griderX (98.17)

griderX's CAPS Blog

The allure of Chinese Equity Valuations

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March 17, 2011 – Comments (1) | RELATED TICKERS: CHI , N , A

First, I'd like to say I'm invested in a lot of Chinese companies (SNDA, NTES, CTRP, LDK, TSL, STP, FMCN, MR, SEED, CGA, YONG, YUII, HRBN). My primary reason for investing in a lot of these companies is the torrid growth stories and deep valuations relative to their US counterparts.

I keep on finding myself drawn to the valuations interested in buying more (HMIN, JOBS) but I have to put on the breaks! I guess you can say if any of these companies were US grown they would trade near double or triple from current depressed prices. There has been a lot of fear in the market about accounting irregularities, false claims, etc. I guess they make an easy target given that these companies trade on the other side of the world with no general presence in the US other than their listing.

My primary question is, does anyone ever foresee a change in valuations from current levels or will they always trade at depressed levels due to the CHINA factor? Yes, some Chinese companies do trade at premiums, but the majority seems to trade a discount.

As an investor I think I have to go back to my roots and invest in home grown growth stories....they exist (EBIX, ISRG, QSII, CLF, and ATW)...and I love reading all the blogs here at FOOL.

I also have to say that I have been drawn to Natural Resources (NOT GOLD or SILVER) I won't jump on that bandwagon....I'm talking about more useful metals such as copper, moly & iron. One that I have been keeping my eye on, but valuations seem steep is IVN, I think their location and size of their find will pay off for many years...just not sure about the stock price ;)

Signing off,

John AKA griderX

1 Comments – Post Your Own

#1) On March 17, 2011 at 5:19 PM, JaysRage (95.26) wrote:

It's possible that the whole lot stays down until one by one the legitimate ones prove their worth over time. There have been way way too many frauds in the bunch. Even relatively weak arguments against a stock can and will drive it down because weak arguments have migrated into deeper dives that have revealed more significant problems in quite a few stocks recently.

I see a lot of people patting themselves on the back for predicting the CCME scam at a time when the short-side evidence was weak. Who am I to criticize? They were right. By the time the evidence was good, the stock was already crushed.

If you feel that you can find the gems buried in the crud, the valuations right now will obviously reward you.

The CCME is a big one, because there were a number of very good reasons to think it was legit. That atom bomb will have have an effect on the sector for a while.

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