Does China Pass the Smell Test?
We at Smead Capital Management believe that prolonged faith in China’s economy and the belief that emerging market growth will be an elixir for developed market multi-national companies is the erroneous gift that just keeps giving. If China’s economy has been successfully soft landed from its boom, why is the internal Shanghai Composite index making new lows as recently as last week (November 29th, 2012)? From its peak on October 16, 2007 through December 3, 2012, the Shanghai Composite is down over 64.8%, whereas the S&P 500 is up 2.7% on a total return basis. We at Smead Capital believe that China’s boom and the boom in commodity prices which it undergirded do not pass the smell test!
December 11, 2012
