G2: A Tale of Two Countries
Source: http://feedproxy.google.com/~r/qvmgroup/yrMF/~3/LNfojnqhIoc/4945Posted on Friday, June 19th, 2009 | In China, Market Commentary
The United States and China are referred to now as the G2; whose twists and turns dominate world economic dialogue, and perhaps outcomes. They are a study in contrasts economically, politically, demographically, socially, in terms of national balance sheet, GDP growth, government roles in business, and more. A side-by-side comparison of the charts for two proxy funds (SPY and FXI) is also a study in contrasts.
The charts below show the OHLC prices and two simple moving averages (middle panel), a percentage return comparison between the fund and the the US aggregate bond index (upper panel), and the share volume traded (lower panel).
click images to enlarge
1-Year Daily with 200-day and 100-day averages
3-Years Weekly with 40-week and 20-week averages
5-Years Monthly with 5-month and 10-month averages
China is more interesting as an equity investment for now.
There are concerns in the US that the rally may have gone too far too fast without adequate fundamental support (and may have already exhausted itself).
There are concerns in some quarters that China’s stock market may be even more ahead of itself, because of government stimulated production that is not matched by export growth, and perhaps not by internal consumption.
Both country funds are showing discomforting divergences with prices rising and volumes falling over recent weeks. However, China has exhibited important trend oriented moving average cross-overs which may indicate a continuing ownership opportunity, tempered by the short-term risk that a retracement in the US stock market would drag most other country stock indexes down with it.
Richard Shaw
QVM Group LLC
Last 5 posts by Richard Shaw
- Quality Individual U.S. Companies - November 7th, 2009
- “China Up / U.S. Down” Theme Checkup - November 2nd, 2009
- Healthcare Co. Profits Sensitivity to Obamacare - October 29th, 2009
- Less Than Good News from Germany - October 25th, 2009
- U.S. Budget Debt History and Projections - October 24th, 2009
 About Richard Shaw (http://www.QVMgroup.com)
Richard is a principal of QVM Group LLC, a fee-based investment advisor based in Connecticut with clients across the country. He provides investment coaching to "do-it-yourself" investors, and manages portfolios for those who prefer not to make their own decisions. His investment approach is based on value, asset allocation, benchmarking, expense control, risk management, customizing portfolios to each client's specific circumstances, and regular communication about strategy and performance. The QVM Group team also provides municipal refinance services, strategic business planning and financial analysis service for new ventures, private acquisition analysis, and custom investment research. Richard's extensive experience, includes serving on the Board of Directors of Aberdeen Asset Management PLC (London Stock Exchange: ADN), membership on the Board of Directors of Phoenix Investment Counsel (renamed Virtus Investment Advisors), a U.S. pension manager and investment advisor to the Phoenix Funds (renamed Virtus Funds), as well as serving as Managing Director of a series of offshore investment funds based in Luxembourg. He has led institutional asset management sales and had overall responsibility for management of a U.S. mutual funds broker-dealer. He was a charter investor and member of the Board of Directors of several internet companies, including Lending Tree prior to its IPO. He is a graduate of Dartmouth College. QVM Group LLC is a Registered Investment Advisor. Visit the QVM Group website http://www.qvmgroup.com/QVMinvest/ |
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