I have $800,000 invested in China blue chip stocks traded in Hong Kong. It now show a loss of about 5%. I get a dividend yield of about 5% per year, so it sets off the capital loss.
I expect the China stocks to move up significantly in 2021. These stocks have been undervalued by more than 50% compared to similar stocks in America. When the international fund move back into the emerging markets, which include China market, the under-valuation should be reduced or eliminated.
This would give a potential upside of 50% to 100%.
I have already seen several of my invested stocks move up by 5% to 10% during the past two weeks. I get a gut feel that this is the start of a longer term trend.
The below chart shows the price trend of the China ETF (MCHI) over the past year. It tracks the blue chip stock in China. The ETF had appreciated about 24% over the past year.
I bought the blue chip stocks traded in Hong Kong. It showed a discount of about 30% compared to the prices in China. These HK listed stock may not show the appreciation of the stock listed in Shanghai. I believe that this discount will decrease in 2021. It is likely to move up to catch the prices in Shanghai.
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