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Finding China Stocks
With the U.S. economy sputtering, many investors are turning their
sights to China. And for good reason! China is experiencing
unprecedented growth as it emerges from third-world status to a major
economic power.
How can U.S. investors participate? Most China stocks trade on local
exchanges and are not available to foreign investors. However, more than
120 China stocks trade on U.S. Exchanges, either directly or as ADRs
(American Depository Receipts), which are equivalent to regular shares.
Here’s how you can get up to speed on China stocks available to U.S.
investors.
China Analyst
China Analyst (www.cnanalyst.com)
is the best place to start your research. For starters, the site claims
to list every China stock that trades on U.S. Exchanges. I have no way
of confirming that claim, but as of last week, the site listed 123 China
stocks.
But China Analyst does much more than simply list the stocks. The site
provides a lengthy report for each stock, describing its business in
considerable detail. The reports are much longer than you’ll find for
U.S. companies on most U.S. financial sites.
China Analyst pays special attention to
Internet stocks and to stocks involved in the
Solar industry, such as makers of solar cells and/or solar panels.
For each of these two industries, you can download a table comparing
fundamental factors such as company size (market-capitalization), profit
margins, forecast earnings and revenue growth, and price/earnings ratios
(valuation) based on 2007 and 2008 forecast earnings. The chart also
lists the year-to-date share price change for each stock.
When I looked, financial website China Finance Online (ticker JRJC), up
738% year-to-date, was the best performing
Internet stock. Solar module maker First Solar (FSLR), up 460% so far
this year, was the best performing solar stock. In both instances, I
ignored firms without significant sales, and you should too.
But, there’s even more. You can compare all 123 U.S.-listed China stocks
based on profit margins, analyst buy/sell ratings, expected long-term
earnings growth, year-to-date share price action, and short-interest
(positions taken by investors betting that the share price will drop).
Overall, the aforementioned China Finance Online, and China Eastern
Airlines (CEA), up 365%, were the best performers year-to-date. But
online game companies Shanda (SNDA) and NetEase (NTES), with net profit
margins of 62 and 58%, respectively, were the most profitable China
stocks.
Finally, you can sign up on the site to receive a daily e-mail providing
commentary, news and research about the stocks that it follows.
Seeking Alpha
Seeking Alpha (www.seekingalpha.com)
is another good resource for learning about China stocks. Seeking Alpha
offers news and commentary about stocks and exchange-traded funds in a
variety of categories, including one devoted exclusively to
China (Global Markets menu).
Although it provides news about China stocks, Seeking Alpha’s strong
points are its expert commentaries and its conference call transcripts.
On any given day, you’ll find anywhere from three to a dozen or more new
postings from a variety of experts giving their take on recent events
and the outlook for specific stocks.
China stocks that trade on U.S. exchanges generally file quarterly
reports with the U.S. Securities & Exchange Commission and hold
telephone conference calls with stock analysts to discuss each quarter's
results. Usually, only analysts can ask questions, but everybody can
listen to the calls either by dialing a toll-free number or via the
reporting company’s website.
You can learn a lot by listening to the quarterly conference calls.
However, most run well over an hour in length, and the most informative
part, the question and answer session, comes at the end. So, if you hold
many stocks, it’s not practical to listen to all of the calls.
Seeking Alpha offers written transcripts of the calls for the most
widely followed U.S.-traded China stocks. You can skim through a typical
conference call transcript in 5 or 10 minutes. It’s an efficient way to
get the information.
China Tech News
ChinaTechNews (www.ChinaTechNews.com)
is essential reading for tech stock investors, which is where much of
the China stock action has been happening. The site covers both local
and U.S.-listed stocks, but you’ll find much of interest here. Scroll
down to the bottom of the homepage to see links to affiliated sites
covering other industries such as retail and hospitality.
Finance Asia
FinanceAsia (www.financeasia.com)
is another good resource. Although it covers stock market-related events
in all Asian countries, and doesn’t limit its coverage to U.S.-listed
stocks, FinanceAsia offers pertinent information that you won’t see
anywhere else. It pays to check the site often. You can download current
and recent news stories for free, but after five days, or so, access
requires a subscription. That will set you back $300 per year.
The China Blog
Time Magazine’s “The China Blog” (time-blog.com/china_blog/)
is a good place to gain a broader view of what’s going on in China. Five
different writers, all China experts, post short columns on all aspects
of Chinese life, including politics. The site also offers links to a
dozen or so other blogs about China.
All of the features that I’ve described are free. Unless you sign up for
a free newsletter, you don’t even have to register to access the
information.
Investing in China stocks requires care. Many have already doubled in
price so far this year, and some say the market is a bubble just waiting
to pop. Do your due diligence. The more you know about your stocks, the
better your results.
published 11/11/07 |
