The appropriate A chance to Invest in China
A decade ago the British handed control of Hong Kong back once again to the Chinese. This is the start of massive changes to that particular economy. State controlled companies were put into private hands and small company started to blossom. The Chinese economy started looking more and more just like a free market.
The effect was incredible growth.
China has a lot more than 1.8 billion citizens and as their economy develops, the middle income grows. Now the GDP of China is expected to improve a lot more than 10% every year. This economic growth is really exciting that Jim Rogers, one of the finest money managers of our time, uprooted his entire family and moved to Asia. When asked why, he said “I really do not want to offer Chinese stocks. I do want to own them forever and I want my [four year-old] daughter to own them.”
Now that’s what I call a long haul investment strategy.
Over the last several years, investors have made a great deal of profit the Chinese markets. If you’d bought China 25 Index in the beginning of 2005 you would have made a lot more than 315% on your hard earned money by October 2007.
Nevertheless the excitement in the Chinese markets got a little beyond control last year. As a matter of fact Private and corporate investments, in May I warned of a near term bubble. As it turns out I was right. but a little early on my call.
The index started falling in October of 2007. Over the last month or two, it’d fallen almost 33%.
Currently, China is emerging from an economic slumber. Politically, they’re a communist country. Economically, they’re waking up to and including free market revolution. I remember the influence China had when I was working in Singapore. It included language, social customs, food, and even economics. Now they’re influential the planet over.
In the short term, the outlook appears uncertain. Some economists believe the economic slowdown in the United States could spread to emerging markets. For the reason that scenario, the Shanghai market might fall further. Some advisors have gone as far as suggesting that we steer clear of the Chinese markets entirely.
I do believe they’re horribly wrong and a bit shortsighted.
Unless you’re focused on very short term trading, now could be the time and energy to go long China. The country is in the first stages of a multi-decade economic expansion. Their economic growth is second-to-none, and their infrastructure is still in the first stages of build out.
Don’t allow the recent market correction scare you away. Consider it as a good way to expand your emerging market exposure at a 30% discount. A great way to have broad exposure to the Chinese market is through the iSharesFTSE/Xinhua China 25 Index ETF (FXI).
Brian Mikes could be the editor of the Dynamic Wealth Report, a free investment newsletter that provides investment ideas and news you can’t get from the mainstream investment press. Brian and his team bring decades of Wall Street and Silicon Valley experience to assist you discover profitable trading ideas you should use today.