CHINA RELATED STOCKS
Because the original intention of setting up a stock market in China is to save the near bankrupted state owned enterprises, it is not surprised that savvy investors normally cannot find enough qualified companies to invest in China's domestic A-share or B-share markets. In Hong Kong, H-shares present higher quality companies. However, the very best Chinese companies, especially those private, investor friendly companies, are yet to be listed domestically or abroad.
This presents a difficult dilemma for investors. We know that China is in a high growth period, and we know that China will continue to grow rapidly in the next a few decades. How could we benefit from it? How can we participate in this "China boom" period?
If we invest in Chinese companies listed domestically, not only it is presently illegal to invest in highly priced domestically listed A-share companies in which the government still owns 30%, we had to take a short term approach, and pay a hefty high commission fee (much higher than Western standard). If we invest in Chinese companies listed in Hong Kong and abroad, we are limited in investing in few companies and in restricted industries.
Here, we present another option: Invest in China related stocks, or companies that do business with China and/or will profit from China's long term economic growth.
China Related Stocks to Buy
While there are many companies that do business with China, and many more try to profit from China's economic growth, natural resource companies, or companies that produce raw materials are the ones to benefit most from China's increasing demand for energy, agricultural products, industrial commodities, and others.
This type of companies are located all over the world, in countries such as Thailand, Malaysia, Norway, Canada, United States, Australia, New Zealand, Brazil, Chile, Mexico, Iran, Bolivia, Finland, Poland, Russia, Vietnam, Indonesia, and countries in Africa.
Investors may purchase companies in these countries, however, they risk two things:
1) If the overall stock market in that country goes down as result of political instability and/or rising interest rates, the natural resource companies in these countries shall go down as well.
2) If the currencies of these companies go down, even though the selected stock goes up, investors will not be making a superior return as a result of depreciation of the currency.
Therefore, it is necessary to invest in countries that are politically stable, economically open, and has a currency appreciation prospect.
In China Investment Newsletter, we explore these countries and companies, so that our readers will profit from China's economic growth, increase demand of raw materials, foreign currency's appreciation, and a hedge against inflation at the same time.
Stocks Related to China
We will look at stocks that are related to China, particularly those stocks that are owned by Chinese nationals and overseas Chinese. We will also examine shares that do substantial amount of business with China and/or profit from China's increasing demand for certain goods and/or profit from China's increasingly competitive manufacturing and other industries.
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