The Chinese Government Charade Continues

• Posted by Greg Harmon
• on December 21st, 2012

The charade continues. China is now moving into a recovery phase and the markets will go higher. Just over 6 months ago nobody believed any of the reports out of the government. Managed or made up statistics. But now a couple of good pieces of data and all that has been forgotten. I for

one am not impressed. It was just 4 weeks ago in Invest in China…..Or Just Its Government that I highlighted the difference between the manipulated Chinese economy and the broad Shanghai Composite. While traders and investors continue to tout their prowess investing in the iShares FTSE China 25 Index Fund, focused on a handful of stocks that the government can control, the

broad market still needs to prove itself. It is giving it a shot, making a new higher high as seen in the chart above. But after the long downtrend still has work left to do. Put in another perspective, the ratio of the $FXI to the $SSEC remains in a rising channel unperturbed by the enthusiasm. Until it breaks down below the channel there is not real relative strength in the broad Chinese market. So again, if you are investing in the Government of the peoples Republic of China, then more power to you. But if you think that you are going to win in the broad Chinese recovery you just might be a little premature.

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