How to invest in modern China


BY HAN AI LEEN

READERS considering investing in China will find Cesar Bacani’s The China Investor – Getting Rich with the Next Superpower (John Wiley & Sons) helpful.  

Written by former financial journalist and personal investor who conceptualised and launched the personal finance section of defunct regional newsweekly Asiaweek, Bacani (now a partner with The Editors Group in Hong Kong) shares his insights on how best to understand and trade shrewdly in the China equity market. 

With the assumption that China and its 1.3 billion people will live up to its promise of being a superpower, Bacani first sets the stage by outlining six rules.  

The first, do not bet all your monies on China (invest ideally five to ten per cent of your portfolio money).  

Second, let professional managers handle some of them.  

Third, it is also wise to consider both growth and value stocks and when buying them, do invest in companies that are well managed, transparent in their corporate dealings and overseen by an experienced authority.  

Do make sure you know which accounting standards were followed in preparing the financial statements.  

Finally, remember that China is really heterogeneous with different parts of the country having different stages of development and different levels of household affluence. This has an effect on how data is interpreted. 

Bacani outlines five broad investment trends: a surging consumer demand; a major restructuring due to hit the telecommunication, power, airline and bank industries; trade that will be boosted by China’s membership into the World Trade Organisation (WTO); a rising industrial production and finally, an expanding private sector. 

Bacani shares his knowledge about companies that are at the forefront of China’s rise to superpower economic status (companies he terms as purple and green chips), new firms founded by private-sector entrepreneurs, best-performing mutual funds and the pitfalls of investing in China.  

Most importantly, readers will value his personal insights that will provide direction to forming your own investment portfolio in China. 

Readers would appreciate the currency of the contents and the Resources Section at the end of the book.  

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