China Stocks Cheapest 'I've Ever Seen': Index Pioneer (CNBC)# Stock
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Chinese stocks are extremely undervalued and U.S. investors should heavily
increase their exposure to benefit from the emerging market's long-term
growth, says Burton Malkiel, author of the financial classic "A Random Walk
Down Wall Street."
“These are the most attractive multiples I’ve ever seen,” said Malkiel,
79, who pioneered the indexing investment philosophy, at a speech Wednesday
for Guggenheim Funds at the New York Stock Exchange.
The economist was referring to a slide showing several valuation metrics—
from the price-to-earnings and price-to-book ratio—for the AlphaShares
family of China indexes he created.
Malkiel helped forward the efficient market hypothesis—that prices of
stocks immediately reflect all public information—with his 1974 classic now
in its 10th edition. The professor of economics at Princeton argues that
this hypothesis means investors are better off buying and holding a large
basket of stocks through indexing, rather than relying on active fund
management. He turned his sights to China about eight years ago.
As one would expect, Malkiel made clear that he wasn’t making a market
timing call to buy China immediately, but rather saying that investors will
be forced to increase their exposure to the world’s most populous nation
over time as its economy transitions to more domestically focused and its
currency begins to rival the dollar.
increase their exposure to benefit from the emerging market's long-term
growth, says Burton Malkiel, author of the financial classic "A Random Walk
Down Wall Street."
“These are the most attractive multiples I’ve ever seen,” said Malkiel,
79, who pioneered the indexing investment philosophy, at a speech Wednesday
for Guggenheim Funds at the New York Stock Exchange.
The economist was referring to a slide showing several valuation metrics—
from the price-to-earnings and price-to-book ratio—for the AlphaShares
family of China indexes he created.
Malkiel helped forward the efficient market hypothesis—that prices of
stocks immediately reflect all public information—with his 1974 classic now
in its 10th edition. The professor of economics at Princeton argues that
this hypothesis means investors are better off buying and holding a large
basket of stocks through indexing, rather than relying on active fund
management. He turned his sights to China about eight years ago.
As one would expect, Malkiel made clear that he wasn’t making a market
timing call to buy China immediately, but rather saying that investors will
be forced to increase their exposure to the world’s most populous nation
over time as its economy transitions to more domestically focused and its
currency begins to rival the dollar.