U.S. stocks continue to climb. For those looking for better value, we've talked about the opportunities in German and Japanese stocks, which are benefiting from the better global growth outlook, and QE from the ECB and BOJ.
As people were wringing their hands, as they do, just a couple of months ago about the valuation of U.S. stocks, and trying to make sense of the persistent climb, the big opportunity was outside of the U.S. If you bought those markets (Germany and Japan) in just early September, you're up about 10% already. German stocks are now back on record highs and Japanese stocks have hit the highest levels since 1996.
With that in mind, we've talked a lot over the past few months about the strength in commodities, especially copper. And we've asked the question, is this a signal that China is doing better than people think?
Chinese stocks have yet to confirm that. The Shanghai Composite is up about 8% on the year, but well south of the performance of most developed and emerging market stocks this year.
Though China's economy hasn't been growing at the breakneck double digit pace it once was, it's still growing at north of 6% annually. And over the past 16 years, it's grown from a$1.2 trillion economy to an $11 trillion economy (at an average annual rate of 9%).
But the stocks haven't done much, by comparison. If we look at how Chinese stocks have performed relative to the S&P 500 over the past 16 years: $1,000 invested in U.S. stocks would leave you with $1,940 today, and $1,000 in Chinese stocks would leave you with just $1,659.
It seems like there should be some catch up in the Chinese stock market at some point.
With this in mind, here's a look at the Shanghai Composite ...
Chinese stocks are knocking on the door of a breakout above the 3,400 level, which proved a key level when broken in the sharp runup back in 2015.
Join our Forbes Billionaire's Portfolio today to get your portfolio in line with the most influential investors in the world, and hear more of my actionable political, economic and market analysis. Click here to learn more.
