Daily Global Economic Calendar

Real Time Economic Calendar provided by Investing.com.

Wednesday, December 25, 2013


Zhongguo is the most common (mandarin) name for China, it means "Middle Country" or something similar. Here are some quotes from internets:
Ancient Chinese believe that China is the center of the world, its in the middle of earth... Some Western writers use the translation "middle kingdom" or "central kingdom" to imply that China has a deeply rooted self-centered psychology as the center of the universe...  The ancient Chinese believed that they are the only civilization on earth while being surrounded by barbarians... 
5000 years of national history is quite a claim, for sure. Plus there is this:
 Those assholes keep dissing Chinese, but they are the ones rocking made in China versace and driving in China manufactured Cadillac
ZHONGGUO investing is a challenge in itself, and has been a dud for a past few years. Complains? Fuck you.  Shanghai Composite Index ($SSEC) gained 6000% from 1990 to 2007, that is 60X your initial investment in less than 20 years, with plenty ups and downs to trade. Its resting now, but its not the first time its down 50% +. In a relatively short index history there where 2 such periods, lasting 4-6 years, followed by multi-year rip higher. Its not a question whether you will double your money, but how many times...
Below is a historical chart up to Dec'12. Notice - chart is log-scale !
Nothing much changed since then.
 I've been keeping an eye on a situation for years, even mentioned it here in April'12 (link).
There are some regulatory changes that will be at work for a next year or two. Specifically, there really isn't a straight way to invest in SSEC - its a composite index comprises of all the A shares (traded in local currency) and B shares (in foreign currency) listed on the Shanghai Stock Exchange. Up until recently foreign investors where not allowed to go into 'inland' market. So we buy A-Shares listed in Hong-Kong (H-Shares), or go for N-Shares (Chinese companies listed in US market, but may or may not be incorporated in China), or other various layers of this particular scam.

All this may be changing soon, as foreign access to A listings controlled under the Qualified  Foreign institutional investor (QFII) scheme, has been relaxed somewhat in 2012 and again in March 2013. It is expected that A-shares with increase in allocation by as much as 60% over next couple of years. In that process China will likely become 4th or 5th largest equity market in the World. Presently Zhongguo is on #9 spot. Liquidity? I got your liquidity right here...
Big Boys are all over it. More here:

Bunch of new ETF's popping up all over the place, all ready with enormous expense ratios, vague allocation rules, and not enough money to go around. I am still most interested in FXI (large cap A-shares in Hong Kong), and PGJ (US listed), with  possibly HAO (small caps)


PGJ - PowerShares Golden Dragon China Portfolio invests in N-Shares, Chinese companies listed in US.
Expense ratio 0.75%. Severely overweight in Information Technology (55%). Abnormally largest holding (8.5%) is CTRP - Ctrip.com - some kind of travel and lodging service I never heard of.

Finviz screen: China, over 300mil market cap, over $5, over 100K average volume. 49 results.
Most of top ones are in PGJ, but at different weightings.

FXI - iShares FTSE China Large-Cap ETF, based on FTSE China 25 index, consisted mainly of  H-Shares - blue chip stocks of largest 25 Chinese companies (H Shares, Red Chips and P Chips) listed on the Stock Exchange of Hong Kong. This seems to be the best access to A-Shares, as we have only few US traded, Hong Kong listed, Chinese main land companies to invest. (CHL, CEO, CHU, MPEL?)
...Easy as ChinaKing menu...
September 2014 they will change it to FTSE China 50 index, doubling allocation to A-Shares.
http://www.ftse.com/Indices/FTSE_China_Index_Series/index.jsp  FXI has 0.75% exp ratio, 2% divi. Abnormally large allocation is  Financials 56%.http://us.ishares.com/product_info/fund/overview/FXI.htm

UPDATE 11/26/2014
$SSEC started to rally at the end of summer 2014, and by November took out  2400-2500 resistance that started way back in winter of 2011. FXI is lagging somewhat, still fighting 40-42 level, but development is positive no doubt.
Investment landscape is poisoned by alot of scams and hype surrounding all kinds of internet, software and game stocks, plus BABA (ipo'd in September '14) pulled a lot of funds from everything China. Technically, stocks split into two distinct groups (for reasons unknown to me) -  some gap and jump all over the place, others trade tight with good daily patterns. I focus on latter kind. Specifically I want to avoid anything with wide following, many news and busy Yahoo message board.


Of note:
all make money, except NORD
all don't have a lot of debt, except XRS and NORD
all don't have a lot of shorts, except ZPIN and MR (MR 16% float short; 23SR !)
all don't have high P/E, except JOBS (P/E 60!)
This list is not perfect by any stretch of imagination, but offers some alternatives off the beaten path, and should compliment FXI very nicely in 2015 and hopefully beyond.

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