This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why Funds Are Bullish on Chinese Markets

Lately Harriss has been shying away from exporters. Their margins have been shrinking as Chinese wages rise and global demand softens. He is finding better earnings at companies that serve China's domestic economy. A holding is NetEase (NTES), a supplier of Chinese language online role-playing games, such as Heroes of Tang Dynasty. By developing new games, the company has been reporting high returns on equity. NetEase also runs online content channels that provide news on sports and finance.

For broader exposure to Asia, a top choice is Columbia Pacific/Asia. The fund lost 2.6% annually during the past five years, outdoing 89% of funds in the Pacific/Asia category. Columbia has 11% of assets in China. The fund seeks high-quality companies selling at modest prices. The portfolio includes a range of blue-chips, such as Toyota Motor (TM) (TM) and Taiwan Semiconductor Manufacturing (TSM), an industry giant.

A holding is China Mobile (CHL), the biggest wireless provider in the country with 650 million subscribers. After a period of rapid expansion, the company is growing more slowly. But portfolio manager Daisuke Nomoto says that the cash flow should continue growing as data usage increases.

For a broad emerging-markets fund, consider Aberdeen Emerging Markets (GEGAX), which has 7% of assets in China. During the past five years, the fund returned 7.6% annually, outdoing 99% of peers. The Aberdeen portfolio managers seek companies with solid balance sheets that can deliver consistent growth.

The managers often prefer steady businesses that can grow 8% to 12% in the next year instead of faster-growing businesses that could sink in a downturn. Once they buy a stock, the managers hold on for years. In 2011, the fund only turned over 2% of its portfolio, while the turnover figure for the average peer was 81%.

A holding is PetroChina (PTR), one of the major oil producers in the country. "They have a relatively clean balance sheet and strong cash flow," says Adrian Lim, an Aberdeen portfolio manager.

Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine. At the time of publication he had no holdings in the stocks mentioned.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.28 0.47%
FB $81.53 -1.07%
GOOG $565.06 3.30%
TSLA $218.42 -0.08%
YHOO $44.52 1.89%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs