Comments
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SSI like the trade, just too risky for me right now. Waiting for a drop into the 30s before thinking about going in.
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HOChina equities are not much different now than in 2015, i.e highly leveraged, the difference being systemic leverage is up by say 30 points of GDP. Authorities are forcing deleveraging in the private sector. Trade tensions are a catalyst but not a cause. This makes China equities an endogenous story, not the reverse. Get the causality wrong, you get the trade wrong.
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LTTechnically, this is a be that the current break out lower in FXI is false and we will return to the trading range above, very similar in South Korea. I do not like this type of trade personally because by the time FXI hits the 40 range, that breakout is more then confirmed, and a new trading range is likely to form, not a return to the higher one.
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AMHow do we determine skill and track record of presenters of ideas without attribution or daily/weekly PnL of trades
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DSWith all the risks inside and outside of China, much less Korea, this is a risky six-month trade. IMO this trade is a winner over a longer period. This could be a falling knife in the short run. Size small, there will be time to enter on the way back up. DLS
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RKAgree with the idea but would not be aggressive here. It is very probably we'll see few more hard legs down to the 34 level in FXI. So I would fish lower down. The Chinese story is not over - there is a worrying corporate debt stress and the comrades might not have the control as they think they have. There are other comrades in the country who need a calamity to stand up to the current elite circle of Winnie the Pooh.
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CMThis is very timely as I was looking to reenter Chinese A-share inclusion using $ASHR or $KBA. This is Chinese equities being included into MSCI global indexes. David Brady who I reply to in this tweet https://twitter.com/thousandairefx/status/1013833751711899648 highlighted the correlation between XAU/CNY/USD about 6 months ago and how XAU (gold) should be treated again as a currency and not a shiny rock. The linked article adds the fourth element SDR (IMF Special Drawing Rights) into the equation. https://www.tradingview.com/x/KmSYp6vF/ this is a great chart and one that I keep looking at every day at the moment. From this, I am looking at a reversal in USD/CNY a bottom in XAU/USD and Chinese equities.