Why Chinese stocks outperformed this year



Over the last 12 months, the MSCI China Index returned roughly 6.3% in dollar terms. This beats the 1.0% return for the MSCI Emerging Markets Index, and the 6.1% return of the MSCI World Index, an index of developed markets, during the same period.

Market Realist – The graph above compares the price returns for Chinese stocks tracked by the iShares FTSE/Xinhua China 25 Index (FXI), emerging markets (VWO) using the iShares MSCI Emerging Markets Index (EEM) as a proxy, and global stocks (QWLD) tracked by the iShares MSCI ACWI Index Fund (ACWI) for the last 12 months (or LTM). They had returns of 8.1%, 1%, and 6.1%, respectively.

Although economic data suggest that China is slowing, the stock market doesn’t view it as a big threat. It won’t derail its run. China is still growing at a brisk pace.

The next few parts in this series explain why China should be viewed as a value play and not as a growth play.

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