Alpha Think Tank 1st-Quarter Recap

May 05, 2014

Roundup of first-quarter views from our Alpha Think Tank experts.

It’s time to recap some of the most popular investment themes from our panel of global macro strategists. We interviewed 12 strategists in the first quarter of 2014. Here are the Q1 highlights, along with’s picks.


China was by far the most-talked-about theme. While some strategists were not outright bullish on the overall economy, they still had a favorable view on Chinese equities because they’re trading at such depressed levels. Famed contrarian investor Marc Faber noted, “Chinese stocks may not go necessarily much lower, but I doubt that they’ll go up substantially.”

One thing was very clear: Not one of the strategists favored China’s mainland A-share market. Instead, they prefer to invest in “offshore” China.

Jim Rogers: “I invest in B-shares. I invest in H-shares. I invest in S-shares, ADRs and European shares. I’ve never bought an A-share that I can remember.” He added, “If the Chinese government is going to put some money in some areas of the Chinese economy, I probably should put some money there too.” 

Brendan Fitzsimmons: “You’ll probably still see major opportunities in the consumer sector, and major challenges in things like housing. You’re going to see more liberalization and consumer development of the economy.” 

Ed Yardeni: “I think the Chinese are going to, at some point, get it right and make this transition to consumer-led growth.”

Marc Faber: “If you believe that China is bottoming out and going up, I would own some Hong Kong shares, as I do.” By “Hong Kong shares,” he means both H.K.-listed Chinese firms and Hong Kong-based companies. Picks

iShares MSCI China (MCHI | B-41) & iShares MSCI Hong Kong (EWH | B-96): For “total” H.K. market exposure, Dr. Faber’s preferred way of playing a Chinese recovery.

SPDR S&P China (GXC | B-40): To play a resurgent China through all investable shares.

Global X China Consumer (CHIQ | B-38): For a pure play of mid- and small-cap Chinese consumer companies poised to benefit from China’s transformation.


We also heard several bullish calls on Spanish equities. Don Luskin said he was “very, very bullish” on Spain, and specifically mentioned Spain’s supply-side reforms and its manufacturing potential. Nouriel Roubini focused on the “depressed” P/Es in the eurozone: “Some peripheral countries have done more in the way of economic reforms than others, and Spain looks to be on a better track than Italy so far.”

So is Spain overbought, with the iShares MSCI Spain Capped ETF (EWP | B-94) returning closed to 100 percent since the end of July 2012? 

Not yet, according to Tom Dorsey. At the time of his interview on March 10, according to his technical models, Spain still ranked near the top. Picks

iShares MSCI Spain Capped (EWP | B-94): For the continued rotation back into Spain, the “best of the European periphery” that’s poised to rebound.


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