Turn on CNBC or Bloomberg these days and you’ll see China is slowly becoming all the rage.
Some of us have been saying for months that China is going to be huge in the next few years (in fact, I’ve been waiting on this for a few years), and there’s no denying it now. No longer should we wait on the American consumer to “get jobs” to buy into this market when we see what’s happening in China (and even India, but this is a totally different ballgame which I’ll discuss in another blog).
Some China based equities are incredibly undervalued compared to their U.S. peers, and really there’s no good reason for it. Of course there is a risk discount, but the discounts are far too significant to ignore — not to mention the political environment is more stable than the political environment in the U.S.!
So either the U.S. was/is way overvalued or China was/is undervalued. Whatever the case, I believe there are certain Chinese gems out there that have presented undeniable value, and that is why I like so many Chinese deals.
Now that the mainstream media is all over it, I believe we’ll start to see a flood of investments in China. For those of you who missed the “March Lows”, then you should probably start looking to China for deals that are still considerably undervalued. …because I believe that while the market may run sideways to slightly up, we’ll start to see some Chinese companies pick up the pace due to this sudden fascination — and if there was ever an opportunity to invest in them it’s now!
So I want to be clear about one thing. My portfolio is only 35% China now. I say “only”, but that’s a very significant chunk. Even though it’s politically stable, there is still a chance that the government will give investors the middle finger if they “feel like it”. I highly doubt something like that will happen, but the fact is it’s *not* the U.S. or Canada and things do work differently over there.
The bottom line, I love the deals we’re playing in China currently, and as many of you have witnessed we’re pretty much on fire over here at Bulls because of our foresight. While others have openly discounted China, they have also lost out bigtime as a result (you probably already know who they are).
So there you go, happy trading, go visit Taipei sometime and fly on over to Beijing, Hong Kong, or Shanghai. It’s good to get an internal view of how business works over there. I make a point of visiting at least once a year.
