[jibpedersen]

I keep hearing that China is going to pull the world out of the recession. How are people investing in that market? Besides buying resource companies (coal? potash?) is it advisable to buy China's stocks directly? Or is it better to go with a fund?

 

[Brad911]

My China exposure is limited to ADRE exclusively. I don't invest in specific companies, but do like the composition of ADRE for adequate exposure to china both directly and indirectly.

 

[daveking]

I'm a big fan of coal. I've been to China last year and they have coal powerplants everywhere. Even right in the middle of a city. Two companies I like are: Grande Cache Coal (CGE.TO) and Westen Canadian Coal (WTN.TO). Both companies have good price to earning and currently is at 15% of last year high price.

 

[Rickson9]

I keep hearing that China is going to pull the world out of the recession. How are people investing in that market? Besides buying resource companies (coal? potash?) is it advisable to buy China's stocks directly? Or is it better to go with a fund?

My wife and I don't feel that we have any particular advantage investing in Chinese stocks so we have no exposure there.

Our advantage is our knowledge of the financial standing of small U.S. securities. We play our strength to the market's weakness.

 

[Sampson]

I hold FXI directly, and will likely add some 'BRIC" expsore through ETFs.

I don't feel like you can make an 'indirect' play on China. Many Canadian and American companies do a lot of business with China - but I feel its impossible to invest properly without living there.

Business there is extremely political, and unless you know who's in favour with the current government - it'll be hard to pick and choose individual holdings.

 

[CanadianCapitalist]

I'm skeptical that investing in China will be profitable for investors. It is true that China is growing rapidly economically but the correlation between economic growth and stock market returns turns out to be negative. The reason is that other investors also recognize the rapid growth and bid up asset values.

That said, I own VWO and have "market weight" to China.

 

[Sampson]

I don't agree with you CC that China will not be profitable for investors

- but I feel that we NA's are so limited in our investment options that most won't profit much.

I actually don't like FXI very much, since its a market-cap weighted index, the holdings are not diverse, and are only mega-cap companies.

I personally think the best route is to invest in the Hang Seng to get direct access to Chinese companies - but then the next problem becomes lack of in-depth knowledge into that market.

 

[CanadianCapitalist]

- but I feel that we NA's are so limited in our investment options that most won't profit much.

I'm not saying Chinese economic growth won't be strong. It is already affecting the world in important ways. It is just that the benefits will mostly go to Chinese workers and management, not foreign investors. Also, investors already expect healthy returns from Chinese stocks and the valuations already discount that. Still, this is just my opinion and I could be totally wrong. Then, I'd be happy that I had some exposure to Chinese stocks through VWO.

 

[MoneyEnergy]

I read Hsu's book on investing in China. Basically, don't bother trying to invest directly on their exchanges. Buy ADRs if you buy direct at all. And don't buy the state-owned corporations (that's his advice, from living there and being Chinese).

I'd like to increase my exposure, but right now I just have exposure through coal.
I'll have to check out VWO - hadn't heard of it.

 

[furgy]

Chinese exports have been dropping for nine months now with no end in sight.

It is the rest of the world that buys their export products , they are in the same boat as the rest of us , until our economies recover , they will have no one to buy their products.

It is conceivable that the Chinese economy may even lag behind the north American and European recoveries.

The one thing they have over the rest of the world is sheer numbers for their tax base , also being a communist country they have more control over their own economy.

The reason they are buying up all the US debt , is so the Americans will start buying Chinese products again.

That said , I think any good Canadian coal , uranium , or potash play would be a good longer term play on China.

 

[mogul777]

I read Hsu's book on investing in China. Basically, don't bother trying to invest directly on their exchanges. Buy ADRs if you buy direct at all. And don't buy the state-owned corporations (that's his advice, from living there and being Chinese).

I'd like to increase my exposure, but right now I just have exposure through coal.
I'll have to check out VWO - hadn't heard of it.

Technically buying an ADR is not buying direct. I take it you meant buying stock of a Chinese company?

Anyhow now may not be the time to do that. I'd wait for a pullback here and then jump in. I've been riding these investments for a few years now, but have gone from a high of four major positions to only one currently. I'd rather own the Canadian commodity plays... course you need a recovery for these to do well. China has lots of money and some power, they will do fine. The USA of course is in decline, but their demise is greatly exaggerated.

 

[bean438]

I own Coke, Proctor &Gamble, as well as JNJ.
They are great companies and I will let them worry about investing in China for me. As their profits rise in China, so do mine.

My yield on cost will rise also

 

[OhGreatGuru]

I too think that trying to invest "in" China would be a challenging and somewhat risky play for the average investor. There are too many imponderables, and it's not an entirely free market. I think the rest of the world is also going to figure out that they cannot continue to export their manufacturing to a country that has no effective controls over safety, pollution, or product purity/quality, and that is going to require a major correction in China's manufacturing costs to fix.

As others have suggested, you would be safer to bet on some commodities that China has to buy, and a few global corporations that are expanding into China.

 

[furgy]

I think the rest of the world is also going to figure out that they cannot continue to export their manufacturing to a country that has no effective controls over safety, pollution, or product purity/quality, and that is going to require a major correction in China's manufacturing costs to fix..

Exactly how I feel , I hope North Americans realise that now in the midst of high unemployment we are going to need the jobs we gave away to the lowest bidders like China.

Our goverments weigh us down with all kinds of regulations to protect us and assure quality , then they allow imports from countries that aren't subject to those same requirements , on top of that , we buy the crap because it is cheaper.

I think the times are a changing and people will start to realise that money spent on goods produced locally is a good investment.

Like I stated before , I think the idea of China leading the world out of a recession is just not realistic , they are in the same boat as the rest of the world , except for their sheer numbers , and that can work to their disadvantage at home , in the fact that they can't seem to produce enough raw materials to supply themselves.

I think they need us more than we need them , they need our natural resources and we get cheap disposable junk in return , it's just not sustainable now that unemployment is high and people are re-asessing their need to own a lot of this junk.

I think any good investment in Canadas natural resources is as good a play on China as any.

Having said that , I would like to hear anyone elses thoughts on what Canada really needs from China , I can't think of anything really , is there something I am missing or is there anything we in Canada can't produce that we need to get from the Chinese?

 

[joncnca]

i don't think there's very much that canada can't produce. and all those arguments about china's lack of quality assurance, environmental protection, etc. are valid. and while there may be a re-assessment of how much chinese-manufactured goods are necessary, and a slow realization of how investing in one's country of residence (i'm of chinese descent but live in canada), benefits the economy, there will stil be a reliance on goods manufactured in china because of the low cost. when someone is standing at the cash register and sees one item for 30% less than another similar item, chances are, they won't be thinking about how buying the more expensive item is going to help the economy because it's made in canada, especially if they've been hit with unemployment.

quality is always important but it's really a consideration that doesn't always supersede increased profits by lowering costs. it ain't right, but regardless of what any individual thinks, at least some of those managers in some of those companies in which you have investment holdings, will at some point decide that lower costs are more important (to some degree) than all that other good stuff i listed above.

so is canada actually unable to produce most if not all of what it needs? probably not, but as long as people are buying from walmart (and what i find totally absurd, stores like Coach and other high-end labels, which charge ridiculous prices for items manufactured in china), then there will be imports from china. next time you buy something, ANYTHING, check to see where it's made. i kind of do this just out of curiosity.

all this being said, i'm investing in china, but i also have a good chunk of my holdings in canadian markets. if any good investment in canada is as good a play as any investment in china, then wouldn't it be better to invest in both, as this would help with diversity?

 

[MoneyEnergy]

So-called China "Bubble"?

Technically buying an ADR is not buying direct. I take it you meant buying stock of a Chinese company?

Mogul, you're right. I guess I mean "direct" as in *not through an ETF.*

Canadian commodity stocks are a good idea as well, but even BNS and MFC can give some exposure to China.

Anyone have any thoughts on the so-called "China bubble?" - Apparently half the growth in their GDP this year can be chalked up to mere stimulus. i.e., they've counted the new money printed instantly into new GDP numbers. I realize that's not the only factor going into any bubble, however.

 

[zylon]

old thread - same topic

h/t: https://twitter.com/TihoBrkan


In the news: IGM Financial investing $468 million for 10% stake on China Asset Management