How do you Invest in China?

bee

Wonder how contributors and lurkers invest in China?

Do you take a direct approach buying funds that have a direct presence in China (China Mobil,HBHC,Bidu,etc.) or, do you buy the global companies that Chinese consumers buy (VW,GM,KFC (Yum Brands), etc.) or, a combination of the two?

Is there a Chinese small/mid cap fund out there? I presently have MSMLX as well as WAEMX which I believe does not specifically focus on China.

MCHFX has a 1.2 % yield and a $10,000 investment made a year ago is worth $8,651 today (-14%). TCWAX, Templeton China World Fund, is highly rated by Bloomberg but has a 2% ER and a load. It also only had a 5% loss this past year. There is a Templeton closed end fund , Templeton Dragon Fund (TDF) that had an even smaller loss this past year (-2%).

Largest holding for TDF is Dairy Mart International:
http://www.dairyfarmgroup.com/global/home.htm

Anyone see a buying opportunity right now or do folks feel that China still likely to catch the flu from the develop market's debt problems?

MikeM

I won't venture a guess if China is a good investment now. But my own personal view would be not to invest in just a China fund. All of Asia will benifit from China's growth. So, in my opinion a diversivied Asia fund is the better bet.

scott

I don't have any direct investment in China; I like Asia, but would really keep to general Asia-region investments. My main Asian investment is Jardine Matheson (not a fund, specific stock and therefore, of course, stock-specific risk.) I am starting to add more emerging market investments in the last few weeks, but I am only adding diversified EM holdings and some Brazil holdings, nothing Asian specific. Jardine is, as I've noted in other threads, a long-term holding.

As for Yum Brands, there was an interesting opportunity late last year when it was called into question whether or not they would be allowed by Chinese regulators to buy Asian restaurant chain Little Sheep and LS went down (they were allowed not long after to buy LS .) Still, I'd rather focus on emerging market companies than global companies when it comes to investing in EM. Many have the opposite opinion.

bee

Reply to @scott:

Hey Scott,

Here's a link to Jardine share prices...Dairy Farms International (I link them above in my first comment) looks to be part of this parent company, I believe. Check this link out:

http://www.jardines.com/investors/share-prices.html

rono

Howdy,

I concur with Mike and Scott, you don't have to invest directly in China to win on their economic potential. You can buy a pan-Asian fund and get similar results AND benefit from any growth in the other countries.

Years ago, when China really started to move but before you could invest directly, I took a trilateral approach with Vale (Rio at the time) the Brazilian iron ore company, Fording Coal out of Canada the made coking coal for the steel mills and Posco steel in Korea that used the previous two as inputs. They in turn were selling steel to China.

For a single stock today, check Billiton BHP out of Australia. They mine everything and are a huge source of raw material supply to China.

peace,

rono

scott

Reply to @bee: Jardine is a majority owner of a bunch of companies, including Mandarin Oriental Hotels and Dairy Farm. Dairy Farm (which is an retail conglomerate) is - I think - particularly interesting both from a conservative, consumer staples-y standpoint and if you start really going further, including things like ownership of a few Asian IKEA stores in Hong Kong and Taiwan and many other things. I think Dairy Farm is a little overvalued/overbought at this point, but I'm not selling as I think it remains a compelling (as well as the remainder of Jardines) play on the region. Again though, not a fund, and stock specific risk.

Dozing Chinese Shoppers Fill IKEA:
http://www.bloomberg.com/news/2010-10-21/dozing-chinese-shoppers-filling-ikea-beds-spur-plans-to-double-outlets.html

scott

Reply to @rono: I was looking at Vale yesterday. I currently own Glencore, which is a significant owner of Xstrata and a number of other subsidiaries.

catch22

Hi bee,

Related to your original notes; you indicated a few return numbers from last year.

If my coffee chemicals infused brain recalls properly; China indexes in particular, are coming off of 3 year lows. I mention this only to the fact of comparisons and/or findings of return values of Asian area markets.

However, based upon your currrent and previous writes; I am assured that you are doing your homework and I am noting nothing of which you are not aware.

As our house is oriented with investments via our Fidelity accts; but our holdings are indeed spread around the various fund houses. We currently have a small holding of MACSX; but are also watching the new Fido funds of FEDDX (EM sm/mid cap) and FTEMX (EM...60% equity/40% bond). FSEAX (broad based Asis equity) is also in the viewer.

The phrase of the day remains...........so many choices. We all are most fortunate to have so much broad access to this "sometimes strange world we here choose to poke our brains and monies".

Take care,
Catch

claimui

Re: Chinese small/mid cap, Matthews offers the Matthews China Small Companies Fund (MCSMX). Holds China, Hong Kong and Taiwan stocks (just one Taiwan stock now AFAIK).

I hold MSMLX for the broader Asia exposure.