Some people are saying that the US market will do better this year than China’s stock market. Frankly, I think that Taiwan, which has started to normalize relations with China, will be the big winner of the three. If China keeps going strong, Taiwan’s inroads will continue. If the US trumps China this year, Taiwan will still plow forward with its moves at business integration.
This funny video just appeared on how the US could get China to revalue its currency overnight, the Yuan (remingbi), if it just imposed punitive duties. I do not believe we would see a rush of factories returning to US shores, however, if this happened. We would see a switch of manufacturing to Vietnam instead and the US, which offsored its capabilities, would not be able to gain very many jobs in return. With globalization we sent those jobs everywhere, South America included.
Nonetheless I do believe that sometime in from 2011 to 2012 the U.S. will finally awaken and push China into a higher negotiated exchange rate. Naturally it will not be the high rate that the US wants, and also it will not save the US … the video speaks the truth about this. China wants to do nothing of the sort because it needs a low remingbi to keep factories churning out orders and people employed. Social unrest is a big potential problem in China, and you can expect many issues like that to hit the forefront of the People’s Congress in 2012.
Sometime in 2011-2012, our contrarian instincts suggest the Yuan, or remingbi as I used to know it when I was in China, will be revalued dramatically. Watch the video and then the seasonal forecasts for the Yuan, FXI and Taiwan ETF — EWT.
Here is the current seasonal chart of the Yuan via the CYB ETF, the FXI and EWT … for the Yuan there is too few years to make any reliable seasonal, and the accuracy fo the FXI prediction is lousy at the moment, but that’s the best we can do …