Email of the day (1)
"Since it seems that raising interest rates and reserve requirements are not checking inflation in China, it would seem logical that the Chinese will allow the Yuan to continue to appreciate. Possibly, this is a faulty assumption, but from an investment standpoint, what would be different ways of taking advantage of this, including possible investments in U.S.
companies doing a large share of their business in China or other Asian countries who may gain an advantage in exporting from a rise in Yuan valuation?"
David Fuller's view Interesting question. First, however, while China does have an inflation problem, I would not assume that monetary measures taken to date have had no affect, particularly in terms of property prices. Food inflation is at least partially a global problem of supply shortages for which tighter monetary policy would be a crude form of restraint.
We think the yuan will appreciate further but to date this has been mainly against the USD. China remains a Fullermoney secular theme and today we particularly like consumer sectors, including healthcare. We also like Chinese banks at today's valuations. There are also a growing number of Chinese technology companies, led by the search engine Baidu.com Inc, listed in the USA. This is best purchased following periodic reactions towards the MA. One can cherry pick among the better performing charts for these shares, or participate via investment trusts (closed-end funds) and other funds.
US and other leading western multinational companies leveraged to China-led growth also remain a Fullermoney secular theme.