Quick update - Chinese stocks putting in a bottom ?

Something worth highlighting.

My gut is telling me that the Chinese stocks have put in a bottom.

Why ? A few things to highlight:

1. Taiwan and Korea have become 40-45% of EM index, whereas index weight for China has dropped to 25% (from 30% or so). In addition, the AI trades in USA have sucked liquidity from Chinese internet ADRs. Put simply, more international money has left Chinese stocks.

2. Recently, the Chinese government cracked down on domestic investors investing overseas via. the online brokers such as Futu. Net result is Chinese retail/hot money had to sell out of stocks in HK.

3. It is well known that the domestic economy is sluggish. The latest retail sales were flat to down yoy. Expectation is already quite low.

4. Following the re-start of the Iran conflict, the Chinese + HK markets are steady. So far so good. Everyone has already left ?

Given that expectation + funds flow, a lot of bad news is baked in. Importantly, valuations of different stocks have become attractive.

My rule of thumb is if a company can grow say around 10% with confidence and trading at low valuation (say low teens PE), investors will make money. See pic 1. Plus many Chinese stocks are paying solid dividend yield.

It is worthwhile to do more work into Chinese stocks.