Sunday, December 17, 2006

China's Stock Market, +60% This Year

We hear a lot of complaints about China's policy of keeping the dollar overvalued, making Chinese goods cheap for Amercian consumers and businesses. Given the passion of American consumers and firms to get the best price, I don't think you'll find too many buyers of China's products complaining about low prices, most of complaining is coming from U.S. producers how have high prices, and would like more business from buyers who actually prefer low prices.

Another benefit of a strong dollar that is often overlooked is the incredible value in recent years of China stocks, see graph above from MSCI for China's stock market, which has tripled in recent years (measured in USD). In 2006 YTD, US investors in China have gotten a whopping 60.34% return! Not bad, more than 4X the return from US stocks (14% YYD).

Bottom Line: We not only save money by buying China's cheap products, but we can make money by investing in Chinese companies.

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