How to Profit in the Post-Lehman Era

Robert Hsu, September 15, 2009

In this Issue:

Bouncing Back from the Lehman Brothers Collapse
The Right Course of Action
Profitable Opportunities in Asia's Recovering Economies
Profiting from Asia's Rebound
A Growing E-Commerce Business

The Right Course of Action

Immediately following Lehman Brothers' bankruptcy announcement in September 2008, the Chinese government stepped up to the plate, slashing interest rates. It marked the country's first monetary easing policy in six years, and it was the first of many rate cuts to come in the weeks and months that followed.

Then two short months later, the Chinese government announced one of the biggest economic stimulus packages in the country's history in November 2008. Its $586 billion stimulus package -- $2 trillion when adjusted for purchasing power -- focused on stimulating economic growth by boosting domestic consumption and investment.

At that time, the Chinese government already understood the severity of the financial and economic problems facing the global financial system. And it also understood that the only way to overcome a financial crisis was to have a strong economy.

The Chinese government's swift and bold action right at the pinnacle of the financial crisis is what helped insulate it from much of the global economic slowdown.

And as a result, as we all witnessed this year, China's economy was the first to bounce back. It posted whopping 7.9% GDP growth during the second quarter, and it is on track to grow more than 8% this year. And because of its economic strength, the country's stock market also rebounded well ahead of most global stock markets.

Year to date, China's A-Share stock market in Shanghai has gained a solid 67%. In addition, China's economic strength helped push Chinese shares listed outside of Mainland China higher this year. Just take a look at some of the winners my China Strategy subscribers have locked in already this year:

China Aluminum, 181%
China Southern Airlines, 170%
Yingli Green Energy, 125%
China Mobile, 109%
Yanzhou Coal, 100%.

We were able to lock in these incredible gains this year by simply investing in companies benefiting from the Chinese government's focus on boosting economic growth through domestic consumption and investment, as well as its support of state-owned enterprises. As you can see, this strategy paid off well for us.

What's great is this is just the beginning. China's economic strength and government support will continue to push Chinese stocks higher through the end of 2009 and beyond. And it's your turn to get in on the action.

We're currently loading up on select stocks in our China Strategy portfolio to prepare for the yearend rally that I'm expecting. So, don't wait a minute longer -- join China Strategy today!

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