I’m sick and tired of hearing the cheerleaders on CNBC talking about whether the Dow Jones will hit a new high.
After all, even if it does, we’re talking roughly a 1,000-point gain for the year. If that kind of gain — spread out over 10 months — impresses people, what would they say about the Shanghai stock markets last week?
Last Monday, the Shanghai B-share Index skyrocketed 9.7%. That’s the equivalent of the Dow Jones soaring 1,084 points in a single day!
In terms of individual stocks, 70 of the 109 B-share companies on the Shanghai and Shenzhen stock markets hit the one-day gain limit of 10%!
And it wasn’t just the Chinese stock markets. Also last week, Taiwanese stocks had their biggest one-day gain in more than two years.
Clearly, there are some big bucks to be made by investing in Asian companies. And there’s no reason to ignore them …
Three Ways to Invest
In Asian Companies
One of the common complaints I hear from investors is that it’s too hard to invest in foreign stocks.
My answer: It’s not nearly as hard as they think.
First, if you want to buy stocks that trade on a foreign stock exchange, you just need to open an overseas trading account. Most U.S. brokers have international trading desks. So you’re probably just a click or phone call away from getting started.
Second, you can also buy funds that specialize in Asian companies. In “A Tale of Two Economies,†I give you some of my favorites.
Third, if you want to buy individual Asian stocks and you don’t want to worry about foreign exchanges, here’s your ticket: There are hundreds of foreign stocks listed right here on the New York Stock Exchange, the American Stock Exchange, and the Nasdaq.
If that doesn’t make it easy to get a stake in Asian companies, I don’t know what would. The rewards can be great — many American-listed Asian stocks have been soaring right along with their Asian counterparts. Here’s an example …
This American-Listed Chinese
Company Gained 47% in One Day!
Last week, a little-known company from China, New Oriental Education (EDU), floated its initial public offering on the New York Stock Exchange.
New Oriental Education was founded in 1993 to provide Chinese students with a way to prepare for entrance exams for law and medical schools.
Three years later, it started offering English classes, and that has become its largest division. In fact, New Oriental ran almost half a million students through its English courses last year!
The company is growing like mad for a host of reasons:
1. China’s one-child policy means parents are very focused on their kids’ educations.
2. A growing number of Chinese wish to attend college in the U.S., and that can only be done if they speak English.
3. China is mounting a massive campaign for its millions of citizens to learn English in preparation of the 2008 Beijing Olympics.
4. There are approximately 457 million Chinese between the ages of 5 and 29, all potential candidates for educational programs.
5. The market for educational services is expected to grow from $2.3 billion in 2006 to $3.7 billion by 2010.
You can see why New Oriental is minting money. Its revenues increased 32% in each of the last two years. In 2005, it banked $6.2 million in profits.
No wonder the IPO was oversubscribed by a factor of 35! The lucky investors who did get in at the IPO price of $15 saw their investment soar by 47% on the very first day. Not bad for one day’s work, eh?
Now, I don’t recommend rushing out and buying the stock at its current price. Even though they lost some ground yesterday, the shares are still too rich for my blood. I will, however, carefully monitor this gem to see if it ever gets to an attractive level. In the meantime, remember …
There Are Plenty More
Great Asian Stocks Right
Under Your Nose
New Oriental Education is just one of the many exciting Asian investment opportunities available here in the U.S.
In fact, New Oriental is the 24th Chinese IPO since March 2004! Just four more examples:
- Focus Media (FMCN), up 248% since its July 2005 IPO.
- Baidu.com (BIDU), up 186% since last August.
- Hutchison Telecom International (HTX), up 126% since October of 2004.
- Suntech Power (STP), up 77% since last December.
And one of my very favorite Asian stocks trades on the NYSE. I’m talking about China Mobile (NYSE: CHL), the largest mobile phone company in the world.
The stock has risen more than 25% since I recommended it to my Asia Stock Alert subscribers in July.
Why is the company doing so well? Because the number of Chinese mobile phone users just keeps growing.
- In just the first five months of the year, 91 million Chinese started using cell
phones. - At the end of August, there were 482 million Chinese using mobile phones.
- Currently, there are about 60 million more people using mobile phones than fixed-lines in China.
- According to the Chinese Ministry of Information, an additional three to four million people begin using mobile phones every month.
To put those numbers into perspective, consider this: All U.S. wireless providers have 202 million mobile phone customers combined, less than half those in China.
Moreover, what has me salivating is the fact that only about 30% of China’s market is using cell phones vs. 70% in the U.S. That means that China Mobile has years and years of rapid growth still ahead of it.
Make no mistake about it — the opportunities in Asia are staggering. That’s why I’ll be boarding a Cathay Pacific flight eight days from now. And while there — in Hong Kong, Shenzhen, Guangzhou, Macau, Shanghai, Tokyo, Singapore, and Bangkok – I’ll be looking for the next New Oriental Education or China Mobile.
So stay tuned!
Best wishes,
Tony
About MONEY AND MARKETS
MONEY AND MARKETS (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Sean Brodrick, Larry Edelson, Michael Larson, Nilus Mattive, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Regular contributors and staff include John Burke, Amber Dakar, Monica Lewman-Garcia, Wendy Montes de Oca, Kristen Adams, Jennifer Moran, Red Morgan, and Julie Trudeau.
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