{"id":63612,"date":"2014-11-13T01:11:22","date_gmt":"2014-11-13T06:11:22","guid":{"rendered":"http:\/\/countingpips.com\/?p=63612"},"modified":"2014-11-13T01:11:22","modified_gmt":"2014-11-13T06:11:22","slug":"why-you-need-to-learn-chinese-characters","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2014\/11\/why-you-need-to-learn-chinese-characters\/","title":{"rendered":"Why You Need to Learn Chinese Characters"},"content":{"rendered":"
November 13, 2014<\/div>
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By MoneyMorning.com.au<\/u><\/a><\/p>\n

Do you know what ‘Maotai’ is? <\/p>\n

It is a traditional spirit alcohol in China<\/strong>. It’s what people give each other as gifts on special occasions. It is a ‘must-have’, when you want to get things done, you give Maotai as a gift. <\/p>\n

However, the current crackdown on corruption has brought pain to Maotai producers. The act of giving expensive gifts \u2014 such as Maotai \u2014 can now get local government officials in trouble.<\/p>\n

You may be thinking, ‘Why is he telling me this? Why is this relevant to me?’<\/p>\n

Here’s why:<\/p>

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‘There are more than 500 pure A-share stocks that are open for the first time with a total market cap close to $US1 trillion ($1.1 trillion), according to HSBC. Mainland Chinese investors will have access to over 200 pure Hong Kong stocks with a total market cap of more than $US2 trillion.<\/em>’<\/p>\n

The Australian Financial Review<\/em><\/p>\n<\/blockquote>\n

What is the Australian Financial Review<\/em> talking about here?<\/p>\n

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‘The launch date for the Shanghai-Hong Kong Stock Connect is set for November 17, the Hong Kong Exchanges and Clearing (HKEx) said on Monday, clearing uncertainty over the start of the highly anticipated cross-border trading link.<\/em>’<\/p>\n

CNBC<\/em><\/p>\n<\/blockquote>\n

Now you understand why I was telling you about Maotai…because you will soon be able to invest into the A-shares in China directly.<\/p>\n

A-shares include most of the Chinese mainland stocks, and are currently off-limits to foreign investors.<\/p>\n

In New Frontier Investor<\/em> I’ve had to forgo a lot of good opportunities in the previous few months, because I could not recommend something my subscribers could not invest in.<\/p>\n

But with the ‘through-train’, that’s about to change.<\/p>\n

The Shanghai Stock Exchange had a market capitalisation of RMB 15,116.53 billion in 2013. Using an exchange rate of one Aussie dollar to six RMB yuan, this was a market cap of AU$2.5 trillion.<\/p>\n

The through-train will open US$1.1 trillion of A-shares to foreign investors. While that does not represent everything, it is still quite sizeable.<\/p>\n

And don’t forget about Shenzhen Stock Exchange. That is where the small-caps<\/a>, medium-caps and the startup sectors are traded. <\/p>\n

And, as readers of New Frontier Investor<\/em> already know, the small-caps, medium-caps and the startup listings in China outperform large-caps<\/a>. You really need to get involved there eventually.<\/p>\n<\/p>\n

Port Phillip Publishing ahead of the curve<\/h2>\n<\/p>\n

‘You’ll see more and more interest from institutional investors here in Australia as the access becomes easier.<\/em>’<\/p>\n

HSBC’s <\/em>head of global asset management in Australia, Geoff Pidgeon<\/p>\n

That’s not news to us at Port Phillip Publishing. It’s one of the reasons we launched a new investment service earlier this year focussing solely on emerging opportunities<\/a> in what we call ‘new frontiers’. <\/p>\n

But, despite what Geoff says in the above quote, it’s not just institutional investors turning towards China<\/a>. Ultimately retail investors like you and me are showing interest in the second largest economy in the world.<\/p>\n


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Left \u2013 The Bull, Wai Tan Shanghai; Middle \u2013 Tourists facing Pudong Shanghai; Right \u2013 Example securities companies on the A-shares<\/em><\/p>\n

The first stocks you need to have on your ‘buy’ list are the securities businesses. The new connectivity will be huge for the securities sector. <\/p>\n

The daily turnover contribution may hit RMB 17 billion with the ‘through-train’. That will mean an earnings growth of 5\u201313% for various Hong Kong listed brokers.<\/p>\n

Don’t let your mind stop there. This is about opening up the entire Chinese equity market<\/strong>, and the entire Chinese capital market.<\/p>\n

It means Shenzhen, it means bonds, and it means derivatives.<\/p>\n

It also means financial product innovation and more offerings from the brokers.<\/p>\n

Yes, you need to be long the securities sector.<\/p>\n

The rules<\/h2>\n

For overseas investors like you and me, there are ownership caps. A single foreign investor cannot hold more than 10% of a company listed on a mainland exchange. The maximum combined holdings of all foreign investors in a mainland listed firm will be 30%.<\/p>\n

This excludes the so-called ‘strategic investors’, typically describing long term investors who are subject to lock-up periods. <\/p>\n

And you cannot short-sell.<\/p>\n

It is a shame that you cannot short-sell, particularly if you want to short certain sectors or companies, but this may change in the future.<\/p>\n

I have already mentioned institutional money; they will have more influence on the mainland market going forward. <\/p>\n

Retail investors dominate the mainland market, and new institutional money will start to alter the trading patterns in Shanghai.<\/p>\n<\/p>\n

Other Implications<\/h2>\n<\/p>\n

The MSCI will review the position of Asia in its indices. This will have a profound impact on how global funds allocate their capital.<\/p>\n

Funds will allocate more capital to Asia as it will take up a bigger share due to the opening of China’s capital market. This will make Asia an even bigger capital market, deserving of attention.<\/p>\n

Ultimately, this helps China to let its capital ‘escape’. <\/p>\n

For the rich, it is great way to channel money out of China. That is something they are desperate to do. <\/p>\n

The reason why Chinese asset markets<\/strong>, including real estate, have seen one bubble after another is because of a lack of investable asset classes.<\/p>\n

The opening of China’s capital market lets capital out, allows diversification, eases inflationary pressure and eases the pressure on the RMB.<\/strong><\/p>\n<\/p>\n

Learning Chinese characters<\/h2>\n<\/p>\n

Is the ‘through-train’ huge? Yes it is. But it is only the beginning of a massive capital market reform that will likely shake the foundation of global capital flow.<\/p>\n

Do you need to learn Chinese characters<\/strong>?<\/p>\n

It would be very helpful if you do. But it’s not easy. And I do expect there will be more English reporting and more English information flow on China’s assets to match the increased trading opportunities. <\/p>\n

Vern Gowdie,
\nEditor, Gowdie Family Wealth<\/em><\/strong><\/p>\n

 <\/p>\n

From the Port Phillip Publishing Library<\/em><\/strong><\/p>\n

Special Report:<\/strong> Return of the Wildcatters<\/a>: One area off the coast of the Philippines contains up to 380 million barrels of oil. A hardened team of Aussie drillers holds exclusive rights to extract it…and they’re going for every last drop<\/a>. <\/em><\/p>\n

Join Money Morning on Google+ <\/u><\/a><\/strong><\/p>\n

The post Why You Need to Learn Chinese Characters<\/a> appeared first on Stock Market News, Finance and Investments | Money Morning Australia<\/a>.<\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nBy MoneyMorning.com.au<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au Do you know what ‘Maotai’ is? It is a traditional spirit alcohol in China. It’s what people give each other as gifts on special occasions. It is a ‘must-have’, when you want to get things done, you give Maotai as a gift. However, the current crackdown on corruption has brought pain to Maotai […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-63612","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/63612","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=63612"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/63612\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=63612"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=63612"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=63612"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}