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Ted Bauman: China Stocks Are A Buy

When Donald Trump was elected President, he vowed that he would make China pay for stealing intellectual property, as well as taking advantage of the United States in terms of trade. He went through with his promise and placed $50 billion in tariffs on Chinese goods. China countered the US tariffs and they placed their own tariffs on US goods. President Trump says that if China tries to fight back, his administration will tack on an additional $200 billion. While some analysts say the US is winning the trade war, economist Ted Bauman points out that the Us is eventually going to suffer economically. He says there are no winners; only losers in a trade war. Although he feels the trade war is only going to cause problems for the global economy, Mr. Bauman feels that the trade war has created an opportunity for value investors to buy Chinese shares at extreme bargains.

While most US analysts are continuing to push US stocks, Ted Bauman believes that the iShares China Large-Cap ETF is a great opportunity for investors. The ETF holds many of the top Chinese companies that are publicly traded on the major stock exchanges. Ted Bauman listed some of the metrics that prove just how cheap these companies truly are. The price-to-earnings ratio is only 2.6 and many investors would have paid almost five times as much for the same basket of stocks back in 2013. The companies in the ETF had combined earnings of over $15 per share. The rest of the world is experiencing stock market declines, while the Us equities market is more overvalued now than any other timer in history. Mr. Bauman preaches a defensive approach to investing and believes investors should consider the cheaper Chinese shares as opposed to the expensive US stocks.

It was in June that the Chinese yuan began to lose value. Some analysts have claimed they were manipulating their currency to help their exporters and to minimize the effects the tariffs. As the yuan fell in value, so too did many stocks in China. The Shanghai Composite lost eighteen percent of its value for the year. Ted Bauman does believe that if the trade war continues, China may end up being more aggressive and retaliate against US companies.

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