China Continues to Wobble
January 26, 2010
The chart of the Chinese ETF (FXI) continues to show relative weakness against the S&P Global Index.
As stated in our 2010 Outlook we do not believe that China's current economic model is unsustainable. China will not disappear any more than Japan or South Korea has. However the bull case of extrapolating the past 30 years of growth into the future is unwise.
One of the many and not talk about problems that China faces is the Chinese model is built upon the premise that Western populations will continue to consume Chinese goods in increasing volumes over the next decade. What the Chinese bulls have forgotten to factor in is dire European demographics landscape over the next decade makes this dream an impossible one.
We continue to have no exposure towards China in our model Beacon Master Portfolio.
