Thursday, December 24, 2009, 7:31AM ET - U.S. Markets open in 1 hour and 59 minutes.

Mick Weinstein The Week's Best Stock Blogs

Mick Weinstein, The Week's Best Stock Blogs

China Stocks Go for the Gold

by Mick Weinstein

Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story
Good (109 Ratings)
2.302752/5
Posted on Friday, August 15, 2008, 12:00AM

As athletes continue to wow us from Beijing, the current medals count mirrors another global ranking. On a purchasing power parity basis, The People's Republic of China now has the second largest economy in the world after the U.S., with gross domestic product clocking in at over $6.9 trillion. Investors are well aware of China's massive expansion. Its economy is 10 times larger than it was 20 years ago, and continues to grow at a torrid 10 percent each year.

Enthusiasm for the domestic Chinese stock market and in Chinese stocks traded in the U.S. peaked around the fall of 2007, and it's been almost straight downhill since. As Bespoke Investment Group observes, with "Chinese growth and prosperity displayed on our TV sets each night throughout the Olympics, it's hard to imagine that China's stock market could be doing so poorly." Yet that market's shown a "classic bubble pattern," with the Shanghai Composite down 60% since last October. "Anyone hoping that the Olympics would give ailing Chinese stocks a boost has gotten a rude awakening." Bespoke's simple chart tells the story.

Yet given the very real and massive growth in China, the big selloff leaves many market bloggers wondering if now is the time to jump back into China.

• Jim Tripon, editor of the China Stock Digest, notes: "Historically, the Olympics host country's stock index captures a nice bounce following the event. Over the last six Olympiads, the average gain for host countries' stock indexes has been 19% in the six months following the games, and 26% in the 12 months after the games. None of that effect has been apparent in China yet, where markets continue to suffer in spite of robust economic growth. Both the Shanghai Market ETF (FXI) and the Hong Kong Market ETF (EWH) are down this week... [yet] from an investment viewpoint, many stocks in China are getting downright cheap."

• Portfolio manager Roger Nusbaum of Arizona's Your Source Financial sold his Chinese exposure early last year, and had been waiting for an opportunity to re-enter. Earlier this week, when Shanghai hit that 60% selloff point from its peak, Nusbaum bought a Chinese telecom stock. "I have never thought the mania in China was worse than the bubble in tech stocks, so I have always felt the decline would be less than 75%. Fifty percent declines don't occur that often, and so 60% seems like a reasonable overshoot of cutting in half."

• For outstanding macroeconomic insight on China, start reading the blog of Professor Michael Pettis of Peking University - China Financial Markets. This week, Pettis observed "sloppiness" and panic selling at the stock market in spite of the "festive" Olympic atmosphere. Pettis thinks there may now be "some government-inspired buying, or even patriotic Olympic-related buying, or more measures from the authorities aimed at propping up the markets, but if none of those, I think the very bad mood could be extended... expectations about the transformational consequences of the Olympics are unrealistically high, and I think there is bound to be some disappointment."

• Martin Hutchinson says that given the fact that Chinese manufacturing output will exceed that of the U.S. by next year, "a substantial part of any investor's portfolio should be in China and any other countries where manufacturing is growing as a percentage of the world total." In particular, Hutchinson encourages investors to look at Acer Inc., Dr. Reddy's Laboratory Ltd. and Aluminum Corp. of China Ltd. (ACH), an integrated aluminum smelter focused on the Chinese market.

• China market expert Shaun Rein recently stated that "while the Olympics is a great thing for China, and the world stage should applaud China for how far and fast it has come, do not overestimate how much two weeks can really positively impact the bottom-lines of companies... it might actually hurt revenue numbers." Rein disclosed holding just two China stocks traded in the U.S. - China Mobile (CHL) and Focus Media (FMCN).

• Finally, fund manager Zach Scheidt likes this Chinese medical company. Stockpickr predicts these five China stocks are "poised to double." The Sun reviews the July performance of 84 U.S.-traded Chinese ADRs. Stockerblog lists ten high-yielding Chinese stocks. And Justice Litle provides six reasons why China will soon be a buy again.

For ongoing coverage of China stocks, visit Seeking Alpha's China stock sector page.

 

Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story

Rate This story

Good (109 Ratings)
2.5/5
Sign-in to rate!

48 Comments

Showing comments 6-35 of 48<< PreviousNext >>
Sort: first to last

  • R A Bottens - Tuesday, August 19, 2008, 10:58AM ET  Report Abuse

    • Overall: 1/5

    Why buy China when you can buy Wal-Mart which is practically a subsidiary of China.

  • Boone - Monday, August 18, 2008, 10:19AM ET  Report Abuse

    • Overall: 1/5

    I'll be glad when the oLAMEpics are over, all of these spoof titles and silly references are too over done. Congrats Michael Phelps, once football season starts no one will care about all your medals. Oh, and after a 60% fall China does look appealing if you have some extra money to invest.

  • JimmyP - Sunday, August 17, 2008, 11:12PM ET  Report Abuse

    • Overall: 3/5

    There will be a time,but too soon. History,and power moves East. UK, US,California(sic),Now the sleeping Tiger.. I truly hate to say our leaders,and corps. have sold us for cheap easy profits..we are dying ever faster..Debt, Mfg, Industry all for cheap greed...Our Army even gets it's bullets from China...Criminy even Bud is foreign. Hate to admit..Ross Perot was right in one respect "giant sucking sound" and soon to increase as we sell our soul for cheap,and quick gains...We will soon be indebted to our new owners as we will only survive by foreigner buying our debt...

  • spinaltap58 - Sunday, August 17, 2008, 9:35PM ET  Report Abuse

    • Overall: 1/5

    Graet idea!Maybe I should pour money into a sinkhole. This dude should be whipped in public for even suggesting that anyone invest in China at a time when the world economy is just beginning to slow and consumers are tightening their belts.There is still a long way to fall for both the U.S. and China Stocks. We are not even in the 1 st inning of an extra Inning game. Many more shoes to drop. Many more Banks to fall. Many more jobs to be lost.

  • Yahoo! Finance User - Sunday, August 17, 2008, 9:32PM ET  Report Abuse

    • Overall: 2/5

    Not really much new information. I already know that up to now the China markets have been doing poorly. I have substantial investments in them though - I still believe that *long term* they will more than pay off. Now is the time to buy in, while it's still relatively cheap to do so......

  • Yahoo! Finance User - Sunday, August 17, 2008, 8:33PM ET  Report Abuse

    • Overall: 2/5

    Poor reporting.The title and the text does not match.It seems that the title is to attacrt many hits!!We all understand that the Chinese stocks have fallen,no new information there.

  • KevinC - Sunday, August 17, 2008, 8:10PM ET  Report Abuse

    • Overall: 3/5

    China has enacted measures to slow their economy like high reserve requirements for banks yet inflation does not appear to be tamed. The combination of high commoditiy prices and falling asset prices makes earnings outlooks shaky The worldwide property bubble is likely to send a lot of yuan to money heaven along with dollars etc. The market is pricing this in, it is not all a stampeding herd effect, although that is prodigious in itself. I'm still waiting for the next shoe to drop like an accounting scandal. Just have to let the smarter players catch the bottom here.

  • Yahoo! Finance User - Sunday, August 17, 2008, 6:34PM ET  Report Abuse

    • Overall: 3/5

    I think it pays to think long term. To be sure, the world is in for a recession. But five years from now, where will China be?

  • david k - Sunday, August 17, 2008, 3:46PM ET  Report Abuse

    • Overall: 3/5

    McDonalds adds 100 new restaurants in China annually. Since it is one of the most sucessful companies in the world they must know something. China's just getting started.

  • imaginator - Sunday, August 17, 2008, 3:33AM ET  Report Abuse

    • Overall: 2/5

    Well the caption and title of the article said "should you invest in China " etc. But when you click on it, all it says is CHinese stock market down by 60%, and these experts say this is good, etc. Why do these people always give such big titles such as "Is it time to buy?", but when you read the article they are as unsure as all of us?????

  • Johnna - Sunday, August 17, 2008, 3:15AM ET  Report Abuse

    • Overall: 1/5

    I remember when the China market was on its way up to 5,900. Not many predicted a crash to 2,400, just like the tech bubble. Funny, while the whole world is going to capitalism, we are running to socialism. Hello Helicopter Ben (Bernancke) and Bazooka Henry (Paulson).

  • Yahoo! Finance User - Sunday, August 17, 2008, 2:44AM ET  Report Abuse

    • Overall: 1/5

    Why in the world would you want to invest in China when you can just invest in great companies in the US. Everyone is always looking for some esoteric mystic new investment that never works. This is just wall streets version of fancy products or shall I say drug peddling. Just put your money in an index fund and call it a day or if you are picking stocks yourself, just study peter lynch and warren buffett and youll do great. As for China being socialist. The USA is socialist. Dont for one second think we are capitalist. Banks take unlimited risks in this country then get bailed out by taxpayers money when they fail, and when they succeed, the taxpayer misses out on the upside. Its a totally flawed system that allows our treasury to be raided to bail out a few wall street bigwigs. We are a country whos citizens know and understand one word, credit! Its also a sad day when everyone in the country basically sees politicians as liars and swindlers, which 90% are. There is no confidence in the system and its actually reflecting this in our stock market. We have been in the biggest energy crisis in our time yet the democratic congress goes on vacation. What a joke. These people are pathetic and dont care about americans.

  • SandyLady - Saturday, August 16, 2008, 10:41PM ET  Report Abuse

    • Overall: 1/5

    Mick: The presentation is still bad, but maybe getting better. Personally, I'm leery of a socialist/totalitiarian/communist county or company. Bottom line is they are still communist (aka not our best buddies) and those roots and allegiance go deep. The Olympics gives China an opportunity to go bowing and scraping to the international community so they can regain some of the credibility they lost selling to the USA poisoned pet food, toys, medicine and seafood--which was curtailed only when it was discovered and highly publicized. Quality in the end analysis does count, which is NOT China's proven strong suit; they bank on the theory of greed within the confines of capitalism, and play that well in export markets. I'm thinking they are going to be pallying up to Russia more (and all the Russian oil that China needs). Since China and Russia share the same deeply rooted dogma, this partnership will be a far greater threat to us than Iraq ever was. For all of you supporters of China, I suggest you spend some time on PBS...there have been some excellent pieces detailing the actual life of typical Chinese citizens and students. Of note: there are Communist "supervisors" in every classroom, and students consider it a high honor to be active in the communist party (which is very much alive and well, although not PC by some "free trade" enthusiasts).

  • Yahoo! Finance User - Saturday, August 16, 2008, 10:11PM ET  Report Abuse

    • Overall: 1/5

    I work as a fee only advisor which means my advice and outlook is untarnished by market activity. Not one of my foreign fund mangers will get near China. They tell me the bottom line is Chinese markets are completely unregulated, suffering from massive inflation, and corruption. None of the foreign fund mangers I work with will go near this unregulated market and neither should the novice investor.

  • Yahoo! Finance User - Saturday, August 16, 2008, 5:26PM ET  Report Abuse

    • Overall: 4/5

    relevant topic with spot on timing.

  • Erik - Saturday, August 16, 2008, 4:21PM ET  Report Abuse

    • Overall: 4/5

    Strong overview with helpful specifics

  • Kathleen - Saturday, August 16, 2008, 11:20AM ET  Report Abuse

    • Overall: 4/5

    The expert article was useful, the blog comments more so. Wake up call on a country potentially facing a brick wall in terms of continued growth. Scary. I'm re-assessing my portfolio.

  • Yahoo! Finance User - Saturday, August 16, 2008, 1:56AM ET  Report Abuse

    • Overall: 4/5

    In a lot of American's mind China is still a communist country where people over there should always be suppressed and poor. And China produces cheap products with cheap wages. Do they know China is clamping down on the cheap product by making a very tough law to protect the workers. In other words workers can no longer be fired that easily. It needs the worker's union's approval and and pay compensations to let go a worker. The governments purpose is to force the business upgrade. Chinese people are capitalist by nature. The government passed the private property law in 2007. And people are free to do business and their private assets are protected by law. You now got millions and millions of enterpreneurs working very hard to do their business. You have to see the hard work and efforts they put in to believe it. It is domestic comsumption that really the base of todays China's economy. Export is important but not as critical as before. than before.

  • Limewire - Saturday, August 16, 2008, 1:41AM ET  Report Abuse

    • Overall: 1/5

    Anyone thinking about taking Jareds stock advise should not be allowed near their retirement accounts .. Personally, I'd recommend looking into a rock-solid American company with piles of cash like CVS, like DOW, like ED, like T. Instead, he's peddling yesterday's sad little broken bubble.

  • Yahoo! Finance User - Saturday, August 16, 2008, 12:07AM ET  Report Abuse

    • Overall: 2/5

    Yahoo! Finance User - Friday, August 15, 2008, 1:56PM ET: What does it matter if it has a huge dividend? The stock drops by the amount of the dividend and you wind up just as poor as you were before it was paid. The Greater China Fund is about a quarter of its 52-week high because everyone knows China sucks. Jared is going to write about a great investment idea called Bre-X or Enron next week because he has heard good things about them too.

  • twist - Friday, August 15, 2008, 9:10PM ET  Report Abuse

    • Overall: 3/5

    hi all, As with many overseas stocks they will often hit huge reporting quarters and result in a flat stock price. A good example is ABAT. Battery supplier to the Olympics. Just last week reporting a gross profit increase of 63% to $6.0 million. And a net income increased 42% to $4.7 million. Resulting in a sell off ~ down 10%. Twist

  • Yahoo! Finance User - Friday, August 15, 2008, 7:16PM ET  Report Abuse

    • Overall: 4/5

    some of the information in the blogs is new to me and hence valuable. As for the Olympics while the comments are correct in saying that theis should have nothing to do with stock investing, there was a major stock bubble in the 19th century in the US where stocks went up prior to the Great Exposition and dropped when it became clear to invetors that this would have no effect on the market.

  • Napolean - Friday, August 15, 2008, 7:03PM ET  Report Abuse

    • Overall: 5/5

    We We mon sheri ,time to buy

  • Yahoo! Finance User - Friday, August 15, 2008, 6:46PM ET  Report Abuse

    • Overall: 2/5

    With all the pressures boiling just under the surface of China it will be a miracle if the application of ruthless force by the totalitarian government can keep such a vast country calm for the long term. The Chinese economy is heavily export based with little geographic diversification and so is quite fragile, when hard times arrive the unrest may be too broad even for their brutal government to contain. The result won't be pretty.

  • Slugabug - Friday, August 15, 2008, 5:54PM ET  Report Abuse

    • Overall: 1/5

    I wouldn't expect the Chinese stock market to go up just because their manufacturing base is expanding. You can only sell a customer of Walmart the same product 3 or 4 times before they figure out the next one they buy will break too. I wake up in a cold sweat from nightmares of Chinese made cars on our highways. "There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again."

  • pbergn - Friday, August 15, 2008, 5:51PM ET  Report Abuse

    • Overall: 1/5

    I can picture this guy in a commercial. It goes like this: "Yahoo Finance, Read Fresh!"

  • Anon - Friday, August 15, 2008, 5:37PM ET  Report Abuse

    • Overall: 1/5

    This article is based in a ridiculous premise. If your using the Olympics as a trading indicator, you're probably losing. Besides, even if the premise were true, the host country would actually have to make a positive impression. China is showing it's true colors as the 3rd world country that it is and always will be.

  • Yahoo! Finance User - Friday, August 15, 2008, 4:06PM ET  Report Abuse

    • Overall: 1/5

    ...................and your advice is????????

  • Yahoo! Finance User - Friday, August 15, 2008, 3:17PM ET  Report Abuse

    • Overall: 1/5

    Incoherent and places too much value on blawgs. I wonder if Mick receives anything for mentioning a blawg. Maybe this is just an avenue for payola.

  • ussinvest - Friday, August 15, 2008, 2:45PM ET  Report Abuse

    • Overall: 1/5

    I like how everyone thinks that a manufacturing economy is going to benefit from a service-related venue going on in a manufacturing city that had to completely close down for a month for the Olympics. Does anyone else see the parallel here? What do you think would happen to Boeing if they shut down their facilities for a month, do you think they would somehow get more planes out the door and bring in more revenue? Or what if WalMart decided to close their distribution centers for some kind of festival, do you think sales would be up considering the JIT inventory model is based on a 365 day operating calendar and most stores would be depleted of inventory? At some point we need to use some common sense in how we analyze these events. I know that the Games mean that a bunch of foreigners will be on Chinese soil spending foreign money in China, but the market has spoken and I think it's asking the same question that every other investor is, "Why should we reward an economy that is based on making things when it isn't making anything?"

Showing comments 6-35 of 48<< PreviousNext >>

Recent Articles by Mick Weinstein

View all articles from Mick Weinstein

More from Seeking Alpha

The Leading Provider of Stock Market Opinion and Analysis

Seeking Alpha is the leading provider of stock market opinion and analysis from blogs, money managers, and investment newsletters, and a producer of its own financial content on market-moving news developments.

Read more from Seeking Alpha here.

More from Yahoo! Sources

  • CNN Money
  • Consumer Reports
  • Kiplinger
  • The Motley Fool
  • Business Week
  • Wall Street Journal

Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data and daily updates provided by Morningstar, Inc. Fundamental company data provided by Capital IQ. Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.

Yahoo! Answers is provided for informational purposes only, and no Q&A is intended for trading or investing purposes. Yahoo! shall not be responsible or liable for the accuracy, usefulness or availability of any Q&A information, and shall not be responsible or liable for any trading or investment decisions based on such information. View Complete Answers Disclaimer.