Chinese economy?

Desperate_Housewife_2-2

What do you guys think about investing in the Chinese economy?

I understand it is going to grow faster than any other economy over the next few years and I wondered if there is any money to be made.

Is it just an expensive gamble?

Interested in your views...

Debt_Free_Chick

I have some of my S&S ISA in the Fidelity China Focus Fund and, yes, it's performed well. But it also took a real tumble about 12 months ago when there was a "mini crisis" in the Asian markets.

It's definitely speculative and should not be used if it's your only form of regular savings. It shouldn't be used for "rainy day" money and your attitude towards it should be the same as investing in other speculative investments i.e. only invest what you can afford to lose as there is a risk that the value could plummet to zero (or as near to).

That said, it ought to produce a return over the long term - as one would expect with most equity investments.

Some of my ISAs are deliberately in "speculative" funds (India, Latin America, China) because I'm using them as a "gambling" fund. If it pays off, that would be great - but I'm not dependent on the money for any future plans.

chipfire

But do we really want to invest in it and speed our own economy's demise?

dunstonh

I have been in Gartmore China Opps for years.

A chinese fund is going to be high potential but highly volatile. Investing in china is not new with investment funds and I do wonder if some of these newer launched chinese funds are going to find it hard to get value when compared to those more well established funds. Especially given the restrictions in place.

The part of your portfolio allocated to global specialist should have a chinese fund in there (along with russia, latin america, global property ideally) but these are high risk funds with a rollercoaster ride of performance.

These funds should be rebalanced annually as well to take advantage of the higher volatility.

richgirl

Where Brazil is today, China was about 4 years ago

http://www.marketoracle.co.uk/Article245.html

mattih5

I have been considering investing in a country like this, I would consider myself to be in a fairly good position to expose myself to risk, being 23 and not really have much outgoings. I have read on numerous occasions that China is a vloatile place to invest but has the potential to make good money e.g. http://news.bbc.co.uk/1/hi/business/6286001.stm, but at the same time I have have also read that Brazil is a good place to start.

I suppose at the end of the day it comes down to taking a risk and like Debt_Free_Chick has said, only investing if you can afford to lose it.

amcluesent

>at the end of the day it comes down to taking a risk <

IMHO the global risk is increasing, not least given the 'sabre rattling' between Iran and the West is likely escalate into an Iran/Israeli/US war.

Whereas the West has the democratic processes to handle (just!) a major depression from another oil-shock, China's single-party state could explode into a chaotic upheaval. And after years of a bull-run in China, I would be extra careful about putting money in now, as global demand for non-essential manufactured goods would collapse, especially as US citizens slash spending and attempt to pay of their massive debts based on mortgaging their houses.

laowai_2

We are only now seeing the beginnings of an equities bubble in China. While the central government is well placed and has executed well here in China to slow other bubbles like housing (Shanghai) and credit (across the board as it pleases), there is little they can do to stop the average Chinese investor trading up the domestic stock markets. Hold onto your seats!

baby_boomer

The Chinese banks are forced by the government to set interest rates below current inflation.

This tempts the Chinese people to invest in their own stock market whether there is value or not.

The Chinese government is determined, at all costs, to keep control of the economy (from foreigners including shareholders ) and politics (from foreigners and its own people) , believing China has learnt hard lessons from the 1840s-1940s when this did not happen.