China is blamed for much of the turmoil brewing in the global markets but one ETF CEO sees buying opportunities in some of the country's most famous Internet names.
Rattled by the Shanghai Composite plunge of nearly 40% since mid June, Chinese policymakers are taking drastic action in an effort to stop the bleeding.
Meanwhile, in U.S. markets, September is notoriously an unkind month and this year’s was the worst start to September since 2002. But this correction is presenting some silver linings including “highlight[ing] the biggest flaw in emerging markets indexes and emerging markets ETFs,” said Kevin Carter, founder of The Emerging Markets Internet and Ecommerce ETF (EMQQ).
Those flaws are “the dominance of state-owned enterprises -- these are the companies that are old, behemoth, corrupt, state-owned oil companies, banks, industrial companies,” he said. “The bulk of the ETFs were invested in these old legacy companies."
Instead, the emerging markets ETF CEO recommends investors look for “companies that are entrepreneurial” and said he believes very strongly in China’s “booming consumer economy.”
Companies that Carter thinks will benefit from China’s long term growth of the consumer include Alibaba (BABA), Baidu (BIDU), 58.com (WUBA). “Those are the names investors should be buying and I think they should be buying them now,” said Carter.
Disclaimer: Yahoo (YHOO), the parent company of Yahoo Finance is a major shareholder of Alibaba.
Ahead of his trip to China this week, Carter brushed aside the recent media coverage of the financial calamities in that country. “China remains in growth mode and that’s what I will see in spite of the headlines that have really been negative for the last few weeks,” he said.
Carter maintains that “the reality is I’m going to find the same things I found there four months ago, and a year ago and two years ago and five years ago, I’m going to find a booming consumer economy.”
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