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Risks in China for Investors

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Chinese companies present a potentially huge opportunity for investors, but the market in China carries unique risks and challenges that bear consideration. Here is how to invest in shares of Chinese companies and exchange-traded funds (ETFs) available for trading in the U.S.

Investing in China can be a real trick as companies there carry various share classes that may or may not be accessible to the average investor outside China. For example, A shares are shares of a Chinese company that are only available to investors in mainland China. H shares, on the other hand, are shares of those companies that trade in Hong Kong and are available to anyone — assuming your broker allows you to trade on the Hong Kong exchange. The easiest way to invest in Chinese companies, though, is to buy shares that list on an exchange in the United States or a European market.

In addition, some companies, such as China’s largest social network owner, Tencent Holdings, are available on over-the-counter markets. In all, some 300 Chinese companies can be traded in some way stateside. The work in filtering through those can be difficult, but an easier option also exists.

When investing in Chinese stock ETFs, investors have three basic choices: stocks listed on Chinese stock exchanges, international investor shares, and companies specifically listed on U.S. exchanges. The DB X-Trackers fund, which holds Chinese exchange-listed companies, has had the wildest performance due to the bubble-and-bust China market of 2015. Because of the extra risk involved, owning shares in China’s fast-developing and changing mainland economy may not be the best route to take for the faint of heart.

Of the two funds that own shares of companies listed outside of the Chinese stock exchanges — iShares MSCI China ETF and PowerShares Golden Dragon China ETF — PowerShares Golden Dragon and the companies it owns listed in the U.S. have fared better. Some, but not all, of that has to do with the extra risk with fluctuating foreign currency exchange rates. Listing on major U.S. exchanges has also helped moderate the roller-coaster movements that investing in an emerging economy can present.

For investors who want to bet on the future of the Chinese economy, there are plenty of options. There are more individual companies than ever available for trading for those of you who don’t mind the homework, and a myriad of ETFs can help you get broad exposure to the whole market. Whichever option you go with, be prepared for a roller-coaster ride as China’s economy continues to modernize.

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Investing / Trading

Whats up with the buffet buyback?

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First what’s a stock buyback?

A stock buyback is simply when a public traded company buys shares back from the open market.

It is common for businesses to buy back shares for several reasons

  • Help boost the value of their shares. This works because when there is less shares available it influences the price of that asset.
  • Boost earnings before and upcoming report.
  • Cause speculation on the value of their asset

In the past year it has been very common for companies to buy back shares. this is often helpful in rewarding investors.

Buffet knows something you dont!

Berkshire Hathaway is a company owned by Warren Buffett who is know for buying stake in companies he believes will grow in value with time. This time they arent buying shares of other companies but are investing in itself with approximately $1 billion worth of stock buybacks.

You may be wondering why Berkshire Hathaway is buying back shares? Well, after a decade long bull market in the USA coupled with increasing stock prices(potentially in bubble teritory now), Buffett thinks a buyback make sense because there is little percieved value anywhere else. The strategy must be working berkshire reported profits increased 351% to $18.5 billion this past year. Buffets style of value investing is known as one of the best in the industry and making Buffett one of the richest men in the world with a worth of about $90 billion.

Be like Warren buffet and start making valuebuys over on the Stash App, here is $5 for free to get started

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Investing / Trading

Euro to replace the dollar?

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there is a probability

The euro is currently 1/3 of global transaction volume, and some think its potentially possible that the Euro coud be placed to surpass the dollar in importance. The euro like the dollar is a fiat currency that is used for trade between european nations and their allies when convenient. With sanctions tarifs and general economic bullying becoming the norm for america and its dollar, some nations are choosing to look for ways to escape dollar hegemony.

It’s not likely to really happen

The euro is a strong currency but it has little chance of becoming the worlds reserve currency. It is more likely that folks will choose to move away from any financial institution that can basically starve your population with financial and trade sanctions. In my opinion cryptocurrency will find it’s way into the worlds economy so that users can escape the easily restricted fiat currencies. Value based in valuless debt notes is on its way out and this will probably be the segway into the next financial crises.

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ICO / Crypto

Can cryptocurrency survive a gobal financial crisis?

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Is cryptocurrency a hedge against economic downturns?

The answer to this question is quite controversial, some would say yes because this is what crypto was made for; while others would chime that crypto is unproven in a downturn and will need to survive its first one before we can feel at ease about its survivability. Much of your perception on whether bitcoin and cryptocurrency in general will survive aneconomic crisis, is based on where you stand about cryptocurrency in general. Today we will talk about the possible survivability of cryptocurency in a crisis.

Is Venezuela a test case

Right now in Aouth America there are several financial crises transpiring that may create possible examples of how crypto will fare in a financial storm. In venezuela reports are coing out that many people are choosing to use cryptocurrency to pay for life expenses. The national government under President Maduro have begun to implement their own state backed cryptocurrency called the petro. The Petro is an asset pegged to the price of a barrel of oil and the Venezuelan government hopes it will help them escape dollar tyrany. Hyperinflation has taken its toll on Venezuelans but many of them were informed enough to seek financial refuge with cryptocurrencies. This is a great example of how when value leaves fiat the holders will seek to run to other assets to store value; that exodus now has cryptocurrency as an outlet for the fleeing fiat users.

We may see a big example soon enough

Much of the world is currently on the precipice of a financial downturn and if america keeps behaving the way it has been then we will likely see a major crises emerge in the next 5 years or so. some analysts see a move away from the dollar as a potential catalyst whilst others proclaim that the trade war and student debt will push us into the downturn of this decade. Unlike those times prior, now cryptocurrency has created and outlet for those funds that “dissappear” from markets as the major stakeholders cash out. The financial bigwigs are likely going to enter the cryptospace as they will soon see it as a way to maintain some value in the crises they create.

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