The long weekend saw me doing more reading than usual. I also read why Mark Mobius, the executive chairman of Templeton, thinks the time is ripe to invest in Chinese equities.
Consumers have more disposable income:
Many consumers in China have been getting annual increases in wages of 20% or more. More personal assets could be funnelled into savings and investments.
Government spending:
The government is devoting more resources to infrastructure and subsidised housing as well as extending social security, education and health benefits to new migrants to the cities.
Fuel for the economy:
Between 2010 and 2011, interest rate in China increased 5x and are now at a 6% lending rate. The government has a lot of room to reduce rates if they need to stimulate the economy.
Volatility brings opportunity:
This year is likely to bring volatility which brings opportunity. We plan to go along for the ride.
I am holding on to my investments in Sound Global and China Minzhong, believing that they are good proxies of the continuing growth story in China. If Mr. Market should decide to offer much lower prices for their stocks in the meantime, I would buy more.
Related post:
China Minzhong: Share price to go higher.
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4 comments:
Sound Global business is capital intensive but once all the BTO project start coming online, it will become a stable recurring income.
AK, what is your opinion on SIIC Environment which is in similar business with some BTO already producing recurring income.
Only concern for Sound Global is it's recent high interest debt (US$). Any idea whether Sound Global income from BTO are yuan based?
Perhaps the company is able betting on the appreciation of chinese yuan and US$ debt amount will be reduced over time with yuan income?
Regards
Yee
Hi Yee,
I agree that Sound Global's US$ bonds are a concern but I am optimistic that the US$ will be worth much less over time. ;)
All income within the PRC must be in RMB. Government projects, aren't they? I believe no other currency is allowed.
As for SIIC Environment, I will have to pass on this one because I have not looked at it but thanks for the heads up. :)
Hi AK,
My chart seem to tell me that 62 cents level is holding well... looking like it is going to head back up to 70 cents soon...
Cheers.
Yee
Hi Yee,
Good news for all of us investors in the company. Thanks for sharing. :)
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