Ten years ago the British handed control of Hong Kong back to the Chinese. This is the start of massive changes compared to that economy. State controlled companies were put in private hands and business started initially to blossom. The Chinese economy started looking more and more such as a free market.
The effect was incredible growth.
China has more than 1.8 billion citizens and as their economy develops, the middle class grows. Now the GDP of China is expected to increase more than 10% every year guizhou panjiang refined coal. This economic growth is so 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 do not want to sell Chinese stocks. I want to own them forever and I want my [four year-old] daughter to possess them.”
Now that’s what I call a long term investment strategy.
Throughout the last couple of years, investors have made a great deal of money in the Chinese markets. If you’d bought China 25 Index in the beginning of 2005 you’d have made more than 315% on your hard earned money by October 2007.
However the excitement in the Chinese markets got a little beyond control last year. As a matter of fact, in May I warned of a near term bubble. As it turns out I was right. but a little in early stages my call.
The index started falling in October of 2007. Throughout 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 recall the influence China had when I was 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 steer clear of the Chinese markets entirely.
I believe they are horribly wrong and somewhat shortsighted.
Unless you’re centered on very short term trading, now’s 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 recent market correction scare you away. Think of it as a good way to expand your emerging market exposure at a 30% discount. A good way to obtain broad experience of 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 totally free investment newsletter that offers 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 can use today.