As MR detailed in its June 23 Blog – Making Money in China Now and In the Next Decade, China stocks will be one of the best investments in the next decade for many reasons. First of all, there are many savvy investors and economists out there that believe China is the growth engine of the world stock markets. Still others believe that China will become the dominant consumption country, even outdoing the United States, in another 5 to 10 years. It is true that there GDP growth has been impressive for several years now and only recently in the recession did it even slow down. Momentum Rider is also in the camp that China will be very important to the worldwide economy and to many companies’ profits throughout the world in the next 10 years. More importantly, Momentum Rider is focused on identifying China stocks that will significantly benefit from their continued middle-class growth and fast-growing consumer product and leisure consumption.
Investors should realize that investing in China stocks can be a risky proposition that will include large market swings up and down, and probably more weak and choppy periods going forward in the next few years. However, the China stocks that Momentum Rider highlights below should turn out to be rewarding for patient long term investors and should provide some of the best investments in the future. The key for profiting with the highlighted companies as long term investments is to scale into these China stocks over time. Partial purchases should be made on general Chinese market weakness over time and you need to be willing to take some profit on any fast runs up in the Chinese stock market. Remember, this country is full of the largest speculation population in the world and those buyers are not going to sit back for too long before driving their stock market up much higher in the next 5 to 10 years.
1) BIDU – Baidu, Inc. provides Chinese and Japanese language Internet search services. Its search services enable users to find relevant information online, including Web pages, news, images, multimedia files, and blogs through the links provided on its Websites. The company also offers online community-based products and entertainment platforms; an instant messaging service; and a consumer-oriented e-commerce platform. The company serves online marketing customers consisting of small and medium sized enterprises, large domestic corporations, and Chinese divisions or subsidiaries of multinational corporations. Baidu, Inc. was founded in 2000 and is headquartered in Beijing, China. This is one of our top choices for China stocks.
2) LFC – China Life Insurance Company Limited provides various insurance products to individuals and groups in China. The company operates in three segments: Individual Life Insurance, Group Life Insurance, and Accident and Health Insurance. The Individual Life Insurance segment offers participating and non-participating life insurance and annuities to individuals. Its products comprise long-term health and accident insurance products. The Group life insurance segment provides participating and non-participating life insurance and annuities products to companies and institutions. It offers various long-term insurance products. The Accident and Health Insurance segment provides short-term accident insurance and health insurance to individuals and groups. The company was founded in 1949 and is based in Beijing, China.
3) CHL – China Mobile Limited, an investment holding company, provides mobile telecommunications and related services primarily in the Mainland China. The company offers various services, including local calls, domestic and international long distance calls, intra-provincial roaming, inter-provincial roaming, and international roaming services; and voice value-added services. It also engages in data businesses and provides various data products. As of December 31, 2009, it served approximately 522.283 million customers. The company was founded in 1997 and is based in Central, Hong Kong.
4) SNP – China Petroleum & Chemical Corporation operates as an integrated oil and gas, and chemical company in China and Hong Kong. The company engages in the exploration, development, and production of crude oil and natural gas; refining, transportation, storage, and marketing of crude oil and petroleum products; and the production and sale of chemicals, as well as owns and operates oil depots and service stations. Its chemical products include basic organic chemicals, monomers and polymers for synthetic fiber, synthetic resin, synthetic rubber, synthetic fiber, and chemical fertilizers. The company was founded in 2000 and is based in Beijing, China.
5) PTR – PetroChina Company Limited primarily engages in the exploration, production, and sale of crude oil and natural gas primarily in China. The company operates in four segments: Exploration and Production, Refining and Chemicals, Marketing, and Natural Gas and Pipeline. The Exploration and Production segment explores, develops, produces, and sells crude oil and natural gas. As of December 31, 2009, it had 11,000 million barrels of proved reserves of crude oil; and 63,000 billion cubic feet of proved reserves of natural gas. The Refining and Chemicals segment refines crude oil and petroleum products; and produces and markets petrochemical products, derivative petrochemical products, and other chemical products. As of December 31, 2009, it operated 17,262 service stations. As of December 31, 2009, its pipelines measured a total length of 50,600 kilometers, including 29,000 kilometers of natural gas, 13,100 kilometers of crude oil, and 8,900 kilometers of refined product pipelines. The company was founded in 1988 and is headquartered in Beijing, China.
6) YZC – Yanzhou Coal Mining Company Limited engages in the underground mining, preparation, and sale of coal. It involves in manufacturing, washing, processing, and selling steam coal used in the electricity power sector; and metallurgical coal used with coking coal in the process of pulverized coal injection, as well as operates six coal mines. The company also engages in the provision of railway transportation services; production and sale of coal chemicals, primarily methanol; and generation of electricity and heat. It has operations primarily in China, Japan, South Korea, and Australia. The company was founded in 1973 and is based in Zoucheng, China.
7) GSH – Guangshen Railway Company Limited primarily provides passenger and freight transportation services on the Shenzhen-Guangzhou-Pingshi railway in China. Its freight services include the transportation of full load and single load cargo, containers, bulky and overweight cargo, dangerous cargo, fresh and live cargo, and oversized cargo. In addition, it operates a travel agency, as well as offers services relating to warehousing, hotel management, advertising, cargo loading and unloading, and catering management and services. As of December 31, 2008, the company operated 240 pairs of passenger trains, including 120 pairs of inter-city high-speed passenger trains between Guangzhou and Shenzhen; 13 pairs of Hong Kong Through Trains; and 107 pairs of domestic long-distance passenger trains. The company was founded in 1996 and is based in Shenzhen, China.
8) EDU – New Oriental Education & Technology Group Inc. provides private educational services primarily in China. It offers a range of educational programs, services, and products consisting primarily of English and other foreign language training; test preparation courses for admissions and assessment tests; primary and secondary school education; development and distribution of educational content; software and other technology; and online education. It offers test preparation courses for language and entrance exams used by educational institutions in the United States, China, and commonwealth countries. The company also operates primary and secondary schools in Yangzhou. In addition, the company develops and edits content for educational materials for language training and test preparation, such as books, software, CD-ROMs, magazines, and other periodicals. It distributes these materials through various distribution channels consisting of own classrooms and bookstores, as well as third-party distributors. As of May 31, 2009, it offered education programs, services, and products through a network of 48 schools, 222 learning centers, and 24 bookstores. The company was founded in 1993 and is headquartered in Beijing, China.
9) CTRP – Ctrip.com International, Ltd. provides travel services for hotel accommodations, airline tickets, and packaged tours in China. It also sells independent leisure travelers bundled package-tour products, which include transportation and accommodations, as well as guided tours covering various domestic and international destinations. In addition, the company offers Internet-related advertising, aviation casualty insurance, and other related services. The company was founded in 1999 and is headquartered in Shanghai, China.
10) NTES – NetEase.com, Inc. operates an interactive online community in China; and provides Chinese language content and services through online games, Internet portal, and wireless value-added services (WVAS) businesses. It operates in three segments: Online Game Services, Advertising Services, and WVAS and Others. The Online Game Services segment develops and operates massively multi-player online role-playing games. This segment also provides Chinese language online services, which include news, information, and online entertainment content; community and communication services, such as e-mail, blogging, photos, instant messaging, matchmaking, alumni directories, clubs, e-cards, chat rooms, and community forums; and a Website directory and Web pages search service, as well as Youdao, a proprietary Internet search engine. The Advertising Services segment provides banner advertising, channel sponsorships, direct e-mail, interactive sites, sponsored special events, games, contests, and other activities. The WVAS segment offers a range of WVAS, which enable users to receive news and other information, such as stock quotes and e-mails, download ringtones and logos for mobile phones, and participate in matchmaking communities and interactive games. NetEase.com, Inc. was founded in 1997 and is based in Beijing, China.
As Momentum Rider writes this blog (June 30, 2010), some of these stocks can be scaled into at these levels. The Chinese stock market has been consolidating in a slightly downward trend for the better part of 8 months. It is well off its 2009 highs and some partial buys are probably a good idea here. For example, CHL has been consolidating for over 18 months. A strong breakout from its long base could be very explosive and fast and should not be missed. GSH has sold down hard from its highs and could be scaled into at these levels. NTES, YZC, and LFC (another MR favorite) have been doing orderly pullbacks before their next moves higher. PTR and SNP are also in long but bullish consolidations at their current price levels. Of course BIDU, CTRP, and EDU have already been huge winners but they are still not done. Wait to buy these three on pullbacks but their trends are still strong.
Check out Momentum Rider’s subscription services where they take advantage of these Chinese stocks’ moves and many others. MR also has a SPECIAL REPORT on China stocks that includes over 25 more promising China stocks that could provide very large trading and investment profits in the future. Investing in China could be one of the best investments you can make if you do it on market pullbacks and manage your positions well with the wild market swings.
