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
TheStreet Open House

Why Chinese Stocks Look Like Bargains

Stocks in this article: WFAAX FHKCX IDCBY GAADX CHL OBCHX VIPS

NEW YORK ( TheStreet ) -- With investors fretting about emerging markets, Chinese stocks have languished. During the past year, China mutual funds returned 5.4%, compared to 21.9% for the S&P 500, according to Morningstar.

Now some portfolio managers argue the Chinese shares are at bargain levels. Anthony Cragg, portfolio manager of Wells Fargo Advantage Asia Pacific (WFAAX), says the Chinese market's price-earnings multiple has dipped to 9 from the high above 20 that was recorded before the financial crisis. "China has gone from being the most expensive large emerging market to one of the very cheapest," he says.

Investors have fled emerging markets because of fears about weakening currencies and deteriorating trade balances. But portfolio managers argue China has been unfairly tarred with problems that afflict other countries. While Turkey and Brazil suffer from weakening trade balances, China remains an export powerhouse with a huge trade surplus.

At a time when many governments worry about collapsing currencies, the Chinese regime has labored to insure that its renminbi appreciates only slowly. "Over the years, most emerging markets crises have been the result of currency problems," says Robert Bao, portfolio manager of Fidelity China Region (FHKCX). "But the Chinese currency is stable."

Make no mistake, the Chinese economy is slowing down. During the past decade, annual GDP growth rates sometimes exceeded 10% as the country raced to modernize. But now that China is the second-largest economy in the world, the growth rate has dipped to 7.7%. While many investors worry about the slowdown, bullish portfolio managers note that GDP growth is still among the fastest in the world. The managers argue the Chinese regime will continue stimulating the economy to maintain a healthy job market.

To obtain a dose of relatively steady Chinese stocks, consider Guinness Atkinson Asia Pacific Dividend (GAADX). Portfolio manager Edmund Harriss focuses on high-quality companies that have delivered reliable returns on investment for at least the past eight years. Holdings include blue-chips that have proven their ability to weather downturns.

The fund has 35% of its assets in China and Hong Kong. The cautious portfolio tends to outperform in downturns and lag in rallies. During the past five years, the fund returned 17.9% annually.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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!

Markets

DOW 17,387.21 -291.49 -1.65%
S&P 500 2,029.55 -27.54 -1.34%
NASDAQ 4,681.4970 -90.2660 -1.89%

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