This Day On The Street
Continue to site right-arrow
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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

New Charles Schwab Investing Whitepaper: Reform Plans Could Make Chinese Stocks Attractive For Investors

Investors may anticipate a new phase of growth in China as a result of a comprehensive reform plan designed to restructure the country by 2020, according to a whitepaper published by Charles Schwab this week. The whitepaper, titled “ Why New Reforms Make Chinese Stocks Attractive,” examines the potential for the Chinese government’s reform plans to create both higher quality and more sustainable growth in the country, reducing some uncertainty for investors. The main driver for optimism in China, according to Schwab, is the potential positive impact the reforms could have on both the financial sector and consumer spending.

The whitepaper is published as a Q&A with Michelle Gibley, Director of International Research with Schwab Center for Financial Research, a division of Charles Schwab & Co., Inc. Schwab Center for Financial Research provides investors and independent advisors with Schwab’s point of view on a wide range of market, economic, investing, and financial planning insights and strategies.

According to Gibley, “China could be a ray of light amid the current emerging market turmoil. Over the long term, we see potential for Chinese stocks to outperform stocks in other emerging markets as China’s economic reforms begin to take hold.”

Key points in the whitepaper include:

  • The next phase of growth in China might be characterized by slower, yet higher quality and more sustainable growth, even if only a portion of the reforms are actually implemented.
  • The impact of China’s reforms on the financial sector could be significant. Reforms could open up new business opportunities for banks and improve the health of local government loans.
  • Consumer spending could also see a boost from reforms to rural land rights, the household registration system and modification of China’s one-child policy, which may result in putting more money in the hands of consumers, increasing mobility of the labor force and potentially lifting consumption, respectively.
  • Chinese stock valuations could rise as a result of higher quality growth amid negative investor sentiment toward emerging markets, creating an opportunity for risk-tolerant equity investors to take advantage of buying opportunities.
  • There could be significant risks in China in the near-term, including increased volatility and uncertainty about the pace of growth and reform momentum as China’s policy makers balance the reforms with economic stability.

The whitepaper notes that investors may consider keeping emerging market equity exposure equal to their long-term strategic allocation, while overweighting China within the emerging market equity allocation with a focus on mutual funds and exchange-traded funds (ETFs) that invest in large-cap Chinese stocks.

1 of 4

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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

Markets

DOW 17,872.50 -263.22 -1.45%
S&P 500 2,076.05 -24.99 -1.19%
NASDAQ 4,936.6460 -46.1630 -0.93%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs