEC) trades near its lowest relative valuation to the S&P 500 in 20 years. Look at this long term chart comparing the SSEC to the S&P 500…<\/p>\n
<\/p>\n
<\/p>\n
When the chart is rising, SSEC is performing better than the S&P. When the chart is falling, SSEC is performing worse.<\/p>\n
For the most part, over the past 20 years your money has been treated better in the U.S. than in China.<\/p>\n
There are times, however, where the valuation difference is so extreme it has paid well to own Chinese stocks.<\/p>\n
In late 2008, for example, as the U.S. markets were still dealing with the Great Financial Crisis, SSEC bottomed. It then rallied about 80% over the next three months.<\/p>\n
In February 2022, this ratio chart hit another extreme low. SSEC rallied 20% in about four weeks, while the S&P 500 dropped 7%.<\/p>\n
And, in November, 2022 – when the ratio chart hit its lowest point ever to that point – the Chinese stock market rallied 15% in just two months. The S&P 500 was unchanged during that time.<\/p>\n
Today, the ratio chart is back down near its lowest point ever. Chinese stocks had a miserable 2023, and a miserable start to 2024. At the end of January, SSEC was down 8% from where it started the year. Meanwhile, the S&P 500 was up about 5%.<\/p>\n
<\/p>\n
![\"Signature\"](\"https:\/\/files.jeffclarktrader.com\/global\/signatures\/jeff-clark-signature.png\")
<\/p>\n