Thursday, August 6, 2009

It Is Time for China Stocks to Shine

By Michael Swanson

Following over 20 years of minimal to no growth, the Chinese economy is finally reaching the potential predicted by many financial analysts in the mid nineteen eighties. As a result, many Hedge Fund managers and portfolio stock companies are looking to the East and for ways to invest in China.

With the mass of products now produced in China, investors looked first to such industries as computers and clothing - modern staples across the western world of course. Furniture too is one to be aware of; though with the government of China's scant regard to all things environmentally friendly at present, many end purchasers, (and many moral investors), are deterred; preferring to look for responsibly sourced materials.

Another area where investment has been huge, and returns generous, is throughout the toy industry. An industry that never seems to suffer particularly hard no matter the worldwide financial situation; toys can be produced cheaply, effectively and sold for huge profits in western malls and shopping districts.

Whilst the boat has not quite sailed for new investors to these industries, those looking for their first opportunity to invest in China have many more options. And these may prove even more profitable than their predecessors. For example, China is the second consumer of oil, and the biggest consumer of coal.

Assisted by the awarding of contracts to tenders from the west, an area already ripe and only ripening further is to be found in the national railway infrastructure, operations and rolling stock. Whilst not the most environmentally focused of countries, China does at least realize the potential of railway travel for its immense populous.

Before rushing out to Beijing to invest in China however, do be warned. Resilience, determination and a sense of bravery will be called for as the Chinese economy, (as with any other fledging market), can be volatile and prove unsteady; particularly as the world continues to ride the global recession.

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