Christopher Wood of CLSA Asia-Pacific Markets on China and Euroland

Barron's interviewed Christopher Wood in the December 12, 2011 issue.

Barron's: China and the Euro: Connected Concerns (December 12, 2011)

Points of Interest:

1) The two most important events for 2012:  when do we get to the endgame of the euro-zone crisis and when does China ease.

2) Southeast Asian markets such as Indonesia, Philippines and Malaysia outperformed in 2010 because the central banks were not tightening.  India and China under-performed due to central bank tightening.  Indonesia has begun easing again.  When China and India begin easing, it makes sense to move money from Southeast Asia to China and India.

3) China and India have room to ease central bank policy in 2012.

4) When China eases monetary policy, the Shanghai market will move.  If the China shares in Hong Kong outperform the Shanghai, that is not a good sign.  That is a sign the Chinese are not really easing, but rather, the Hong Kong market is going up.

5) Two items to watch in China:  interest rates and the property market.

6) There has historically been a close relationship between Chinese property prices and Chinese property stocks.  If Chinese property stocks are not rallying, the Chinese market cannot rally.

7) Notes China is the most policy-obsessed stock market in the world.  Policy moves the market more than earnings.

8) Brazil and Russia are commodity plays.  They will trade up on a resurgent Chinese market.  They need China to rally before they can outperform.

9) The key variable for the US market is the US dollar not the US economy.

10)  You want to add to Asia when Europe causes Asia to sell off.  When the Shanghai has rallied and decoupled, you want to add aggressively to Asia.