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Xinyuan Real Estate Co., Ltd. Message Board

  • growth.value growth.value Sep 21, 2012 2:53 PM Flag

    What makes you interested in XIN and Chinese stocks

    I see many non-Chinese background posters here buying XIN. So, what makes you interested in this Chinese real estate developer stock? My bet is some buy XIN because of its low P/E and low P/B.

    I also notice some folks such as Hmmm have quite high exposure in Chinese stocks other than XIN. Just wonder why you are interested in Chinese stocks when you do not have China background.

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    • Good thread. In case you'd like a specific example for discussion, I'll bump forward an old review I wrote for BIDU, often my largest China stock position (although right now that's SINA).

      I. Target Rich Environments and the First Time I've Ever Used My History Degree.

      But I've still never used the geometry they taught us in high school -- not once.

      I suspect most people interested in China stocks got that way because we're the latest inheritor of the China Dream: We've noticed that China's 1.3 billion people, AKA 1.3 billion potential clients, are growing steadily wealthier in a rapidly developing economy, providing them with the means and the desire to buy lots and lots and lots of stuff. From a business point of view, that makes China one gigantic, target rich environment.

      There's nothing new in our covetous gaze. Westerners have been freaking out over the potential of the Chinese market ever since the British started running opium 200 years ago. It's just that, until recently, political developments haven't cooperated.

      II. Rising Tides or Growing Pizzas? Screw It, Let the Reader Choose.

      I couldn't decide which metaphor to use, so if you can pick your own; if you like boats more than pizzas, read Section II. A. If you're the other way around, go with Section II B.

      II. A. Rising Tides.

      As the saying goes, "A rising tide lifts all boats." In other words, with an economy that's getting bigger and richer at a 7 to 10% rate, you don't need to pick "winners-only" to make really solid profits among China stocks, the way you do in a fully developed economy. With an economic boom as the backdrop, suddenly your good picks become great picks, your OK picks become good picks and your boneheaded picks become less costly.

      Or, at least they should. Unfortunately, I've never found an antidote for making dumb decisions (I still own several thousand shares of CCME bought around ten bucks now trading in the Pinks for about a penny -- whoops).

      II. B. Growing Pizza Pies (cue Homer: "mmmm, pizza", "mmmm, pie" [splendiforous, drooling noise]).

      China's economic pie is getting bigger, fast. That means that even if your investment choice doesn't grow its market share (expand its slice of the pie sideways) like you'd hoped, as long as its market share remains constant, it should STILL make higher profits for you over time, and therefore its share price should appreciate, as the pie itself grows from a 12 inch pizza size, to 14 inch, to 16...well, you see what I'm saying: In a sustained boom like China's, the "length" of each slice is getting longer.

      The best part (besides its yumminess) is that the growing pizza makes you look smarter than you are. The winners become mega winners, because you get to multiply its growing market share with China's overall economic growth (its pizza slice is expanding both sideways and outward -- a very profitable little pizza pig). Likewise, if you happen to make only an OK investment choice, there's still the chance of decent appreciation, JUST from the growth of the economy as a whole, as its slice gets "longer". Even your losers should cost you less.

      Honest to God, writing that section just made me hungry. If my wife's views on health food were slightly less Fascist, I'd be ordering a pizza right now.

      III. One Final Thought.

      Naturally, It's up to you, but I would note that there ain't no law, nowhere, no how, that says you have to give any of the credit for your China stocks' appreciation to China itself. If your family and friends were to accidentally assume that your better than average profits were owing to your own genius, rather than China's booming economy, well, then, really, what's the harm in that?

      Wait, you won't rat me out, will you?

    • "non chinees background" I suppose you speak Chinese and live their.. why do you want to know what/why investors invest? this is a market that wil turn around just like the usa market will... all in perspective time horizon most bang for the buck and if their cash value is where stated this will rise up from the ashes beside their also buying usa real estate with some of that money now a two country developer and dividend like a reit

      • 1 Reply to harleyridingman2
      • That reason is China is a special country. Many western concepts and standards just do not apply there. Many seasoned investors in the Western market get burned there pretty easily. While China has many merits, which make China grow so much in the last 20 years, China also has many drawbacks that many people from the west simply could not understand.

        Then, my question is do you agree that investors should only invest in companies they understand? If you don't understand a company, you may still make money when you are lucky. But it is unlikely you will be lucky every time.

    • Usually sane investors looking for growing countries, and in that case real state usually works good.
      In my case -first of all- looking for assets instead of "toilette papers".

      Look at the following list (Monetary expansion from 2007/2012):

      Japan +83%
      ECB +146%
      China + 151%
      Switzerland: + 212%
      FED (USA) +223%
      England + 362%

      what do you think?

      which your view about Ben?

      no more than two possibilities: .stagflation .....
      or another big war to help "everywhere hawks"
      who 'll pay that in name of the "freedom"?
      all of us declining "wethepeople" or "everywhere declining middle class"


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