China Investing Tip by Gary Smith Over the last two years I have been pounding investments in China. Believe it or not the success of our relationship with China is and will continue to be the cornerstone of our investment future.
First the background review. China is right now the second largest economy in the world. It is rapidly becoming number one and it is
just a matter of time. One and one-half years ago China became the first country in over 30 years to become part of the IMF. This means that other countries will be able to trade with China in the Chinese currency, the Yuan. Second - Chinese companies were never part of the MSCI. Money managers for the first time can invest a portion of their international portfolios into Chinese companies and funds. There are individual companies, such as Tencent, Baidu, Alibaba, JD.Com, and there are ETF’s and Chinese mutual funds thru Fidelity. Also, there is KBA, FXI, and many others that may provide investment opportunities. Lastly, there is the 4-2-1 rule. Couples were only allowed to have
one child over the last generation. They are charged with taking care of their parents and grandparents as is custom. Each child is now responsible to provide for up to 7 people. Further, China in the past disallowed their citizen to invest in their markets. Now it is a necessity. The government, realizing that there will not be enough money for children to take care of the elderly, has now allowed its citizens to invest in Chinese markets. The projection is that between 1 and 2 trillion dollars will flow into Chinese companies from the world and from Chinese citizens in the next 3 years. In December Trump put huge tariffs on Chinese products and has caused an international
crisis. This included American companies dependent on China for growth having a severe correction; Apple, Starbucks, Qualcomm, Nvidia, Microsoft, JNJ, McDonalds, and many others. America’s future was looking bleak. As some of the angst associated with the tariffs subsided the markets began to start the march toward the Melt Up. The negotiations with China are causing Chinese companies to begin their assent as well. They have gone up 30-40% this year with significant long-term upside. Also, important was getting a deal done to prevent the government from defaulting. My feeling is that we not be afraid to invest in Chinese companies or companies in America that are heavily invested in China.
This tip was composed as a result of two years of research from several different sources. Peter Churchill, Porter Stansberry, Steve Shuggerud and others. At the FJMC convention in Toronto in July the FJMC Foundation for Jewish Life is sponsoring a Wealth Conference. The agenda tentatively will include intergenerational retirement planning by Dan Goldfarb, Venture Capital opportunities in Israel for the small investor, non-professional options investing for income and more. We will also have the FJMC Foundation for Jewish Life annual meeting luncheon for present and potential new Foundation members. PLEASE TRY TO ATTEND - IT WILL BE AN INCREDIBLE EXPERIENCE, potentially life
changing. The Thursday keynote with breakouts on “Living a Life of Legacy” will be given by Rabbi Daniel Cohen. His books and YouTube videos should entice you with topics like: “What will they say about you when you are gone?” and “Living your Elijah moment”. Are you intrigued yet? There is still time to bring a personal focus on your whole-life’s-legacy; to appreciate the life of legacy you are now living, in part through your commitment to your men’s club, and to become more aware of how you can do more to be even more aware and proud of the current and future formation of your legacy. |