Ways to play China after a tough 2021: Market analysts

besides these issues with evergrand that we're dealing with we've also seen a notable slowing in retail sales in china around the delta variant so we've seen big international luxury retailers last week lvmh for example richmond they all got hit on this concern um how do you feel about the prospects for the chinese consumer because that's the main argument for investing there this is the biggest consumer market uh in the world right now listen it it's an enormous market it's an enormous country you know all you have to do is switch china for the u.s and say you know how many times have we had a conversation you and i about what do you feel with the prospects for the u.s consumer well the chinese consumer is going to continue to consume and if some of these chinese policies gain some traction you may actually end up with more disposable income in the hands of those chinese consumers i mean look if you're spending however much it is for private tutoring and all of a sudden the country said no that that's a non-profit business everybody should have access to tutoring that's a little extra money in your pocket yeah arnie a lot of u.s investors write to me and they're interested in investing overseas in bond markets particularly high-yield just like here in the u.s they're reaching for yield there are emerging market high-yield funds that are out there um right now we don't see any particular contagion is is there any thoughts that your company organization has on on how uh how to approach this i'm talking about international u.s investors who are going overseas buying into uh emerging market high yield funds for example and this there is a concern here about a contagion associated with that at all any any thoughts on that yes and in fact i'm i'm gonna borrow a page out of dan's book when it comes to active management i would want to say with regards to china equity indices in particular as we said before they're very investable i'm very much a proponent of etf-based investments there however when we look at emerging market high-yield bonds in particular um it is a very valid statement to say hey do i not want to look at an active manager because um there's there's several risk factors when it comes to fixed income that um don't necessarily make the front page so to speak uh such as foreign exchange if i buy a non-dollar denominated bond then i no longer have a fixed income instrument but i have a variable in income instrument because all of my coupon payments as well as the principal repayment are subject to effects risk on top of this you have different jurisdictions in terms of in terms of the legislation that underlies those bonds all of those relatively nuanced details for me are very relevant uh from a u.s standpoint to say hey if this is a segment that interests me why don't i look at an active manager however i do want to very clearly state that in chinese equity case and we're very much a proponent proponent of etf-based investment there yeah and arne just on a separate subject i know value guys out there and they have a very laissez-faire attitude about all these fundamentals who are talking about regulatory risk or bank risk they they don't care they buy china when it's cheap so it's one when it's under i'm picking a number 15 times forward earnings they buy uh and then they sell or they walk away when it's higher than that is that an equally valid way to play china at all on the technicals i would say it um it it can't pay it off pay off um it it can be a little bit dangerous too though because as we stated before bob the regulatory risks in china uh are somewhat heightened as proven by the current situation and by essentially the different scenarios we discussed on this call alone so looking at the the underlying fundamentals looking at the uh the analytics alone might not be sufficient we would very much encourage you to work with an asset manager or with essentially a partner that as dan was saying has boots on the ground to get a good understanding and a good feel for what are essentially risks that may not necessarily be priced in or what might be a little bit of a forward-looking sentiment around those yeah i think so dan you're in agreement with that i mean obviously uh your business is not technical analysis but you get my point there are guys who don't particularly care about all of the fundamentals they're just looking for it when it gets cheap right and and those same guys are are trading in and out and by the time they make some money if they make some money they're going to give half of it back to the irs so um i you know i'm i'm loath to uh to recommend a trading philosophy when you can be a long-term investor and make an awful lot of money in this market and you know i think arnie's exactly right you know bob you like vanguard a lot uh and i cover vanguard vanguard's actively managed emerging markets bond index this year alone is doing quite a lot better and has done quite a lot better than its emerging markets bond uh index the active fund has done better than the index fund yeah yeah this year for sure [Music] [Music] you

Channel: CNBC Television

Views: 3,290

Keywords: ETF Edge

Id: _O_y5yMfD7g

Length: 5min 55sec (355 seconds)

Published: Mon Sep 20 2021