View from the Observation Deck

1. We are often asked if "now" is an opportune time to invest in Chinese equities. The answer is probably yes if the investor has a long-term horizon.
2. China's Shanghai Composite Index has substantially underperformed most major markets since the end of the last bear market on 3/9/09. That may indicate its own citizens aren't bullish.
3. Most U.S. investors seeking exposure to Chinese equities invest their capital via Hong Kong (Hang Seng Index), which has performed much better.
4. Investors liquidated a net $769 million from China Region funds through the first 10 months of 2012, while Diversified Pacific/Asia funds reported net inflows totaling $250 million. (Morningstar)
5. While investors have cooled on Chinese equities, China's economy is still the second biggest after the U.S. economy and growing at annualized rate of 7.0% or better.
6. The chart shows the surge in China's foreign currency reserves garnered from its trade surpluses. Its reserves first cracked the trillion dollar mark (USD) in 2006 and have since grown to nearly $3.3 trillion.
7. That represents a lot of buying power. In other words, investors should take note of the powerful consumption engine China is becoming. So consider investing where China shops.
8. As of 2010, China's top trading partners with respect to imports were the following: Japan, South Korea, Taiwan, U.S., Germany, Australia, Malaysia and Brazil. (The U.S.-China Business Council)