Hi FR1, <<investing in China>> is a big topic, and I will try to keep it succinct, but not as short and snappy as simply responding, ‘do not do it, and do not even think about doing it’.
<<I know there are risks involved (especially with the government involvement)>>
Government actions introduce a lot of risks and government count-actions remove some other risks spontaneously generated by the local business leaders learning from international experience.
Local business leaders are learning fast, the good and bad stuff. For example, I just heard from a friend about government resistance to introducing non-calendar year corporate fiscal accounting year, mainly to make it harder for companies to do sham ‘end-of-fiscal-year’ revenue and profit boosting deals with seemingly unrelated parties on different accounting fiscal year. Many people here are waiting to read about Enron, wanting to take away lessons on both sides of the law.
I think of China as USA in the 1920s in industrialization, urbanization, political and economic developments, and social change. We should think of China in terms of USA 1920s as far as corporate governance, investor sophistication, and financial market regulation. We should think of China in terms of Charles Schwab and Enron Metal as far as financial deal making know-how and IT infrastructure. We should think of most Chinese listed companies as Enron-wannabies.
Getting excited? Now we understand each other:0) Read on …
<<growth>> The growth, while reliably undecipherable through the reading of official stats, is positive and high, by observation, experience, and inference. The growth is apparently self-sustaining (I believe we are already past the fabled initial take-off stage).
Growth is sustained, so far. Soros’ reflexivity is applicable here in regard to the movement of manufacturing capacity to China, increasing local income, raising local demand, inducing more sophisticated and simply more varied production to satisfy additional domestic needs, improving the knowledge base, better and more fully utilize graduates of schools and training centers, reducing overall unit cost, improving quality, price, and margins, increasing export, attracting additional international capital, utilizing more domestic tag-along and copycat capital, wasting more of both, then print money to band-aid the wound, encouraging further governmental reforms, edged on by W3C (Wang 3-cups) on the streets.
So, 5-6 percent annual growth qualifies as a China recession; 7-8% is apparently just right, 9-10% is overheated, and 11-12% not sustainable. Sustained 3-4% will supposed cause all hell with a capital H, triple underlined, maroon font-ed, to break loose. This sums up the growth environment, with a high tipping point to possible doom and gloom, governed by a ruling elite, as they themselves like to put it, ‘riding on the tiger’s back, holding on tight’.
Info me if you have trouble accessing this from Economist …
economist.com
“China's middle class is expanding rapidly. But what does it want?”
Question:
<<1) Where would you suggest going to trade (ie the ADRs like these: site-by-site.com or invest directly through a major US broker in China?>>
Investing in China is dangerous enough already, without having to worry about custodial issues and such, and so suggest major brokers such as MSDW, GS, and MER. They are able to do ADR, as well as buy HK and China (B-shares) shares, and they are able to arrange Japanese Yen loans:0)
<<2) What would you suggest investing in?>>
I do not. The companies are often dangerous, accountings are sometimes false, valuation mostly baseless, and management is always self-dealing. When I do buy, I do sell after reasonable (25-50%) profit in unreasonable time (less than 6 months), and stay out for a good long time (1-3 years), until the next time.
Message 16898477
“Equity 5.4% (AMGN, AOL, CHL, CMCSK, NEM, SNE, Furukawa Electric, Hongkong & Shanghai Banking HK.5, …) w/ NEM accounting for 1.4 out of 5.4%, the largest position”
I actually have the following (what I consider) China related shares amongst my ‘HK.5, …’:
China Mobile (CHL), QCOM (yes Maurice, I do have some), WMT, and NEM (-ng-) on the US exchanges, and
China Mobile stock code 941, China Petroleum 857, Pacific Century Cyberworks 8, Phoenix Satellite TV 8002, Sinopec 386 (of Sudan fame), Hongkong Shanghai Bank 5, Hutchison Whampoa 13 (of Panama Canal fame) on the Hong Kong exchanges.
Use www.boom.com to check on HK market.
I have traded and continue to watch the following alphabetically arranged HK domiciled shares …
Asia Satellite 1135 (SAT in US available)
Cheung Kong 1 (property development, holding, Li Kai-sin’s flagship company, controls Hutchison, flipped telecom, now incubates biotech and gold)
China Shipping Development 1138 (inland and coastal shipping)
China Unicom 762 (CHU in US)
Citic Pacific 267 (conglomerate opportunist)
CNOOC 883 (offshore oil and such)
COSCO 1199 (international shipping and domestic ocean port ownership, of AK47 in Los Angeles fame)
Dongfang Electric 1072 (hydro and conventional power equipment)
Founder 418 (printing software)
Giordano 709 (retail chain clothing store)
Huaneng Power 902
Johnson Electric 179 (world’s micro-motor dominator)
Li & Fung 494 (global sourcing and trading)
Shanghai Industrial 363 (conglomerate of Shanghai based businesses)
SHK Properties 16
TVB 511 (Television programming, channel, etc)
Vitasoy 345 (soymilk beverage)
Vtech Holdings 303 (branded and OEM electronic products)
I am studying China Agrotech (as in chart watching, speculating on the next HK mania) 8011, Tom.com 8001 (same).
I have occasionally traded in the following B-shares:
Lujiazui Development (owns most of Pudong land in Shanghai)
Wai Gaoqiao (Shanghai land developer)
Hero Company (largest pen maker)
As you had suggested, my caveat emptor footnotes …
Message 16153454
Message 16172978
Message 16178484
Message 16182582
Chugs, Jay |
