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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (2223)	12/24/2003 12:48:01 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

Hedge Funds Lick Chops, Knit Brows Over China By Will Swarts Staff Reporter 12/24/2003 07:04 AM EST Click here for more stories by Will Swarts China, the emerging market of the moment, is an easier play than most investors realize, but it probably isn't where you should go looking for quick profits. With Chinese ADRs hitting U.S. equity markets to much fanfare and growing hopes that the dollar-pegged renminbi will soon become convertible -- at a 7.8% estimated annual growth rate -- investors of all types think the East isn't quite so red but might well be green. Hedge fund managers focused on "greater China," which comprises mainland China, Hong Kong and Taiwan, recommend a balanced mix of optimism, patience and caution for a market where many investors have ventured with high hopes and later been burned. Political risk has declined, but is still an issue, and much of the investment momentum is predicated on possibly unsustainable annual growth rates of 7% or more. With an equity market still split into domestic and foreign-owned share classes, securities regulations are becoming easier to navigate, and so after a lull of several years, China is back. "I can't think of a single investment or investment strategy that is not currently being affected by one's views of what is going on in mainland China," says John Trammell, president of Investor Select Advisors, a fund of hedge funds in New York. He sees opportunity in China as a matter of scale, because its high economic growth rates have driven up demand for commodities and consumer goods alike. Major names among China ADRs include recently offered China Life (LFC:NYSE - commentary - research), cell-phone powerhouse China Unicom (CHU:NYSE - commentary - research), oil producer Sinopec (SNP:NYSE - commentary - research) and Huaneng Power (HNP:NYSE - commentary - research), two companies expected to grow with the country's infrastructure needs. Trammell says that Chinese companies will grow, and so will U.S. companies that do business there. He said a recent Lehman Brothers analyst's report on 3Com (COMS:NYSE - commentary - research) attributed 2004 growth to a boom in Asian orders. "Even 3Com can be included in the China story -- there are all kinds of ways to invest in it," Trammell says. Go to NEXT PAGE thestreet.com