If you have extra money lying around that you don't particularly need and you have an appetite for risk, I'd seriously consider investing in a basket ...
If you have extra money lying around that you don't particularly need and you have an appetite for risk,
I'd seriously consider investing in a basket of Chinese stocks right now. You can do so quite easily. The iShares FTSE/Xinhua China 25 Index (NYSE/FXI) represents the largest companies in China that are available to international investors. That index comprises 25 of the most liquid Chinese companies, all of which trade on the Hong Kong Stock Exchange. There are all kinds of other securities that provide a basket of different Chinese stocks.
Imagine a population that's more than four times the size of the United States, full of hardworking people who want to create significant wealth for themselves. Then imagine an equity market representing that population's aspirations, which is down over 50% from its recent high. I think this has the makings of a really good long-term opportunity.
I leave out the politics of China because, for the most part, I support the practical policy of progress through engagement. To the best of my knowledge, this is how the Western world relates to China, and that engagement is accomplished through commerce and subtle diplomacy.
The major stock market correction in the U.S. has also occurred in China, but this was after their equity market's bubble had already burst. Chinese equities were in a major bubble up until October 2007, and they've been falling in value ever since. After a terrible October in 2008, the main Chinese equity indices looked to have stabilized, and they are now trading in a range that I view as a long bottoming out.
So, with a global recession and investor gloom rampant, it seems that now is a good time to be considering this type of investment.
The one thing that China has going for it right now is that it can actually afford its own government stimulus package. Policymakers in that country have lots of options available for economic stimulus, because they have a lot of money in the bank. They have a lot of our money because we've been buying so many of their products. This is why I'm guessing that their economic stimulus plan is going to work, because spending hundreds of billions of dollars won't put them further behind the eight ball.
You wouldn't want to take on too much China in your portfolio because it's still a bit of a Wild West economy over there. Still, as part of a long-term strategy, I think you have to have some exposure to the world's third largest economy, which, by the way, is still growing and is not in recession.
Profit Confidential
---
http://www.profitconfidential.com/
LOMBARDI PUBLISHING CORPORATION
News, Analysis, and Information Services Since 1986.
One Million Customers in 141 Countries.
Lombardi Publishing Corporation
Financial Publications Division
350 Fifth Avenue, Suite 3304
New York, NY 10118-3304
---
Copyright 2008; Lombardi Publishing Corporation. All rights reserved. No part of this e-newsletter may be used or reproduced in any manner or means, including print, electronic, mechanical, or by any information storage and retrieval system whatsoever, without written permission from the copyright holder.
