- ISBN13: 9780470276778
- Condition: NEW
- Notes: Brand New from Publisher. No Remainder Mark.
Product Description
As one of the leading experts on investing in China’s economy, author Robert Hsu advises people every day on how a China strategy will truly take them to a new level of investing. With his new book, Hsu shows you how to build your fortune by participating in what he calls the “China Miracle.” Page by page, Hsu helps you navigate this dynamic market and reveals the best ways to invest in the world’s fastest-growing economy.
China Fireworks: How to Make Dramatic Wealth from the Fastest-Growing Economy in the World
Hsu’s intent is to provide investment advice for those interested in China. This he does well, explaining both his style of investing (momentum-driven), and the types of investments to look for and look out for. In the process, he also tells the story of a very dynamic economy.
First, some of the superlatives. China produces more steel, aluminum, cement, coal, clothing, and toys than any other nation. It has the most cell-phone users (average fees = $6/month). China already has the world’s largest dam and airport, high-speed train network, and highest railroad. Now it is finishing a six-lane bridge connecting Shanghai with the island of Yang-shan (20 miles offshore) that will be the largest sea-span bridge and connect with the world’s largest port. Shanghai alone has 40% of the world’s construction cranes; the nation builds the equivalent of a new Philadelphia every six weeks, and a new nuclear power plant every year. China was also the world’s largest manufacturing exporter in 2006, up from half the size of the U.S. in 2000. Renewable power sources are mandated to increase from 7% in 2008 to 15% in 2010.
Hsu sees Confucian values (social harmony via respect for authority, emphasis on education, strong interpersonal relationships, and personal integrity) as supportive of China’s economic growth.
The author points out that China’s major cities and provinces have different cultures, and sometimes different languages, and suggests those looking for real estate opportunities focus outside of Shanghai and Beijing – less competition, and larger overall population. Avoid investing in State-Owned Enterprises (SOE) – they generally are not well managed, and the government recently mandated they become self-sufficient or dissolve – about 2,000 of the remaining 100,000 went bankrupt in 2008. Hsu also points out that Chinese firm valuations are often severely distorted by the fact that the government may hold (without trading) a majority of shares in them. Hsu also suggests staying away from firms traded only on Chinese exchanges – their financial reporting requirements are not that stringent.
Chinese casinos can be very profitable (Macao’s Sands Casino was built in 2004 and recouped that amount in less than one year), but differ from the U.S. – Chinese gamblers don’t drink, consider fine shopping and dining a waste of time and money, and ignore slots. The focus is on table games.
Hsu sees education as a big business in China. It is estimated that a typical Chinese household with a child spends more on education than housing and health care. There are about 70,000 private school, serving 14 million students (200/). There is also a large market teaching English (especially to pass the TOEFL and GRE). English is now mandatory for high-school graduation. Recently the government mandated that rural schools accept pupils unable to pay tuition and books.
On average, less than 20% of the price a brand-name product commands in the U.S. goes to Chinese manufacturing. Per UBS AG, China earns only 0.35/Barbie doll retailing for $20 in the U.S. Because of these low margins, and the fact that other areas of China and Asia stand ready to take over, Hsu recommends staying away from investing in Chinese manufacturing. (China, however, is working to learn R&D in manufacturing and drug development – so watch out!)
Personal health care spending now averages $55/person/year, and Hsu sees this area as another good opportunity for investment.
Bottom Line: Very interesting and credible.
Rating: 5 / 5
A few years back, I read Jim Rogers’ A Bull in China: Investing Profitably in the World’s Greatest Market, carefully underscoring those securities that I could actually buy. (If you don’t know already, Rogers’ talks about some Chinese companies that only trade on the Shanghai or Shenzen exchanges, which is difficult for the typical investor to do, especially if that typical investor isn’t a confirmed resident of China. He did, however, also discuss companies traded on Hong Kong and American exchanges, among a few others. Hong Kong-exchange stocks can be bought via an E*TRADE global trading account. ’nuff said there. Now on to “China Fireworks.”
Hsu raises some good points about buying stocks sold on the Hong Kong exchange, namely that you have to buy minimum lot sizes, which means you can’t buy three or 12 shares of something, but instead must make a minimum buy of 200 to 10,000 shares, depending on the security. (The good news is that 1 USD is equivalent to about 7.75 HKD, so it might not be as expensive as you think.) Fine so far. But then Hsu steers away from trading on the Hong Kong exchange and goes on to discuss only those stocks traded on American exchanges. Well, that’s great, but everyone on earth and their grandmother has heard of most of these Chinese stocks, many of which are probably riding on CSNBC, SmartMoney, Forbes and Fortune hype.
Here’s a few:
China Mobile
PetroChina
CNOOC
The9
Focus Media
CTRIP
eLong
Home Inns & Hotels Management
Suntech Power Holdings
Trina Solar
Huaneng Power
China Aluminum
China Southern
He then goes on to recommend a bunch of other stocks as good investments in the “China Miracle” (a phrase he tends to use overmuch, IMHO), but we’ve all heard of these, too:
Citigroup
Potash Corp. of Saskatchewan (of which I am a pround owner)
Travelocity
Expedia
Mosaic
Tyson Foods
Motorola (of which I was the proud owner, later the disgusted seller)
Nokia
Intel
While Hsu raises good points on why these are good investments with regard to China and its people, the book is overlong at 257 pages. I realize that a seven-page list of all the stocks Hsu mentions might not be sell as a book, but it might be all that YOU, the investor, need. Armed with that and a Morningstar or ValueLine membership, you can check them all out and see if they’re overpriced or not. Save yourself some time.
Hsu does point out that investment in Chinese companies that manufacture goods is not the best idea, which rings true when you think about it. Many manufacturing companies in the world operate with razor-thin margins and a lot of competition. Also discusses “momentum investing” which, I would say, is not a bad way to go with some companies.
Bottom line: an informative yet overlong book that doesn’t list enough strictly Hong Kong-traded stocks (Li Ning, anyone? [the Nike of China]) while discussing too many stocks every savvy investor already knows about.
If you haven’t read A Bull in China: Investing Profitably in the World’s Greatest Market (also reviewed by me), then “China Fireworks” might be a good introduction for you regarding certain aspects of China investment.
Note: On the book jacket of “China Fireworks,” Hsu looks thin and young, but if you go to his website and look at pictures of him in China, he appears to be older and to have been packing on the pounds! What does the real Robert Hsu look like?
Rating: 3 / 5
I have read many other China investing books but I was particularly looking forward to this one mainly because I am a subscriber to Hsu’s newsletters as well. I would say this is a good book for anyone interested in China and the opportunities it offers. As a subscriber I enjoyed the more detailed look at themes he merely touches on in his newsletters. Many of the topics he discusses in the book are not found in his other publications, so I was able to enjoy the new information.
Rating: 5 / 5
As the reviewer above, alludes, Mr Hsu operates an online subscription newsletter. One small niggle I have with the book is that it occasionally lapses into “advertorial” mode. Another grizzle is that the author takes a negative slant on the USA stockmarket. Examples given, of extended periods of low capital growth, do not include the dividend quotient. At those times dividend pay-outs were greater than today, and it is a tadge naughty to overlook them as a part of the total returns. But, aside from these points, this book is a mine of useful information for investors seeking an “emerging markets” exposure. Mr Hsu draws upon his personal life as a native of Taiwan, and presents, in an easily readable style, a brief history of China, and a progression to where the merger of capitalism and communism has brought China today. He gives excellent examples of stocks, mostly listed as ADRs on the NYSE, and their respective positive and/or negative attributes. At a cost of only $ 25, less than the brokerage fee on one share trade, this book represents stunning value. Bravo Mr Hsu.
Rating: 4 / 5
This is a good book on China Investment Strategies. Hsu takes you around China and introduces you to the different provinces, and discusses the market and what the people want where they live. The diversity of China is explained. Even though it dates from 2008 it is helpful because he included from the beginning how violtule China’s market is. He discuss’s the advantages of Hong Kong and his stories always follow the basic keystone of investment strategies.
Good Humanitarian aspect. Find detailed financials from your financial sources, but read this .
Rating: 4 / 5