(Chinese President Xi Jinping delivers a speech at an annual meeting of the Boao Forum for Asia in Boao, in the southern Chinese province of Hainan, in this photo taken by Kyodo April 10, 2018. Kyodo/via REUTERS)
Whether or not you’re inclined to be interested in global affairs, they have a prominent role to play in your portfolio. The finance news may still sound like a foreign language but start keeping an eye on it. It gets more evident with time. Also, as you continue learning how to trade shares overseas, we’re here to help. Your individual relationship manager at Monex can help you sift through seemingly unintelligible data to find useful trading tips. We also have easily reachable customer support in multiple languages, so you can call or chat with us throughout the trading week. On that note, here are some issues you need to observe in China.
You might be worried about the stereotype of ‘Communist China’, but their political leanings are expanding in favour of the economy. Every five years, the Communist Party holds a National Congress meeting. Last year was the 19th one, and a lot of older leaders retired. The new crop is expected to focus on market forces over government-controlled pricing. Supply and demand will, therefore, have a wider effect on stock and share prices, which could be good for your Asian portfolio. It’s important to watch updated views on financial policy.
Chinese President Xi Ping is big on technology and environmental conservation. He currently leads the ruling Communist Party as well as China itself. In February, his party proposed removing the two-term limit from the constitution so that he can rule for another term. Mr Xi promotes green development and home-made tech. He is keen on the Made-in-China-2025 initiative, and if his party succeeds in extending his presidency beyond 2023, he can follow through. Both these priorities can raise stock prices for metal and tech companies. Already his limits on pollution and production favour tin, copper, and aluminium pricing.
Trade and transport
At the moment, China’s highest priority is President Xi’s BRI (Belt & Road Initiative). It aims to encourage Chinese investment outside her borders by enhancing rail and sea trading routes. This outbound focus will strengthen the Chinese market, which in turn boosts your Chinese portfolio. The project – which includes five railway links – is receiving generous funding and this credit flow has a spill-over effect on construction, commerce, and energy. Also, for the first time, China’s A shares (companies trading in Shanghai and Shenzhen) will be offered for trade on the MSCI. Trading begins in June, and companies like Qingdao Haier, Moutai, Wuliangye, Midea, Yili, and Hikvision are expected to be popular with overseas investors. Shore up your portfolio accordingly.
Follow the bank
Trump imposed sanctions on Chinese washing machines and solar products, risking a trade war, so you need to watch how China will respond. The BRI suggests trade expansion with non-US partners. Meanwhile, global banks seem to favour Asian trade in 2018, perhaps in response to China’s apparent intent to open up. Banks are generally a useful metric for the direction of their portfolio, so in addition to watching China herself, watch the reaction of big money – and the institutions that keep it.
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