You may be aware that I have been long the Chinese and Indian markets for the latter part of 2014 – here’s one of my blogs on that call: https://www.valuetrend.ca/?p=3341
One of my clients recently asked me about the Chinese Yuan. Specifically, they wanted to know if the Yuan might be a negative, or a positive vs. our own loonie, or the US greenback.
Today’s chart – above – shows the Wisdom Tree Chinese Yuan ETF, (CYB-US) which closely tracks the Yuan. As you will note, the Yuan recently pulled back – but it managed to hold a 5-year trendline. In fact, last weeks action provided some evidence of that trendline holding.
My prognois is that the Yuan will represent a reasonably safe bet for the coming year. Watch the trendline for continued support – a break would be bearish. So long as the trendline holds, it is my opinion that unhedged ETF’s and/or Chinese stocks (ADR’s) are unlikely to be too affected by violent current action in the coming year.
Let’s pull up a chart of my other emerging markets currency exposure – the Indian Rupee. As you can see, the Rupee (vs. USD) is coming into a bit of technical resistance—with some signs of breaking out. Thus, my comments would be similar to the Yuan regarding currency risk of the Rupee – that is, buying ADR’s and non-hedged ETF’s trading Bombay stocks should not be at too much risk of a currency drawdown. A failure to hold above 62-63 might suggest a potential currency drawdown on your Indian stock or bond holdings, but so far, so good.
BNN recently reported that some 80% of active managers underperformed the North American markets in 2014. We’re happy to report that 2014 saw our clients enjoy gains associated with being in the winning 20% of managers! Check our website at https://www.valuetrend.ca/performance-investing-portfolio-management/
While past performance doesn’t guarantee future results, we do believe that our active approach using technical analysis can offer a leg-up over traditional money management. If you would like more information on how we can help you achieve respectable long-termed performance in your portfolio, please contact my associate Craig Aucoin at [email protected]
Learn Technical Analysis
I’ll be conducting a free technical analysis workshop at the Richview Toronto Public Library: 1806 Islington Ave, Toronto, ON M9P 3N3 – January 14, 2015 @ 7:00 PM. This may be my last library seminar for the winter, so if you live in the area – Come out and join the discussion!