|
Headlines
Market news and breaking stories live from Dow Jones Newswires
Market Commentary
A technical analysis commentary of the major markets, only from INO
Smart Scan
A premium service, alerting you to changes in the market by web and email.
Extreme Futures / Stocks
Extreme Markets from all exchanges, updated throughout the trading day.
|
| |
|
Trade Triangle Technology, Advanced Charts, SmartScan, Trading Workshops.
The premier online video learning platform for traders.
Daily Portfolio Scan and Analysis
|
| |
|
By THE ASSOCIATED PRESS
Investor Q&A: Keeping the long view76 days ago
Edmund Harriss oversees three Asia-focused mutual funds for Guinness Atkinson. He sees more strong growth in the region, but he says investors need to be willing to stomach the increased volatility.
Q: Why should a U.S. investor be interested in Asian stocks?
A: The U.S. economy is quite clearly in trouble, and Asian economies are not. Their banking systems did not get involved in exotic financial instruments. There is not one Asian bank that's had to be bailed out. Companies themselves have not taken on huge piles of debt; they haven't expanded particularly aggressively over the past 10 years.
There are always the stresses and strains associated with a developing economy. But with banking systems able to lend and supply credit, and with populations that are poor but getting richer, there are huge opportunities there.
The U.S. is starting to recover, but it's just going to be at a much lower trajectory.
Q: What is the best way to benefit form that then? Investing in U.S. companies that do business in China?
A: Myself, I think it's Chinese companies listed in Hong Kong. I think that for large U.S. companies that do business in China, the revenue and assets dedicated to that market are usually dwarfed by what's going on in the U.S. To play the Chinese auto story, General Motors sell an awful lot of cars in China through their joint venture. Do I recommend you play it through General Motors? It's too small a part.
It is much more sensible to play it with Chinese companies and to do it through Hong Kong, which is an international market, so money can flow in and out, and valuations are comparable. You're not paying silly prices for such companies (as can be the case on the Shanghai exchange).
Q: How much more volatility should one expect? Like someone who is used to the S&P 500.
A: You have to expect greater volatility than you will get in the S&P. You have to keep your eyes on the horizon rather than looking at every trough and peak. If you believe that China can deliver 8 or 9 percent growth a year over the next five years and that companies themselves are being managed in an increasingly better fashion, so they are becoming more profitable, then you should feel comfortable that you can ride the volatility
There was no greater example of this than in 2008, when China tanked. What we had seen was people not understanding China particularly well, bailing out and then upon closer study finding that China was OK, and you get an absolutely massive rally. It falls 50 percent, it gains 100 percent, that's flat. That's simply correcting a misapprehension from earlier.
Q: So people should have a two-year time horizon, minimum?
A: I think you should. But most importantly, I think that you should have in your mind when going into these emerging marts that this is money I'm not going to need at the moment. You can choose your own time to take the money out. So you can say, "You know what, we've had a heck of a ride, but I'm up 50 percent now; I think I'll take my money out.' Rather than finding yourself in a year's time saying, "You know, we've got to pay this college fee; I've got to pull it out, and I've lost 20 percent." But if you had waited six months or so, you'd be back up again.
Q: Emerging-market funds have been very popular this year. Does that raise worries about a bubble?
A: I guess it's always a concern. However, I think that needs to be looked at in the context of: There was a significant withdrawal of funds from emerging market funds in 2008. So in large part, it was a return to those markets. Valuations in Asia are above their historical averages, but not massively so.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
< Back to News Index
|
