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New Global Opportunity: “3 Ways to Play China”

Major outbreaks of infectious disease are not as “bearish” as everyone thinks

by Bob Stokes
Updated: February 11, 2020

China's Shanghai Composite has been in a large-scale downtrend for about 13 years.

So, when the news of the coronavirus outbreak hit, it came as less of a shock to Elliott Wave International's global analysts.

You may ask, "What in the world does one have to do with the other?"

Our just-published February Global Market Perspective provides insight:

When a major infectious disease breaks out, we find that a stock market correction has usually preceded it. That observation is germane right now because China's Shanghai Composite has been tracing out a large-degree correction since its peak in 2007 and, not coincidentally, China has experienced numerous outbreaks of highly lethal infectious diseases over the 13-years-and-counting period.

One of the most lethal was the H7N9 bird flu epidemic that broke out in March 2013, which had a mortality rate of about 39%.

Here's another thing that's notable: The bird flu epidemic broke out a few months ahead of last decade's low in the Shanghai Composite, after which the index soared 180% over the next two years. The December 2019 novel coronavirus--which Chinese researchers have since determined was present in the human population months earlier--similarly broke out in the wake of another low, this time the 2019 low in the Shanghai Composite, as EWI's Asian-Pacific editor notes.

The takeaway is that many investors who view the coronavirus as bad news for Chinese stocks may be mistaken. In other words, negative news often reflects the past, not the future.

Indeed, in a new update called "3 Ways to Play China" from our January Global Market Perspective, our Asian-Pacific editor says:

[Here are] three U.S.-traded ETFs that investors could use to ride the ongoing rally in China.

All three of those vehicles remain viable. We note [in February] that...the first two ETFs in the chart -- continue to show better relative strength compared to the...ETF at the bottom.

These chart patterns are not the result of news -- like the coronavirus -- instead, Elliott waves often predict the news.

Learn the names of all three ETFs now -- as well as what Elliott waves are suggesting about the rest of Asia, Europe and the U.S. inside our January Global Market Perspective, 100% risk-free.

Follow the link below to get started.

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