By Joseph Meuse
For Northwest Asian Weekly
If I told you that General Electric has grown four times faster than its competition for decades and will continue to do so for years to come, yet its stock trades are well below its competition, wouldn’t you sell your car to buy as much GE stock as you could?
The answer is yes, of course. What if I told you that an opportunity of this magnitude exists right now, but only a few of us know about it? Who is the company? Well, let’s call it China, Inc.
The Chinese stock market is not as advanced as what we have in the United States. Most Chinese companies have to list themselves on the U.S. exchanges if they want to be publicly traded and raise capital.
While there are many high profile Chinese initial public stock offerings (IPOs), there are more than 800 lesser known Chinese companies that are public in the United States, with the lion-share of them trading at valuations substantially below their U.S. competitors.
While I believe that the American business community has to zealously protect their own assets to foreign entities, including the Chinese, I also believe that there are significant opportunities for American investors in the China marketplace.
While many sectors of American business are losing ground to the Chinese, there is no reason why American investors hunting for bargains should not carefully look at Chinese businesses. The World Bank and the International Monetary Fund forecast China’s growth from 7.2 to 7.5 percent this year. China’s $586 billion stimulus program is helping to counter the sagging global economy and puts a spotlight on China’s business.
The largest economic expansion that the world will see during this century is taking place right now, and most U.S. investors are not taking advantage of it.
Is it because we don’t like China? We either fear the Chinese will take our jobs, or we simply don’t like the competition. Is it our arrogance that assumes Chinese companies cannot be as good as ours? Looking at the performance of GM, AIG, and others, why would we want to invest exclusively in American companies?
I met with a multi-billion dollar hedge fund head trader last November. The trader relayed to me that the fund’s managers were only buying Chinese companies and only those with a P/E of 1 or less. He said that there were no shortages of good companies to buy.
I believe that Chinese companies, trading on U.S. exchanges, represent the best opportunities to make money in the stock market in this generation.
Many Americans complain that China is restricting the United States’ ability to make money. I believe we should wake up and realize that China has given us a golden opportunity to make money off of their efforts. The Chinese work day and night to ensure that their future is better and brighter for generations to come. I believe Americans can ensure a brighter financial future as well if we start investing in well-run Chinese companies traded on the U.S. exchanges. ♦
Joseph Meuse is the founder and president of Belmont Partners, www.belmontpartners.net, an international financial consulting firm and leading provider of shell public companies for reverse mergers.
Meuse can be reached at firstname.lastname@example.org.