Betting on China now?

I’m quite  busy with the ongoing submission lately as we have to constantly address urgent FDA requests which can come anytime. Working during evenings and weekends are becoming norm now. So I may be brief on my blogs. A quick note that I think right now it may be a great time to buy Chinese stocks. I know it is against the herds but that’s often the time most of money could be made. You see, the Chinese market has been bearish for 6 straight years since its peak. It has been struggling and has tried many times to turn around but each time it failed. So the sentiment for the Chinese stocks is extremely poor. That’s one of the greatest indicators for a bottom. When no one wants to talk about something, it often means no one has left to sell and the next direction will be up for it. I guess you can understand in this situation, the stocks are likely very cheap. It is indeed. For the 25 largest Chinese blue-chip stocks, the P/E ratio is only 7 as compared with 18 for the US stocks. They are yielding 2.9% in average and are trading roughly at 1.0 times book value. While no one is interested in the Chinese stocks, the so-called smart money is quietly moving into it: it was reported that the big fund companies such as Goldman Sachs, Morgan Stanley and JP Morgan are buying Chinese stocks now. I think it is the time to put some money in. If you are brave enough, you can buy individual stocks but the much safer way to bet on the Chinese stocks is to buy a basket of blue-chip stocks. You can easily do so to buy iShares China Large-Cap (FXI). It is designed to track the performance of the 25 largest companies in the Chinese equity market that are available to international investors. As you can see below, FXI is presenting a very bullish pattern: inverse head and shoulders. Oftentimes, it is leading to a uptrend. However, keep in mind, FXI has run quite well in the past few weeks and now it is approaching its first resistance line at $37. If it can break out this resistance, it will be a very strong bullish sign. But more often than not, the first attempt is usually failed. So I'd expect that FXI may likely come down first in the next few days or weeks before getting ready for the next run over this Resistance. I just cashed in for my first bet set up 2 weeks ago and will make another bet if it indeed drops a bit.