It’s no secret China is an up and coming economy with plenty of potential for investors and their exchange traded funds (ETFs). Tony Sagami of Weiss Research Inc. believes there are three "C" ‘s to the opportunity in China: construction, cargo and "chuppies". Currently, there is a major developmental boom in China from structures to roads to dams and water treatment facilities. And Sagami reports there will be lots of activity through 2008, when the Olympics are scheduled. As for cargo, China is the world’s manufacturing mecca and the hottest link for transportation will be the company that connects the major manufacturing ports to the shipping ports.
Sagami coined the term "chuppie" for a Chinese yuppie! Consumption is a huge trend in China, especially for the high-end designer market – we’re not talking street vendors. Mr. Sagami says these chuppies make their U.S. counterparts look like rookies. A chuppie spends their money on cell phones, domestic hotels, local casinos, jewelry and restaurants. Sound familiar?
To take advantage of this forward progress look at the iShares FTSE/Xinhua China 25 Index(FXI) and PowerShares Golden Dragon Halter USX China(PGJ) . Keep in mind that although there are promising companies associated with these promising trends, not every one will get it right.
For full disclosure, some of Tom Lydon’s clients own FXI.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.