Chinese Stocks and the American Market

I recently came across two new exciting China stocks. In a way, it’s like a financial invasion. Clearly, Chinese companies like raising money in the U.S., and they like listing on our stock exchanges. Some companies are interlisted with stock exchanges in China, while others choose to solely list their stock for trading here.

Most of the China companies listed here are very much risk- capital-type investments. Many of the companies are at an early stage of development or are high-risk technology ventures. Regardless, you can’t argue with the growth that most of these companies are generating.

Another aspect of the China financial invasion is the fact that many of the companies listed here are extremely profitable. Compared to Western business standards, the level of profitability on Chinese enterprises seems to be far greater.

Perhaps this is because so many of the corporate customers in China are government entities that don’t mind paying top dollar for services. With the rest of the world buying so many products from China, they have the money to spend. There’s also the fact that China’s labor force is cheap to begin with. Combine a wealthy customer base with cheap labor, and you’ve got the makings of significant profitability.

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Regardless, it is an exciting time to be a speculator in Chinese companies. The timing is right, and the opportunity is now. We’ve talked about many of these companies in this column, but I’m finding more new listings, and there really are some very interesting opportunities to speculate on.

I hope more Chinese companies consider listing on U.S. stock exchanges. It just makes it easier for American investors to capitalize on great business opportunities that are operating half a world away. There are going to be problems, and the Chinese economy is more and more susceptible to volatility and corrections; with this in mind, I still contend that domestically listed China stocks represent the most attractive opportunities for risk-capital speculators in the market today.