Investing in China

[Hyperborea]

Interesting article in today's Globe and Mail (Toronto/Canadian national newspaper) on investing in China.  The link will be good for about a week before it goes from free to pay.  It discusses a bit about the new FTSE ETF for China - FXI.  This new ETF may be the investing vehicle that I and others wanting direct exposure to the Chinese market have been waiting for.  I am considering splitting my emerging market exposure to 1/3 FXI and 2/3 general emerging market.  I would cut that to 1/3 general emerging market and put 1/3 into India if I could find a similar product for that market.

http://www.theglobeandmail.com/serv.../20041023/STMAINCHINA23/Columnists/Columnist/

This is part of a special feature on China in the paper. The special section is at -
http://www.theglobeandmail.com/generated/realtime/specialChina.html

 

[ESRBob]

Hyper,
Great suggestion on this new China ETF: having an expense ratio of 3/4 of a % is really good for China -- most were still 2% plus when I last looked, which has always been a turnoff, and kept me from owning a China-only fund. Will give FXI a good hard look -- thanks for pointing it out to us.

ESRBob

 

[Lancelot]

Hey Hyper,

Have you ever read any of Jim Roger's observations about China? He has a website at /www.jimrogers.com/
He's also written some books-one is "Adventure Capitalist." I've never read it, but I did enjoy reading his articles.

I see alot of US companies/brands here: P&G, Coke, KFC, Pizza Hut, Star Bucks... Might be another way to get some of the Chinese market action.

Good luck and keep us informed about that China ETF.

Lance

 

[John Galt]

As soon as we veered into international investments,
I thought of Jim Rogers. I have no interest in or knowledge of international investments of any kind, but Jim sure does. Good writer too. I read 'Investment
Biker' twice and then loaned it to a friend. Of course
it never got returned

John Galt

 

[Hyperborea]

Have you ever read any of Jim Roger's observations about China? He has a website at /www.jimrogers.com/
He's also written some books-one is "Adventure Capitalist." I've never read it, but I did enjoy reading his articles.

I haven't yet but his books are on my long virtual "to read" list.  I'll have a look at his site - thanks for the link.

I see alot of US companies/brands here: P&G, Coke, KFC, Pizza Hut, Star Bucks...  Might be another way to get some of the Chinese market action.

Yes, there is always the argument about just buying total US market and not buying anything else because big US companies sell everywhere.  However, that then ignores the fact that US companies can also lose in those markets.  I think that if one is willing to slice their US portfolio to include value or small or small-value then one should be willing to include international and to slice that into emerging market ownership.

Holding just US stock smacks of the idea of just holding British stock in 1870. Over the long run that wasn't a good choice though it might have appeared so then. IIRC William Bernstein did some calcs on holding a diversified basket of equities that would be split by the market cap of each countries' equities. It returned only marginally less than if you were able to magically guess which country would return the best and investing in it. That turned out to have been the US but if you had asked investors in 1870 which emerging market to invest in they would have told you Argentina instead of the US. That's why I want to keep my investments spread out a bit. What if China is the modern Argentina? Perhaps it will be India that trumps all?

Good luck and keep us informed about that China ETF.

Will do.  I'm in the process of cleaning up some IRAs and an old 401k and that's where I'd like to hold the China ETF.  So if I make the decision I'll have it done by early next year.

 

[Lancelot]

What if China is the modern Argentina? Perhaps it will be India that trumps all?

My hunch is that China is the future. The Chinese are born business people; even Chairman Mao could not eradicate the "profit" motive in the vast majority of Chinese.

We'll know in about 20 years .

Off to Nanjing,

Lance

 

[ESRBob]

Lance,
Hope you're enjoying China -- I went in 85 when they were all wearing Mao suits, and again in 89 when there was nothing at all like that anymore-- all western garb. I understand it has just rocketed in its change since then. My in-laws are Chinese and go there nearly every year and give a pretty credible report of the changes.

I did hear Jim Rogers speak last year in Greenwich, CT at a museum benefit, where he talked a lot about his travels, and about commodities. Slide show of his adventure biker trip. Absolutely riveting. The guy is a real pistol.

ESRBob

 

[Lancelot]

Hey Bob,

Enjoying China? You bet! Interesting about your inlaws-I'm sure you get a very accurate report on their annual China trips.

I've been inpressed with the wide boulevards, excellent public transportation system (Some Shanghai taxi's even have tv monitors built into the front seat head-rest) and gleaming new skyscrapers.

They've got their problems too-farmers streaming in from the countryside, looking for work in the prosperous east coast, pollution (Shanghai is MUCH cleaner than Bangkok though), general lack of worker safety (thousands of coal miners die each year) corruption and lack of transparity.

Despite all the "Human Rights Violations" stuff we read in the newspapers, I rarely see a cop here. I've never been stopped for an "ID" check, people seem eager to talk with a westerner and the Chinese seem to mind their own business. During rush hour, the subway is very crowded and the Chinese don't que very well, but I've never seen any fights or shoving matches that happens in more macho countries.

My take is that like it or not, the Chinese are a nation on the rise and are definately going to be key players in the international political and business arena.

Lance

PS-I don't see many Mao jackets, even on the older folks, but I do see alot of guys wearing old army jackets. I'm not sure if they are discharged veterans or just taking advantage of cheap, durable clothing...

 

[ESRBob]

Lance,
Glad to hear Shanghai is cleaned up. When I was there in 85, the water pollution was so bad in those canals around the Bundt that you really had to hold your nose -- just really rank.

Had a lot of fun changing black market yuan or dollars for remnibi so I could buy all the cheap stuff the locals bought. Things were so tight then that you could only get a cab in one of 5 places in Beijing, and you had to keep the guy all day, going around and waiting for you at each spot til you wanted to go the the next one. Then you paid a guy with a clipboard at the end of the day -- they really wanted to keep the hard currency out of the hands of their people.

ESRBob

 

[GTM]

Any opinions on the Matthews China fund an open end fund.

Matthews has a few funds in the Asian markets .

Does anyone feel these are worth an investment.