China stocks did not perform very well in SGX for the previous years. I hold a couple of them which up till now seen its value depreciate up to 30% in value as compared to the price i bought it for.
My uncle, who is a CFO of an SME company told me that China companies generally have two different types of accounting standards, one for the public's view and the other one for their own management which was not shown to the public. Because of the lack of trust for china companies, many of the investors prefer to stay away from them.
However, i ignored the negative sentiments for them and went in to buy a few of the china stocks, hoping that they will be part of the China's 10 year growth plan, and appreciate in value in future.
These are the few stocks that i own namely Midas, which business is providing steel related products for the railway sector. Another stock i own is Hu An Cable, which deal with cable products etc electrical wires.
I believe that these two companies are well positioned to tap the expansion plans from the chinese government. Both Midas and Hu An had been constantly winning contracts from the government to build railway trains, extend electric cables along the china provinces.
Below is a news that China had started its expansion plans.
Wang, J (2012) says, "China approved plans to build 2,018 kilometers (1,254 miles) of roads, spurring the biggest stock- market rally in almost eight months on signs the government is stepping up stimulus efforts to revive economic growth.
The government also backed nine sewage-treatment plants, five port and warehouse projects, and two waterway upgrades, according to statements on the website of the National Development and Reform Commission yesterday. No investment amounts were given."
Midas and Hu An Cable went up slightly today. But in the long run, it is still uncertain whether investors will start regaining confidence on chinese stocks. But i am sure that the contracts they won will contribute positively to their revenue at least by end of 2013.
Reference List
Jasmine Wang 2012, China’s Roads-to-Subways Construction Spurs Stocks Rally, viewed 7 September 2012
< http://www.bloomberg.com/news/2012-09-06/china-approves-plan-to-build-new-roads-to-boost-economy.html>
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