China’s Economy May Be Slowing But Chinese Stocks Still Hold Long-Term Promise

Monday, December 19, 2011 08:55
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China’s Economy May Be Slowing But Chinese Stocks Still Hold Long-Term Promise

Tags: China | emerging markets | mutual funds | world economy

Fear of a hard landing for China’s economy has led to steep drops in China-oriented funds, offering investors bargain prices for solid investments.

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Much of the concern over China’s slowdown is already priced into China shares. For examples, the iShares FTSE China 25 Index Fund (FXI) has plunged 19% this year.


“China's economic importance is such that ambivalent long-term stock investors should move beyond the question of whether to invest and focus instead on how much, and how,” writes SmartMoney columnist Jack Hough.


China contributed 9.3% of world economic output last year, and its economy grew at an annualized pace of 9.1% in the third quarter. It was China’s slowest growth in two years, but it compares with just 2% in the United States, Hough points out.


Hough suggests investors should keep a stake in China between 1% and 10% of their portfolio, then discusses different ways to do so, through various funds or direct investment.

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