Is China a 70 Percent Growth Opportunity

Is China a 70% Investment Growth Opportunity?

Many of you will well know on this website that we place a lot of faith in investment timing. We do not believe that you should simply invest your money in bonds or equities and then leave it for long periods of time without making any investment allocation changes.

The classic example is the FTSE 100 index which is still lower today than it was 15 years ago. If you had invested your money in the UK stock market 15 years ago and done absolutely nothing with it since then you will still have achieved no growth. Yet, if you had pulled your money out of the market and reinvested back into markets and then came out and in again at various buy and sell points over the last 15 years you could have made significant growth returns in excess of any losses.

Let's look at China:

Specifically the Shanghai Composite index.

• This index has a 52 week high of 5178 on 12 June 2015.
• It has a 52 week low of 2279 on 16 September 2014.
• In the last five years it has been no lower than the 2000 mark.
• Yesterday it closed at 3005.

We know that China is the second largest economy on the planet. It will recover. The sheer scale of the economy, the population and the sheer volume of Private investors combined with the financial support that the People's Bank of China has given to the market will bubble back through again eventually.

The numbers:

• If you had invested in China at the market high 5178 in June, today you would be facing a huge loss of 41.9% (index at 3005 yesterday).

• Investment timing is key!  If you invest this morning at the 3005 mark and at some point in the next couple of years the index recovers to 5178 you would make 72.3%.

The index prices are the same but the timing is totally different. This is the power of investment timing.

We repeat, repeat, repeat "buy low, sell high, buy low, sell high, buy low, sell high".

Is now the time to buy China?

We are not saying today is the right time to invest in China (in fact we are actually waiting ourselves to invest some money back in China) but what we are saying is for higher risk investors and for those who are prepared to wait, there may be an investment opportunity even now or soon depending upon your appetite for risk.