The appropriate A chance to Invest in China
A decade ago the British handed control of Hong Kong back again to the Chinese. This is the start of massive changes to that economy. State controlled companies were put into private hands and business started to blossom. The Chinese economy started looking more and more such as for instance 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 group grows. Now the GDP of China is expected to boost a lot more than 10% every year Investment in China. This economic growth is indeed exciting that Jim Rogers, one of the greatest money managers of our time, uprooted his entire family and moved to Asia. When asked why, he explained “I really do not want to market Chinese stocks. I want to own them forever and I’d like my [four year-old] daughter to own them.”
Now that’s what I call a longterm investment strategy.
During the last few years, investors have made a lot of profit the Chinese markets. If you’d bought China 25 Index at the start 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 only a little out of control last year. As a matter of fact, in May I warned of a near term bubble. As as it happens I was right. but only a little in early stages my call.
The index started falling in October of 2007. During the last several months, 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. From the the influence China had when I was employed 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. In that scenario, the Shanghai market might fall further. Some advisors have gone as far as suggesting that individuals prevent the Chinese markets entirely.
I think they’re horribly wrong and a bit shortsighted.
Unless you’re focused on very short-term trading, now’s the time for you to go long China. The country is in the early stages of a multi-decade economic expansion. Their economic growth is second-to-none, and their infrastructure continues to be in the early stages of build out.
Don’t allow recent market correction scare you away. Think of it as a great way to expand your emerging market exposure at a 30% discount. A good way to obtain broad contact with the Chinese market is through the iSharesFTSE/Xinhua China 25 Index ETF (FXI).
Brian Mikes is 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 help you discover profitable trading ideas you can use today.