Friday, January 23, 2009

Chinese New Year

Growth may have slowed in the last year, but China is still in a party mood for its New Year. News is so dismal in the U.S. that the holiday - even though all the way around the year - is a welcome diversion.

Government planners in China are still targeting double digit growth for the current five-year plan, but economists suggest the growth rate in 2009 is likely closer to 4% to 5%. Officials are worried about unrest as rising unemployment is putting more of the country’s population into the streets. For a few days at least the Chinese will be in the streets for parades and other celebration. Then it will be back to reality - the same kind of reality that Americans are facing.

U.S. investors will need to face a new reality for China stocks as well. There is any number of China operations that have chosen to list their common stock on U.S. exchanges. Solar chip manufacturer Solarfun Power Holdings Co. Ltd. (SOLF: Nasdaq) is an example. The practice is making it easier for U.S. investors to get acquainted with China companies through corporate reports in familiar form and format.

Yet the economic realities can be decidedly Chinese. Solarfun operates in world markets for devices used to generate power using solar energy. However, China Architectural Engineering, Inc. (CAEI: Nasdaq) is a construction engineering company that caters predominantly to customers is China and Asia. Investors will be challenged to make certain that they are monitoring the right business pulse in tracking and managing positions in these companies.

Then again cross border investments are the scary proposition they used to be. After all the same knowledge and awareness that brings the Chinese New Year into American homes, should be able to carry economic intelligence as well. Growth rates between 4% and 5% certainly seem more interesting than the recession that U.S. companies are facing.

So grab a sparkler and join the party!

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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