Domestic China Companies Offer Investment Opportunities

China's government implements billions of dollars stimulus in its domestic economy. There is no doubt that China is an export-oriented economy, which has been negatively affected by global recession, especially by belt-tightening US consumers. With the US consumers saving more money and spending less, China exports are down significantly. To maintain China's economic growth, the China government has put in billions and implement policies to stimulate domestic demand. Of course, some economists maintain that China's domestic economy cannot replaced US consumers. I will not argue that when talking about China economy as a whole. But no doubt that China local economy is doing fine relative to the rest of the world. The reduction in exports have greatly affected multinational companies, but the domestic stimulus have help small China companies.

For example, China Architectural Engineering Inc (CAEI), a small construction company has received projects to help building the world's longest automated rail system in Zheijiang. The projects are amount to $500 million. The stock price went up 77% to $2.27 with more than 19 million shares traded yesterday, while the average volume is only about 900,000 shares. This little China company now received great attention from investors. Of course, I am not suggesting to buy into the stock now since the stock has a great run up.

My point is this: with the world economy is still in recession, the best way to invest in China is to buy small China companies that can benefit from local domestic demand and stimulus, rather than investing in big multinational companies, which will continue to suffer from the world slow economy.

Comments

[winnersdon'...:]

China's determined to capitalize on the global recession.
In doing so, it is generating tremendous internal opportunities in "purchasing power" (commodity deals), while at the same time expanding east to west within its own geographic boarders.
The game plan being executed today, in the future, will enable the Chinese to rapidly expand from export nation to more of consumer.
A small company like APWR is more intrinsic to economic development thru electric grid buildout and alternative energy development than many analysts seem to give credit.
APWR's dominence in their business will prove rewarding to those of us with the patience to hold.

Jun 26 09:06 AM

[James Kar:]

I will watch APWR. Thanks for the info.

Jun 26 11:00 AM

[Dave Marsh:]

The increase yesterday was because the company "entered into a new agreement with Shanghai Nine Dragon Co., Ltd. (www.ninedragon.com.cn) to undertake the major projects located in the Nine Dragon Resort, Zhejiang, including a seven star hotel, a marine park and luxurious villas. " Didn't mention a rail system in the news release. If you like rail and nuclear buildout in China, look at HLS Systems (HOLI), specializing in automatic control systems specifically for high speed rail and nuclear power plants. Forward earnings look fantastic. Lightly traded right now, but tends to just go up. I'm long CAEI, APWR, and HOLI.

Jun 26 11:27 AM

[HaavBline:]

Thanks for pointing to HOLI, worth further study.

However, seems like it "tends to just go up" only since last December in sync with the big rally of most Chinese stocks.


On Jun 26 11:27 AM Dave Marsh wrote:

> The increase yesterday was because the company "entered into a new
> agreement with Shanghai Nine Dragon Co., Ltd. (www.ninedragon.com.cn)
> to undertake the major projects located in the Nine Dragon Resort,
> Zhejiang, including a seven star hotel, a marine park and luxurious
> villas. " Didn't mention a rail system in the news release. If you
> like rail and nuclear buildout in China, look at HLS Systems (seekingalpha.com/symbo...),
> specializing in automatic control systems specifically for high speed
> rail and nuclear power plants. Forward earnings look fantastic. Lightly
> traded right now, but tends to just go up. I'm long CAEI, APWR, and
> HOLI.

Jun 26 12:06 PM

[James Kar:]

Dave: Thanks for pointing out my mistake. I must have read a few things at the same time and mix up the info. I will pay more attention from now on. I will also look into HOLI.


On Jun 26 11:27 AM Dave Marsh wrote:

> The increase yesterday was because the company "entered into a new
> agreement with Shanghai Nine Dragon Co., Ltd. (www.ninedragon.com.cn)
> to undertake the major projects located in the Nine Dragon Resort,
> Zhejiang, including a seven star hotel, a marine park and luxurious
> villas. " Didn't mention a rail system in the news release. If
> you like rail and nuclear buildout in China, look at HLS Systems
> (seekingalpha.com/symbo...), specializing in automatic
> control systems specifically for high speed rail and nuclear power
> plants. Forward earnings look fantastic. Lightly traded right now,
> but tends to just go up. I'm long CAEI, APWR, and HOLI.

Jun 26 12:57 PM