I remembered reading Chua Soon Hock anticipating a sharp downturn in global in 2008 back in 2007. He was the only one, besides Marc Faber. He called for a 'sell' on global equities, in particular, overvalued China stocks. Chua was spot-on. I have always been an admirer of this man, who is the founder of Asia Genesis. In fact, he came in tops in a trading competition some years ago.
Now Chua is recommending a 'buy' on China equities, and I am definitely all ears. I missed the boat the last time when he recommeded a 'sell' as I was not familiar with shorting, This time round, I promise myself not to miss another opportunity.
Why Chua is predicting a 50 - 100% rise in Chinese equities in 2009?
1. extremely good risk-reward ratio
2. downside risks limited
3. expansionary monetary and fiscal policies which will work well despite a
slowing global economy
4. anti-inflation policies have prevented a bubble
5. does not have a banking and credit crisis
6. many options to spur the economy
7. efforts by Central Banks around the world to pay off - the global banking crisis will be resolved "within 4 months" with activation of global inter-bank lending
8. global economic news will continue to be horrible over next 6 - 9 months, but forward - looking stock markets around the world, especially high-beta markets like China, will rally.
9. extremely bullish, especially on H-shares - fast, big, cheap $ from central banks will always work
(The Edge, Nov 17 2008 edition)
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