Why China’s Rally Won’t Have Legs

Absent the multi-decade housing and construction boom, China will be unable to generate the monster credit impulses that it did through 2000-20. Hence, the recent melt-up in Chinese stocks and China plays may last a few weeks more but is unlikely to be a rerun of the 2015 episode either in magnitude or in duration. We go through the tactical and longer-term investment implications. Plus, a new recommendation on a 6-month horizon is to go long USD/GBP.