It’s a quite strong conviction to be bullish on EU stock as I heard nowadays from market participants and so far this year backs the idea. Emerging markets are still suffering and I think it will be the same way through the year.
The other day I stumbled into a site which showed the tallest 20 buildings completed in 2013 and more than half of these skyscrapers were built in China. One can read about high vacancy rates, domestic financial market problems, bubbles and whatnot so I compared the main Chinese indices to consumer biased funds and their performance were amazingly different in the last 9-12 months. The gap actually goes above 20% in a lot of cases. If we believe the market prices the right way then a 7%+ GDP growth might be a bit exaggerated given financial and real estate sector gives a huge chuck of the main indices. I wouldn’t be surprised if multiple downward revisions would be presented in the coming months. An other side of this thought could be the relative underperformance of consumer discretionary sector which had one of the best runs out of any other sector. Just compare the SPX and VCR:US in any timeframe and in 3 months.


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