Investing strategy: “buy what China is buying”

Nov.23, 2008 in Investment Opinions, Market Outlook, The Economy

By Craig Stephen

“If you want to invest in China, do not try to pick winners among businesses. Instead, follow government policy.

That was the advice given by one seasoned China private equity investor speaking last week at Hong Kong’s annual Venture Capital Forum held at Cyberport. To be honest, I had expected some secret investment recipe from these sage professionals, who invest early for the longer term.
There was more: Read the Peoples Daily carefully, as it often front-runs government policy to gauge opinion. ”

Yes, when the government controls the economy and everything else, that makes perfect sense.

Some brokers agree that following the government is a sensible investment strategy. MainFirst, in a new report, says earnings visibility is scarce and the simplest path is to see which sectors benefit from the Chinese government’s monetary and fiscal stimulus.

This looks like a timely updates of the “buy what China is buying” strategy. After all, in these cash strapped times it seems only governments have money to spend.

Another way to follow this advice is to watch the mainland Chinese government’s external policy. China looks set to assumes a bigger role on the world financial stage, possibly sooner rather than later. Increasingly Beijing is debating policy options as it surveys the damaged financial landscape in the post sub-prime era.

http://www.marketwatch.com/news/story/For-China-investors-its-all/story.aspx?guid={C6C3074C-7F00-40DB-8F55-6E5303B13CDC}

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