The View | Chinese stocks are regaining their appeal as the US economy comes back down to Earth

Nicholas Spiro says there are compelling reasons to get back into Chinese equities. American stocks are seen as increasingly overvalued, while the trade war’s impact on Chinese stocks is less serious than expected

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An investor monitors stock prices in Shanghai. Although the Shanghai Composite Index is down, the appeal of Chinese stocks is actually growing. Photo: AFP

Published: 5:30pm, 24 Sep 2018Updated: 10:30pm, 24 Sep 2018

Last Monday, the Shanghai Composite Index closed at its lowest level since November 2014, dipping below its trough in January 2016 following the bursting of China’s stock market bubble.

On the same day, the benchmark S&P 500 index was within striking distance of another record high, of which there have so far been 19 this year, with the latest one set last Friday as international investors downplayed concerns over the escalating trade war and a renewed rise in US bond yields.

Yet while the S&P 500 rose a further 0.8 per cent last week, the CSI 300 Index, a gauge of large mainland-listed stocks, was up more than 5 per cent, with the index surging 3 per cent last Friday, its biggest daily gain since March 2016, according to data from Reuters.

A previous rally in July fizzled out as investors fretted about the trade dispute and harboured doubts about whether Beijing’s recent shift towards more growth-supportive policies could prop up the economy as the government perseveres with its deleveraging campaign.

.css-1m2rp1p{color:#34b8b5;}The View | Chinese stocks are regaining their appeal as the US economy comes back down to Earth

Watch: Escalating US-China trade war makes European firms nervous

The View | Chinese stocks are regaining their appeal as the US economy comes back down to Earth