Make Your Fortune In China's Second Surge

Robert Hsu, Editor

4 Ways to Profit from China's Second Surge

China Market Outlook

Market pundits and critics around the world are up in arms over what they mistakenly see as a "China bubble."

I'm sure you've heard them -- and at first glance, it seems like they might have a point. But in reality they're missing a few key facts. Since the beginning of the year until early August, China's A-Share stock market in Shanghai skyrocketed more than 80%. Then, the Shanghai market dropped more than 20% in August. And that's when the comments started… "The markets ran up too far, too fast…" "China is now facing another bear market…"

Now, while I'm not going to deny that Chinese shares ran up rather quickly this year, I don't think that the recent pullback was the start of another bear market. Rather, it was a consolidation period. Here's what you need to consider: The Shanghai stock market is sitting just under 30, which is below its historic PE average. And given low interest rates and robust earnings growth, this valuation is far from expensive.

In fact, its current PE ratio is reasonable for a high-growth, high-liquidity economy like China -- only about half its peak valuations in 2007. That's one reason why I told my readers that I expected the Chinese markets to consolidate for a while, and then resume their uptrend through the end of the year. And guess what? They have started to do just that -- in September, China's A-Share stock market in Shanghai has rallied 15%, while many select Chinese companies traded in China and abroad have pushed even higher.

To me, this spells nothing but opportunity for savvy investors who know where to invest their money.

And right now, that's China. Already the Shanghai A-Share is back over 3,000 -- and you'll likely find those same critics doing an about-face once they realize China's market still has plenty of room to go higher.

Here's Why:

Unlike most developed economies riding high in the asset bubble game, the Chinese banking system was not encumbered by excessive bad debt. In fact, China has the largest savings rate in the world, its money supply grew by 28% in the first six months of 2009, and its foreign reserve surpassed $2 trillion this year, nearly twice as much as number-two Japan.

Additionally, the Chinese government controls most of the banks in the country. As a result, Chinese banks lent out more money in the first four months of 2009 than it did during all of 2008. And by the end of the first half of the year, Chinese banks lent out an astounding 7.37 trillion yuan, or $1.08 trillion -- more than any half-year or even full-year period in the country's history.

The result is that while countries like the U.S. have recently reported contractions in economic growth, countries like China continue to post robust growth despite the global slowdown and financial crisis.

There's no denying the fact that China is leading the global recovery. After bottoming out in the first quarter with 6.1% economic growth, China was the first major economy to recover from the global economic crisis with 7.9% GDP growth in the second quarter. The country is well on track to post more than 8% economic growth in 2009, maintaining its title of the fastest growing large economy in the world.

So what does this all mean for investors?

Simple. China offers the best opportunities for your investment portfolio right now. But the key to truly profiting from China's economic strength is knowing exactly where to invest -- because not all Chinese companies are benefiting -- and that's where I come in. Join my China Strategy service today, and I'll point you towards that best Chinese companies directly in line to profit as the country continues to post solid economic growth.

1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Next

In This Report:

China Strategy

China's economic recovery has captured the world's attention once again. On track to post more than 8% GDP growth in 2009 has sent investors back to the drawing board, looking for the best ways to profit from China's economic strength. But while China's economic recovery is creating profitable investment opportunities, not all Chinese companies are benefiting from China's economic rebound this year.

That's why Robert Hsu has made it his mission in his China Strategy service to help you profit from China's economic emergence–pointing out the best Chinese investments while avoiding the pitfalls. Just take a look at some of the gains his China Strategy subscribers already locked in this year:

China Aluminum, sold for a 181% gain
China Southern Airlines, sold for a 170% gain
Yingli Green Energy, sold for a 125% gain

And that's just a small sampling of the profits China Strategy readers have experienced this year. By joining his China Strategy service, you'll have instant access to all of his advice regarding China's economy and his current recommendations profiting from China's economic strength. Don't miss out on the next leg higher!

Over the past three years, Robert Hsu's has shared his firsthand knowledge of Chinese culture, business and government with his China Strategy and Asia Edge readers. His wealth of knowledge about and on-the-ground experiences in China have helped him direct investors to the most profitable investments in this great nation, while avoiding the pitfalls that most investors fall in to.

Robert was born in Taiwan, speaks Mandarin fluently, and reads and writes Chinese. But what really sets Robert apart from other investors is his rich history of investment success and his understanding of what's happening across Asia today. While employed with Goldman Sachs, Robert learned a great deal about international markets, equities, interest rates, currencies and commodities markets.

Since then Robert has started his own money management firm, and writes two investment newsletters: China Strategy and Asia Edge. Robert Hsu To stay on top of what's happening in Asia today, Robert visits China regularly, as well as employs a boots-on-the-ground team of analysts in China to provide him with up-to-the-minute details on what is happening in China. As you can see, Robert is perfectly positioned to stay on top of events shaping China's path to economic power.