an tSonna {12.08.14}

Long time readers here know that I have been positive on international equities for quite some time, having last talked about it here.  I will also be the first to admit that that love affair has mostly been a one way relationship as international markets will for the most part disappoint again in 2014 when compared to the US market.  There are however signs that may be changing.  India has a stock market that has been on fire and China has broken out of a long term downturn that dates back to 2008.  

Bespoke Investment Group posted this chart of the Shanghai market last week.  They noted that the Shanghai market has now broken well above this downtrend line.  They note that Shanghai has had a great year and some pullback may be possible in the short run but they also point out that this type of break out is generally very bullish because "when a long term trend breaks it can have a powerful effect on prices".

I'll note that the Shanghai market has done better than most of the ETFs that you can invest in here that have money in China.  That's because the Shanghai index generally tracks Chinese A shares which until recently have been hard for non-Chinese to invest money.  However, probability suggests it's likely that a rising boat in China will begin to have a more positive on the more investable Chinese ETFs such as GXC and FXI.  Also access to Chinese A shares is starting to open up to outside investors.  You can read more about the Chinese A share market here.  {Please note that the I do not own any of the newer ETFs listed in that article and have no opinion of them.}

*Long ETFs related to Asia markets that own shares in Chinese equities.  Also long GXC and FXI in certain client and personal accounts.  Please note these positions can change at any time.

Link: Bespoke: Classic Downtrend Break in Shanghai