China’s regulators have begun boosting restrictions on lenders to curb debt and to rein in shadow banking that has plagued the country.
This financial deleveraging has sent the Shanghai Composite Index down about 7% in a little over a month.
Not to worry: Beijing needed to crackdown on debt. Plus potential rising interest rates and weaker commodity prices could put some added pressure on the fast-growing and volatile Asian market equities.
I will be looking to add to our positions on China and other Asian markets as this pullback plays itself out in the region. But wait for my signal.
In the meantime, your current moderate speculative positions should include …
- Shares in China Mobile Ltd., symbol CHL. Hold and maintain your good-till-canceled protective sell-stop at $48.15.
If you have not purchased CHL, you may purchase it now at the market using 5 percent of the funds you have allocated to the Asia Investments section. Place a good-till-canceled protective sell-stop at $48.15.
- Shares in U.S. Global Investors — China Region Fund, symbol USCOX. Hold and exit the fund if it closes below $7.20 on any trading day.
If you have not purchased this fund, you may purchase it now at the market using 5 percent of the funds you have allocated to the Asia Investments section. Exit the fund if it closes below $7.20 on any trading day.
- Shares in China National Offshore Oil Corp. Ltd., symbol CEO. Hold and maintain your good-till-canceled protective sell-stop at $108.29.
If you have not purchased CEO, you may purchase it now at the market using 5 percent of the funds you have allocated to the Asia Investments section. Place a good-till-canceled protective sell-stop at $108.29.
- Shares in iShares China Large-Cap ETF, symbol FXI. Hold, and raise your good-till-canceled protective sell-stop to $33.75.
If you have not purchased FXI, you may purchase it now at the market using 5 percent of the funds you have allocated to the Asia Investments section. Place a good-till-canceled protective sell-stop at $33.75.
