Patience will be rewarded when investing in China. I did warn you that the big guns would come out with reassurance in our financial pages. They need you ! They need naivety. They need your commitment to buy and keep them wealthy. But, hey, remember, no gloating...
Nice stat Aug 2001 (when series begins) to 2021, the MSCI China Index annualised total return 12.3 %, SPX 9.3 %. And the winner is..? Not so sure...is it appropriate to compare 2 countries at very different points in their development?
SPX achieved the same returns 1910 ish to end 1929 - a period marked by a world war but when all the ducks aligned for the US v RoW. 15% if you exclude the WWI and just take the roaring 1920s. So hmm...alright but there's no WoW factor. This ain't proof of anything.
And then there's FX. The China Index is a dollar return. I suspect there's a negligible HKD asset translation effect. It's hard to quantify but as the years progressed the index would have captured more yuan assets. So how much return is yuan appreciation v $ ?
Remember that rate was fixed at 8,28 until 2005. So how much of outperf is simply yuan travelling from very cheap to just kinda cheap v $ ? I'm unsure that a 12% cagr stock return is noteworthy for an economy where everything played out perfectly. Haven't we been here before?
The same FT reports that a prop co ...was encountering “significant difficulties” in registering land titles for intended purchases, meaning the dwindling number of willing buyers could not get mortgages...But I thought China's State lenders obeyed different rules?
So 20 years of US first global ascendency produced similar returns to China but then concluded in the Great Depression and subsequent 20 y SPX cagr of zero; I exaggerate, 5.5% incl div.s...In my head, it's 50:50 if China can outperform that over next 20 y; even if you are patient
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