In short: "We've seen China has been a little bit of the laggard this year" — he would "look for an eventual further bounce out of China at a time when it really has lagged pretty sharply." A dollar that rolls over into next year is the catalyst ("that's a good sign for emerging markets"), but South Korea is the higher-conviction expression today.
China has been "a little bit of the laggard this year," and Newton's interest in it is patient rather than immediate: he would "look for an eventual further bounce out of China at a time when it really has lagged pretty sharply."
The logic is mean-reversion plus currency. Deeply underperforming markets set up the largest bounces when money finally rotates, and his forecast that the dollar rolls over into next year is the trigger that historically pulls capital into emerging markets. But he ranks South Korea ahead of it today, so this is a watch-list idea, not a current position.
35:40This time, I think it's still sort of a wait-and-see. I would much more be apt to follow South Korea, the EWY [as heard: "EWI"], and look for an eventual further bounce out of China at a time when it really has lagged pretty sharply. — And when you look out to the end of 2026 into say the first half of 2027, do you have any concerns? Is there anything in the back of your mind where you think, "Okay, this could be a real issue?" — No, I don't really.
In short: Pick of the Week — reiterated Buy. Tracks the FTSE China 50 (50 largest HK-listed Chinese firms; financials 35.2%, consumer cyclicals 25.3%, communications 17.8%, tech 5.9%, energy 4.8%); $5.37B AUM, 0.73% ER, ~10.78× P/E, ~2% yield. First bought $38.42 on Feb 25, 2026, now ~$34 (~11.5% down; range $31.19–$42.00). The drawdown is macro/sentiment-driven (tariffs to ~17% effective, Hormuz risk-off, weak consumer), not fundamental — the four original pillars hold and AI monetization has accelerated. "China is the cheapest major stock market in the world"; light positioning (~$895M outflows). Reiterating a Buy at $34, 12–18-mo target $42–48 (re-rate to 12–13× earnings); eventual break of $45 resistance / new ATH >$60. Size for binary geopolitical risk (VIE, tariffs); "not… a size that would be uncomfortable if the drawdown extended to 25%." A Haymaker Buy-list holding. "We are staying in."
FXI is a single fund that holds the 50 biggest Chinese companies that trade in Hong Kong — banks, internet giants, consumer names — so buying it is a one-click way to own "China Inc." without picking individual stocks. Haymaker recommended it in February at about $38.42; it has since slipped to about $34 (down ~11.5%), which is frustrating, but the argument here is that nothing broke in the businesses — the price fell because of the mood around China, not the numbers. Three things spooked investors: the US raised tariffs sharply (pushing money out of Chinese stocks), Beijing purposely slowed its own economy to use less oil during the Strait of Hormuz crisis, and Chinese shoppers stayed cautious (retail sales actually shrank in May). Hay admits they were right on the big picture but too early on the consumer.
Meanwhile the reason to own it has gotten stronger: China is adopting AI at a staggering pace (daily AI usage jumped roughly 1,400-fold in about two years), and the fund's biggest holdings — Alibaba, Tencent, Baidu — are already turning that into real profits. The fund trades at under 11× earnings, "the cheapest major stock market in the world," and most investors have been selling rather than buying (a classic contrarian setup, like beaten-down oil stocks right before they bounced this month). The chart also broke above a multi-year ceiling and is just resting. The risks are real and specific — trade war, the unusual legal structure through which foreigners "own" Chinese firms (the VIE structure), and a weak consumer — so Hay's advice is to keep the position small enough that a further 25% drop wouldn't hurt. Bottom line: he's reiterating a Buy at $34, expecting $42–48 within 12–18 months and, over several years, potentially a record high above $60. "We are staying in."
In short: China broke out then corrected hard — set for "a very big bounce back" on any Middle East resolution.
FXI is an ETF that holds China's largest companies. China's market broke out of a long, ugly downtrend, then corrected hard — exactly the kind of beaten-up-but-still-rising setup Hay likes.
His catalyst is geopolitical: he expects an eventual Middle East resolution, and China (a huge energy importer) would benefit a lot from cheaper, more reliable oil. When sentiment turns, he thinks China is set up for "a very big bounce back," and FXI is one easy way to own it.
34:30the Chinese market had a breakout after being in a horrible long downtrend and then has corrected hard and if there's resolution you know when there it's it's going to happen there's going to be peace in the Middle East and if nothing else they're going to build pipelines so that they're no longer held hostage by Iran but that's going to take a while but uh you know if you're looking for a bounce back when things look better I think China is going to have a very big bounce back like the FXI is a good way to play that not the only way but it's one of them
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Verbatim excerpts from the public transcripts (auto-pulled at each mention's timestamp, lightly cleaned). Timestamps link into the video; "source page" opens that commentator's full analysis at this row. Click a mention's header line to expand it (one open at a time). For personal study — not investment advice.