What's hot in China?

[donlat3]

Anybody investing in China? What are some of the hot things to invest in over there and is it safe?
Seems like the only thing I hear of people doing is in the import/export business. I know there is a lot of opportunity over there with them having the most millionaires in the world residing there.

There has to be something they want from us in America right?

[Broken Arrow]

Best way may be through an international ETF that targets the Chinese market.

A couple of caveats. Yes, China is hot. However, the Chinese stock market is strictly government-regulated. For example, shorting stocks is strictly forbidden, and unfortunately, that has lead to stock bubbles where some have lost fortunes. Despite the fact that you can't short.

Also, the Chinese market is not easy to put your money directly into. In many cases, I think the Chinese government can and will actually forbid direct outside investments. However, you can either make a play on an ETF or with stock ADRs.

As to what they want, why yes, they do want something from us Americans. Our consumer demand again. Seriously though, did you know that China is also one of the world's biggest buyers in scrap metal and power utility equipment and supplies? And American is one of their chief suppliers?

Kind of a strange commodity play until you realize that China is trying to modernize the country by, among other things, provide electricity into more rural parts of the country. (Modernizing also makes it easier for the government to assert more control towards the rural population; something that was difficult for them to do in the past.) And scrap metal? Raw material for their own domestic market, as well as for finished goods that they will sell back to us.

However, these two commodity plays are on American companies that deal with Chinese buyers, rather than investing in Chinese companies. However, I think that's a very reasonable alternative considering that US companies are easier and safer to invest in. Seriously, I think an indirect China play can be just as viable of an option as a direct one. It's certainly worth considering.

I'll never forget Warren Buffet's PetroChina play. He made a bundle on that one, but he didn't stay for long either. Bought and sold it within a year or so I think. Very uncharacteristic of him. Perhaps it just also goes to show the level of risk that may be present there, not just the rewards.

Good luck!

[mainyy]

Originally Posted by Broken Arrow

Best way may be through an international ETF that targets the Chinese market.

A couple of caveats. Yes, China is hot. However, the Chinese stock market is strictly government-regulated. For example, shorting stocks is strictly forbidden, and unfortunately, that has lead to stock bubbles where some have lost fortunes. Despite the fact that you can't short.

Also, the Chinese market is not easy to put your money directly into. In many cases, I think the Chinese government can and will actually forbid direct outside investments. However, you can either make a play on an ETF or with stock ADRs.

As to what they want, why yes, they do want something from us Americans. Our consumer demand again. Seriously though, did you know that China is also one of the world's biggest buyers in scrap metal and power utility equipment and supplies? And American is one of their chief suppliers?

Kind of a strange commodity play until you realize that China is trying to modernize the country by, among other things, provide electricity into more rural parts of the country. (Modernizing also makes it easier for the government to assert more control towards the rural population; something that was difficult for them to do in the past.) And scrap metal? Raw material for their own domestic market, as well as for finished goods that they will sell back to us.

However, these two commodity plays are on American companies that deal with Chinese buyers, rather than investing in Chinese companies. However, I think that's a very reasonable alternative considering that US companies are easier and safer to invest in. Seriously, I think an indirect China play can be just as viable of an option as a direct one. It's certainly worth considering.

I'll never forget Warren Buffet's PetroChina play. He made a bundle on that one, but he didn't stay for long either. Bought and sold it within a year or so I think. Very uncharacteristic of him. Perhaps it just also goes to show the level of risk that may be present there, not just the rewards.

Good luck!

Broken Arrow,you are an expert of China.

Yes,If you want to invest chinese Capital Market ,you must be a Qualified Foreign Investors that permitted by government.

As an individual person ,you can only invest ETF to invest chinese capital market.

[SoCoolGifts]

Any suggestions on where to find some of the better ETF for China?

[snafu]

Nothing in China is what it appears to be. How do I know? I live in Guangzhou, Guangdong province a Special Economic Zone [SEZ] Factories galore, 1 hr. from ShenZhen also known as WalMart city.

The big push this week is cars. There is a huge Auto Show here this week. GM, VW, BMW, Toyota, Honda, Hyundai, Skoda made in China imports... Geely, Chery and I think BYD is newest. This is the biggest new market as there are 1.2 billion people and only 3% [I thought I read] have private cars. it is the desire of every university student I see to own a car.

If everyone starts buying the cars they desire, they will need much more roadway. Anything to do with engineering and cement sounds good. Talk to your broker

[Broken Arrow]

Snafu, I didn't realize you are in China! That's pretty wild.

SoCoolGifts, I'm sorry. While I may have suggested China ETFs, I actually don't have any personal experiences or specific recommendations. As a starting place though, you could try looking into a major brokerage's ETF offerings. For example, it appears that both Fidelity and T Rowe Price will allow you to buy PowerShare Golden Dragon ETF (PGJ).

But please don't forget that several major Chinese companies also have their stocks available (as ADRs) on the NYSE. China Mobile and PetroChina are two such examples. That way, it won't be too different from buying US stocks, but you'll still directly own shares of Chinese companies.

Finally, a lot of international mutual funds and ETFs already have some exposure into the Chinese market. I would check on the prospectus and ask for additional information if you would rather just take a passive route.

[TermMonster]

One way to play China is to invest in commodities and shipping. China will require a strong US to support it's manufacturing business. If you think the US will recover, China will be a good investment and the Yuan will give you a nice currency kick as the dollar depreciates!

[shultice24]

I love Vanguard Emerging Markets ETF (VWO). It is not China-specific (about 18% of assets currently are Chinese), but it's a good, broad play on the continued emergence of China, Brazil, India, etc.

I'm currently wading into it slowly though. Stocks have risen very far, very fast in these countries and could be ripe for a downturn (or not, nobody knows for sure ).

I also used to have a little Guinness Atkinson Pacific Dividend Fund (GAADX), which focuses on dividend-paying stocks in the Asian region. It's a more direct play than VWO, and may be of interest to someone looking to get into that region.

Unlike snafu up above, I have absolutely no justification to try and pick individual industries over there. Just funds for me...

[Broken Arrow]

Originally Posted by TermMonster

If you think the US will recover, China will be a good investment and the Yuan will give you a nice currency kick as the dollar depreciates!

The Yuan kind of worries and confuses me at the same time. Because, China has specifically tied their exchange rate to the US Dollar. Doing so gives them an export advantage against us because of the recent sagging Dollar. In fact, the Yuan could even be under-valued because it's tied to the USD.

On the other hand, if they stay the course, and the American economy rebounds, then their currency takes a hit. I suppose, by then though, they could always change the policy to something more beneficial.

A direct currency play on the Yuan is risky to say the least, but investing in US dry shippers isn't a bad indirect play. Even Cramer talks about that fairly regularly.

Originally Posted by shultice24

I love Vanguard Emerging Markets ETF (VWO). It is not China-specific (about 18% of assets currently are Chinese), but it's a good, broad play on the continued emergence of China, Brazil, India, etc.

I'm currently wading into it slowly though. Stocks have risen very far, very fast in these countries and could be ripe for a downturn (or not, nobody knows for sure ).

I also used to have a little Guinness Atkinson Pacific Dividend Fund (GAADX), which focuses on dividend-paying stocks in the Asian region. It's a more direct play than VWO, and may be of interest to someone looking to get into that region.

Unlike snafu up above, I have absolutely no justification to try and pick individual industries over there. Just funds for me...

This is a great response here.

People are drawn to China because of the potentially huge payoffs, but it does not come without an equally huge amount of risk. So, if you want to make a direct play, you're going to need a pretty solid thesis.

Otherwise, I would recommend to just buy-and-hold related mutual funds or ETFs.

[Joan.of.the.Arch]

I bought a gold panda coin as a first birthday gift a few years ago. I guess one doesn't buy commemorative coins being sure to get a profit down the line, but over this time period there certainly has been one. Of course, that would have been the case matter where the gold came from. ....Sorry nothing constructive to add.