In the March issue of SmartMoney magazine, Anojja Shah writes about an alternative way to play China for investors who like growth but are wary of the run-up in Chinese stocks. Shah suggests looking at companies and countries that export to China.
According to ChinaView.cn, Chinese imports grew 20% in 2007 to $950 billion. What are the Chinese buying? According to a government agency, China’s biggest import category was integrated circuits at $128 billion, up 32% in 2007. Key chip exporters to China included Taiwan, Korea and the Phillipines.
China also had a large appetite for oil in 2007, up 20% to $80 billion (Saudia Arabia, Angola and Iran). Other large import categories included plastics, up 20% to $32 billion (Taiwan, Korea and Japan) and iron ore, up 62% to $34 billion (Australia, Brazil, India).
Get exposure to Korea through the iShares MSCI South Korea Index (EWY) and to Taiwan through iShares MSCI Taiwan (EWT). Look into the CIMB FTSE ASEAN 40 (Code M62 on the Singapore exchange) for exposure to the 40 top stocks in the ASEAN countries (Indonesia, Malaysia, Philippines, Singapore, and Thailand).
Check out Van Eck Global’s Market Vectors Steel (SLX) for exposure to global iron ore miners such as Rio Tinto and Vale do Rio Doce.