Dividend Yield Investor!: China's output contracts at quickest pace in 18 months during March

Wednesday, March 26, 2014

China's output contracts at quickest pace in 18 months during March

 Flash China Manufacturing PMI™ at 48.1 in
March (48.5 in February). Eight-month low.
 Flash China Manufacturing Output Index at 47.3
in March (48.8 in February). Eighteen-month
low.
Data collected 12–20 March 2014.

DYI Comments: China's slowdown continues. Will this slowdown be enough to throw China into an outright contraction is the big question. If it does, look for the Chinese to ramp up their government spending to cover the difference. However the day of reckoning can only be postponed before all of the debt buildup in the private sector collapses with China going into a 1930's style depression. Many of us have been predicting this collapse for the past five years. Market and governments can stay far longer irrational than most of us thought possible. However, the SSE Composite (Shanghai) is down from its height of 5900 in October of 2007 to today at 2063. That is a decline of 65% with the majority of that decline bottoming in October of 2008 at 1728. Are Chinese shares undervalued? It appears that at least they are far cheaper than before the huge speculative mania of 2006-2007 and have been flat in price since 2012. For those who are looking to diversify their stock holdings look into the Matthew Asian Funds [Matthews China Fund]. With the potential debt bomb exploding dollar cost averaging would only be recommended.

DYI

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Estimated 10yr return on Stocks

Using 5.4% as the historical growth rate of dividends and 4.0% as the ending yield.

Starting Yield*---------return**
1.0%-----------------------(-5.7%)
1.5%-----------------------(-1.7%)
2.0%------------------------1.3%
2.5%------------------------3.8%

3.0%------------------------5.9%
3.5%------------------------7.8%
4.0%------------------------9.4%
4.5%-----------------------10.9%

5.0%-----------------------12.3%
5.5%-----------------------13.6%
6.0%-----------------------14.8%
6.5%-----------------------15.9%

7.0%-----------------------17.0%
7.5%-----------------------18.0%
8.0%-----------------------19.0%

*Starting dividend yield of the S&P500-**10yr estimated average annual rate of return.

DISCLAIMER!

This blog site is not a registered financial advisor,broker or securities dealer and The Dividend Yield Investor is not responsible for what you do with your money.