Daily Macro Economic View
The Wealth Effect
Thursday 9 July, 2020
Last week the Chinese government announed it’s intention to spread the ‘Wealth Effect’ of it’s Economy. Chinese stocks are now on the move, with the Shanghai composite Index jumping 14% since last Tuesday.
As you can see on the chart (2014-2015), the Shanghai Index has the ability to Inflate and Inflate very quickly. If the Chinese government wants it, they get it.
Japan has, for some time now, been an outright buyer of Japanese stocks. The Fed is now involved in the U.S. stock market, buying corporate bond ETFs. China looks like it will follow suit, using stocks as a tool to promote economic recovery.
For those that want to get onboard the China play, the top 2 (by assets) US exchange traded ETF’s on Chinese stocks are FXI & MCHI - both are up 15% since the middle of last week.