China bags the tag of the world's fastest growing nation (could soon enjoy the highest GDP growth in the world) even when most part of the world is experiencing a slowdown. Creating a business in the country or be it investing in markets, both can present some daunting tasks in the form of tax laws, trade barriers and the communistic nature of the state.
First World investors seeking to invest in the China Technology Sector should consider simplified ETF (equity traded funds) that are available in the broader markets. Some are industry specific, while others focus around commodities but liquidity and uniform exposure comes with all market traded products. For Instance, Index Bound China Tech ETFs can be traded during normal market hours, their prices are refreshed every 10-15 seconds and it enables a wide holding pattern which is complicated to achieve through direct equity buying and much safer as well.
The NASDAQ OMX China Technology Index comprise of the top 26 stocks from the Mandarin tech world and has delivered 5.82% returns for the year 2012. Some other China Tech Funds have even outperformed the benchmarks during the same year.
The continuous growth in its economy means well for the technology sector as it will experience a major advancement being an integral growth driver. The government endeavours too have boosted this sector per se the internet and telecommunication companies, hardware and software manufacturers. A significant amount of fund is set aside for the growth of this sector and it will only become a stronger segment in the years to come.
The nation is experiencing a great deal of internal growth with its major population moving from rural farms to the flourishing cities. These people aspire to attain high paying jobs. Along with urbanisation, the vast exports made by the country and the trade surplus have been instrumental in the economic growth providing stimulus to the domestic companies.
This country is the number one world market for cell phones, internet tools and technology. The total number of internet users is more than roughly 500 million. The mobile phone users are estimated to be around 600 million. Smart phones are gaining massive popularity in China scoring over the United States.
Mr. Glenn Hutchins co-founder of private equity fund- Silver Lake Partners is of the view that the sector is thriving. Further Silver Lake has made a huge investment just a couple of months ago in the internet company- Alibaba.com (an e- commerce company).
Attached risks exist in the form of the government's tendency to implement harsh rules and regulations on the sector, Secondly fraud cases have come to the fore front as the securities' regulatory system is not properly established yet. Also the economy may struggle with inflations in the near term which will directly affect the prices of the technology exports from the Asian giant.
Foreign Investors sold on the China Technology ETFs must engineer diversification in their portfolios, a stable exposure to the sector must follow the rational approach to acquire the blue chip equity from the Sino Tech World and at the same time should include the promising start ups that are potential multi-baggers considering quite a few good options exist today.
The internet penetration among the Chinese population is among the highest in the world but still there are millions of potential customers who are yet to get on the info media highway. The middle class uproar in this Asian country is visible through the numbers of the indigenous customers and their fatter pay packets, that is why invest in China Technology Sector along with other industries will continue to grow even if at a slower rate; when the most of the other capital markets around the world are actually getting downsized with each passing day.
Global X China technology fund [QQQC] is attuned to The NASDAQ OMX China technology ETF and delivers as per its performance post the annual expenses of 0.65%. QQQC ETF has delivered +9% returns for the past six months and has an equity holding pattern which includes Lenovo Group Ltd, SINA Corp. US, ASM Pacific Technology and Ten cent Holdings Ltd as its top four assets.