Gone Completely Chinese

wombat42_2

ixwood wrote: »

Wouldn't gone HK be a better title then?

Where does HK make it's money? Is it in China? I've really no idea.

I don't think china is a great bet, if you consider how much trade they do with the US. Surely a US recesssion would hurt China bad?

HK acts as a conduit (or buffer) between outside investors and the domestic Chinese market. I think many Chinese companies are listed on both the HK and the Chinese stock market. The HK market is much more tightly regulated than the Chinese domestic market. The domestic Chinese market itself barely even wobbled in the last few weeks, in fact before this week the domestic Chinese market was up by about 10% per week.

Sure HK and China would get hit if the US had a recession but I think almost every other country in the world would get hit more.

China currently has about 12% growth per annum. It may continue growing at this rate for another decade.

si1503

ixwood wrote: »

Wouldn't gone HK be a better title then?

Where does HK make it's money? Is it in China? I've really no idea.

I don't think china is a great bet, if you consider how much trade they do with the US. Surely a US recesssion would hurt China bad?

That may be so, but over the long-run you simply can't ignore China's economic growth potential. I very much doubt a long-run US recession is around the corner, the fed still has more cards to play if needed.

My opinion: The dragon will roar over the next decade.

wombat42_2

si1503 wrote: »

That may be so, but over the long-run you simply can't ignore China's economic growth potential. I very much doubt a long-run US recession is around the corner, the fed still has more cards to play if needed.

My opinion: The dragon will roar over the next decade.

Thanks for the postive post. I was finding this thread an uphill battle. :wall:

influence

If from my own opinion, I do agree HK is a strong base for Chinese stock (H share). Nonetheless, i have a feel that HK relates too much on Chinese trade lately. Its main economy, I believe and correct me if I am wrong, comes from China - tourism, real estate development, projects, import/export. There are not much industry in HK, not much R&D.

To me, I don't feel secure with an economy that highly rely on a third country. Any movement in this third country (i.e. China) will deeply affect HK. More deeply than it will affect shanghai etc.

So bear that in mind.

As for asian fund, I think a portion of portfolio (a small one) on Australia is actually fine. Australia/New Zealand are more/less self contained. So any movement in the global economy is not as deeper hit on them than say China, India, Europe, etc.

my view.

jon3001

wombat42 wrote: »

I have ditched investments in JP Morgan Natural Resources as it has been very volatile of late
...
I now have a sizable wodge in Gartmore China Opportunities and Jupiter China Jupiter funds.

So this is an exercise in reducing volatility? Maybe you'll do well in the long run but I think you've got to expect a 40% hit along the way.

Do you have a plan B for long term investing if the China story doesn't turn out so well?

wombat42 wrote: »

I think the "commodity supercycle" idea may be hyped. Even if commodity prices keep rocketing it doesnt automatically follow that mining shares will rocket as they may have to pay more on overheads and also mining shares tend to reflect the wider market.

Have you considered investing more directly in commodities? ETF Securities have a good range:
http://www.etfsecurities.com/

Commodities have long term returns similar to equities (10%), have lower standard deviation/volatility, and are negatively correlated against bonds and equities. And in the current bull market you should get returns much higher than the long term average.

I'm still researching this area for my own portfolio but for the non-bonds part I'm thinking:
10% direct commodities
5-10% JPM Natural Resources
Rest balanced in the usual kind of stuff: domestic value/blend/small, international (inc Emerging Markets)

jon3001

wombat42 wrote: »

IFAs say investing in a single country is risky and that you should invest at least 50% in the UK. Well isnt the UK a single country ?

Part of this is because of the additional currency risk. I wonder what they would say if we were in the Euro? :eek:

And some UK companies will derive a significant part of their income from overseas operation anyway.

I certainly wouldn't just stick it the FTSE-100 though: In the long run you should expect to do better with less risk by balancing between different sectors e.g.: value/income, blend, small companies, property [not too keen on this one right now though].

You get a free extra return with periodic rebalancing since it forces you to sell high and buy low.

wombat42_2

jon3001 wrote: »

Do you have a plan B for long term investing if the China story doesn't turn out so well?

Have you considered investing more directly in commodities? ETF Securities have a good range:
http://www.etfsecurities.com/

Hi. My funds are in a private pension portfolio and also in PEPS/ISAs. I suppose i could always fund switch again if I decide that China is a loser but hope not to. Yes i agree ETF commodities are a good idea except you might have a problem deciding which commodities to invest in and also I couldnt invest in them in my pension/PEP/ISA.

As previously stated, the future success of commodities depends a lot on China anyway. I have a sizable cash buffer and if my pension/PEP/ISA sunk almost without trace (worst case senario) it wouldnt quite be jumping off a tall building time. There is immense potential in China - probably more than any market in the world. Yes it is not a certainty but that is true of any market.

One option open to me is to cash in my pension/PEP/ISA after just a few years if the two China funds carry on doing as well as they have in the next few years, as i would have made enough dosh.

wombat42_2

jon3001 wrote: »

Part of this is because of the additional currency risk. I wonder what they would say if we were in the Euro? :eek:

And some UK companies will derive a significant part of their income from overseas operation anyway.

I certainly wouldn't just stick it the FTSE-100 though: In the long run you should expect to do better with less risk by balancing between different sectors e.g.: value/income, blend, small companies, property [not too keen on this one right now though].

You get a free extra return with periodic rebalancing since it forces you to sell high and buy low.

China is set to become the country with the third biggest GDP (overtaking Germany) in a few months time. I just read that in 2020 it could well overtake Japan as the worlds second biggest economy and in 2050 overtake the US as the worlds biggest economy.

jon3001

wombat42 wrote: »

Yes i agree ETF commodities are a good idea except you might have a problem deciding which commodities to invest in

Well - I've just started out reading Jim Roger's book. The basic advise seems to be
1. Start out with a catch-all index as your main base.
2. If you're so inclined then research and branch out to individual commodities (e.g. copper) as you might a single share.

wombat42 wrote: »

also I couldnt invest in them in my pension/PEP/ISA.

According to HL (I think you said you were with these) you can:
http://www.h-l.co.uk/shares_and_stock_markets/security_details/sedol/B15KY98.hl

wombat42 wrote: »

As previously stated, the future success of commodities depends a lot on China anyway.

Indeed

wombat42_2

jon3001 wrote: »

Well - I've just started out reading Jim Roger's book. The basic advise seems to be
1. Start out with a catch-all index as your main base.
2. If you're so inclined then research and branch out to individual commodities (e.g. copper) as you might a single share.
According to HL (I think you said you were with these) you can:
http://www.h-l.co.uk/shares_and_stock_markets/security_details/sedol/B15KY98.hl

Thanks I have just switched over my PEP/ISA from L&G to H&L so I have this option available to me. I will give it some consideration for the future.

Also I plan to switch my pension portfolio over from Merchant Investors to a H & L SIPP once they allow setting up protected rights policies as SIPPs (October next year I think) so i could then put ETFs in my pension as well.