Likely long-term buying opportunities in the Chinese market



On June 12, 2015, the Shanghai Composite Index (SSE) jumped to 5,166 points while its US counterpart Dow Jones Industrial Average (DJIA) rose to 17,898 points at an even more moderate pace.

Three-and-a-half years ago, therefore, it was on the Chinese side that investors were looking for strong growth potential, at least in the value of their quoted shares as the recovery of the US economy backed global growth.

Today, the cards have clearly changed hands since the situation is more or less reversed with the SSE which has fallen to 2,598 points, down 49.71 percent since its top of June 2015, and with the DJIA which despite entering the correction zone in October 2018, however, remains at a historically high level at 24,688 points, up 37.93 percent in the same period.

Against the backdrop, the gradual decline in Chinese economic growth and President Xi Jinping’s ambition to turn his country from the workshop of the world into a consumer economy have contributed to this sharp stock market depreciation of Chinese assets even though the peak of 2015 appears a posteriori as a typical buyer excess.

Considering the long-term potential of China and taking into account the ups and downs of its trade negotiations with the United States, it seems relevant to look now for possible good buying opportunities in the Chinese market, especially in the consumer and energy sectors.