Chinese stocks have underperformed US stocks over the last decade to a staggering degree. It’s a reminder that popular, consensus trades are often wrong.
Leading up to and in the ensuing years after the Great Recession, many believed that Chinese stocks would continue outperforming US stocks after very strong outperformance from the early 90s to 2007 as the country’s economy modernized and embraced capitalistic practices. This turned out to be false, and these 2007 levels have yet to be exceeded for the Shanghai Stock Exchange despite years of strong GDP growth.
