Geopolitics & Fundamental China Investment Strategy & Insights: China Internet Sector Revisits a Bear Market. What's next?
China Investment Strategy: Premium Note to Members (With thoughtful and comprehensive preview)
The Bear Market in China has returned, and I would like to provide a strategy update.
There are several ways you can track China:
KWEB Internet ETF (most prominent ETF by AUM size)
FXI Large Cap China Growth
CQQQ Investco China Tech ETF
MCHI China ETF
Since the mid-January euphoria phase where investors rushed into China on the promise of the reopening trade, most of these ETFs are experiencing a swift, violent 20% retracement. It was at those moments I had strongly voiced caution on this thematic sector.
In this note, I will provide a concise update on the geopolitical situation between U.S. and China, the internet sector’s fundamentals, and updated technical analysis on key names of interest.
Longer-term members will know that I’ve been constructive on China at the beginning of the year, and discussed great caution as BABA approached the 115-120 level by mid January. I first retargeted 100 when BABA traded 115, followed by 90 when BABA was at 100 (feel free to see previous notes).
Here are 2 Key Public Tweets (make sure to follow me on Twitter) along with deeper context provided inside my Community:
Feb 21st, 2023:
Feb 28th, 2023:
As we experienced a heavy Sell in China in early March, I discussed that the sector was approaching attractive levels again with specific parameters I was looking for.
At today’s levels, it’s no longer wise to fall into overly fearful thinking on the sector, in my view. However, we’re not yet at basement bargain levels yet - although we’re not far away (discussed below).
Of course, Investors who scaled out at significantly higher levels (as we did) have the upper end on re-entry considerations due to psychology and hands of strength.
Let’s dive into where I believe China becomes buyable, and what are the key signs that will let us know when the risk/reward is on our side. Concise education will also be provided on how to assess this sector and understand what catalysts drive buy-side thinking and behavior.
I provided proactive guidance to members to navigate scaling out of China during extreme euphoria.
And it is my intention to help the Community safely wait & hunt for enduring value now that enter a market phase of confusion, danger, and frustration.
Patience, patience, and...patience!
As you can see from my intermediate-term methodology, now public readers see my ideas materialize from a multi-week/multi-month standpoint.