Sunday May 20, 2007
Despite expected volatility, Paul Tracy in StreetAuthority Market Advisor remains bullish on two Chinese ETFs -- iShares Xinhua China (NYSE: FXI) and PowerShares China (NYSE: PGJ)
“Back in late February and early March, Chinese stocks suffered a widely-publicized selloff. However, that nation's benchmark stock indexes have now erased all those losses.
“Interestingly, Chinese stocks have continued to rally to new highs, despite a warning from the country's central bank in early May that the market is starting to become overheated.
“While this isn't the first warning from Chinese officials on this issue, it is the first time the market has largely shrugged off such comments. That's a testament to the strength of this recent rally.
“Our take on China and other emerging markets remains unchanged. Undoubtedly, these markets will see corrections and pullbacks from time to time. However, the long-term story is just starting to play out.
“Emerging nations like China and India are home to literally billions of consumers that are seeing rapid growth in disposable income, and we are still in the early stages of what could prove to be a multi-decade growth story.
“We continue to recommend purchase of iShares Xinhua China and PowerShares China. Both exchange-traded funds remain solid long-term buys and holdings in our ‘Beat the S&P’ model Portfolio.”
