Although most investors focus on China’s impressive economic expansion over the past two decades, the accompanying environmental challenges will create significant opportunities for savvy investors. Solid local partnerships will be critical to any international company looking to profit from China’s clean-up effort.
We explore the recent devaluation of the renminbi, analyze market’s misreading of this development and explain why we remain cautious on Chinese equities in the near term but like the financial sector over the long haul.
An influx of liquidity from Chinese investors, coupled with the central bank’s recent rate cuts, has propelled China’s equity markets to big gains. We book another solid profit on one of our previous picks, highlight our favorite Chinese stocks and identify two other Asian equity markets that should ride this liquidity wave higher.
Asia’s emerging markets remain some of the best long-term growth stories and should be at the top of your shopping list. Chinese equities still trade at relatively low valuations, giving savvy investors an opportunity to be selective and stock up on best-of-breed names.
Investors who think that developed markets can deliver strong returns if China’s economy collapses will be painfully off the mark. Fortunately, we don’t foresee a complete meltdown for China. The world’s quintessential emerging economy also includes pockets of opportunity for investors with a longer time horizon and the stomach for near-term volatility.
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