Masters Series: Why Hundreds of Billions of Dollars Will Flow Into China's Stock Market
Editor's note: Steve Sjuggerud is calling it "the greatest investment story of my career."
He's talking about the incredible, potentially life-changing gains that could come soon from the next Google... the next Amazon... and the next Facebook.
If you're like 99.9% of investors, this opportunity isn't even on your radar. But in today's Masters Series – adapted from the December 1 edition of our free DailyWealth e-letter – Steve details this opportunity...
Why Hundreds of Billions of Dollars Will Flow Into China's Stock Market
Shares of U.S.-traded Chinese web-services company Baidu are up 30% over the last year...
Why?
One reason is that Baidu is a Chinese company that is being added to MSCI's international indexes TODAY.
Investors knew that this date was coming. And they bid up the stock price in advance.
The action in Baidu is just the tip of the iceberg...
The same thing will happen – only with hundreds of Chinese stocks – in the next few years.
Here's why...
Right now, China-traded stocks (stocks trading in China's currency) make up ZERO percent of the major international stock indexes. (Yes, they are zero percent of the major emerging-market indexes and the major China stock market indexes.)
This is crazy.
China is the world's second-largest economy. And the China "A-share" market is the world's second-largest stock market behind the United States'.
It is inevitable that Chinese A-shares will be a huge part of international index funds in the not-too-distant future.
The move to add Chinese A-shares to international stock indexes is long overdue. The index providers (like MSCI) are a bit behind.
My humble suggestion is that you get your money there first.
To give you the full story, index providers like MSCI do include something called "China" in their emerging-market and China indexes... But for the most part, these are not actually shares trading in China – they are typically businesses trading in Hong Kong.
As we speak, MSCI is moving toward having more actual Chinese companies in its China indexes...
MSCI recently laid out its "road map to a comprehensive China equity index." It plans to move from zero percent in Chinese A-shares to 47.2% over time.
Let me repeat that: MSCI is going from zero percent in Chinese A-shares to 47.2% in Chinese A-shares. That's a huge jump!
That jump will obviously force index funds and exchange-traded funds (ETFs) to buy Chinese A-shares. Just like investors bought into Baidu knowing that index funds would be buying it soon, the same should happen in China-traded stocks.
Ultimately, I expect hundreds of billions of dollars will move into Chinese stocks in the coming years – all because of this change in the international China stock indexes.
The major change in MSCI's China indexes kicked off in December 2015, with the addition of Baidu (and similar names). But this is just the beginning... This move still doesn't include any Chinese A-shares.
Investors will scramble in the coming years to get money into Chinese stocks. Again, we're talking about the world's second-largest economy and the world's second-largest stock market. It will happen, in the not-too-distant future.
I suggest you get your money there first.
Good investing,
Steve Sjuggerud
Editor's note: The MSCI story is only a glimpse into the amount of money that can be made in China right now. Steve recently put together a video presentation detailing a second, "secret" way to make 500% to 1,000% in China over the next few years. If you want to invest in the next Google, Apple, Amazon, or Facebook before they explode higher, you won't want to miss this free presentation. Click here to view it.