Investing in China – How to Get Ahead with International Investments

While many other countries have experienced a serious economic slowdown, China has continued to be a strong player in the global financial market. While growth has slowed somewhat in the past couple of years, investing in China can still be a good idea. However, as with any other type of investment, it’s important to weigh the risks before you decide what type of industry or sector to invest in. There are certain aspects of the Chinese economy that are doing better than others, and as an international investor, if you have the right guidance and expert advice, you can follow suit and broaden your portfolio.

Real estate, for example, may not be the best industry to invest in anywhere in the world at the moment. After a frenzied period of real estate development, there are now many empty buildings in China, with brand new skyscrapers left without tenants. When investing in China, you may wish to stay away from the real estate market unless you have a strong lead on a promising new development. Because the US is China’s largest trading partner, the two economies are intertwined. It’s possible to get a good deal on stocks or other investment opportunities if you know where to look.

There are a few ways to make your investment a safer bet. To begin with, when you are investing in China you will want to hedge your bets and protect your shares with collaring and other hedging options. Collaring can protect shares from any large downward moves, making your international investment far safer. Another factor to consider is whether or not to choose multinational corporations to invest in, or to choose Chinese companies directly. If you have little knowledge of the Chinese market, you may wish to stick to these multinationals for ease of research.

A safe way to go about investing in China is to choose a broad mutual fund, such as Matthews China or other options of this nature. This can be easier than trying to hand-pick individual Chinese companies to purchase shares in. With an annual growth rate that still is sitting at 9 percent, China can be an interesting and profitable market to pursue investments in. With a bit of caution, some professional guidance, and openness to negotiation, you can end up with some great deals. Mutual funds can be a good way to get started, while you gain a greater understanding of the market.

About Richard Wilson