BMO CHINA EQUITY INDEX ETF (ZCH.TO)

He has been underweight on China for the last year or so. It has underperformed dramatically over the last 6 months. It is starting to get more interesting to him now. He gets it through a US EFF. China is going to have a challenge holding a 7% growth rate. It should slow to 4-5% over the next couple of years. He thinks ZCH-T will fall another 10%.

(A Top Pick Nov 7/14. Down 2.2%.) This hasn’t worked as well as the Shanghai index, but he feels safer with this one. This one will be dragged along.

This ETF will hold nothing but ADRs. The accounting standards on ADRs fit international standards, so you are not going to get zinged by some obscure Chinese accounting methodology on some company. Chart shows it had formed a base in 2012-2013 and broke out upwards and then based again and is now starting to break out. Has a decent pattern. Overall, this looks okay.

This is a fine product but the question is, what is your view on China. China is still growing, virtually faster than any other part of the world, with the possible exception of India. 7%-7.5% is the GDP growth. However the salad days are over. Growth is slowing, but so is everyone’s.

If you look at it, it is interesting because it is composed of ADRs from the US. Nothing is purchased in China. ADRs are subject to international accounting standards. Some big Chinese companies are in there. There is a lot to be said for this one. He previously recommended the Chinese consumer ETF and it has done well.