Investing In China Stocks, Options & Indexes
PHILADELPHIA STOCK EXCHANGE
Why & How • China’s GDP to grow 8% annually throughout 2010. Are we missing the boat? • Is the door open? Can we participate in this growth? • Yes, access and choices exist!!! PHILADELPHIA STOCK EXCHANGE
Direct & Indirect Examples UTSI SOHU CHU CHINA SINA NTES CYD NTE SNP CHL PTR DFCT CHA ACH FHKCX SBUX MOT WMT Dell IBM YUM
UTSTARCOM INC. SOHU.COM INC. CHINA INICOM CDC CORP SINA CORP NETEASE.COM INC China Yuchai Intl Nam Tai Electronics China Petro Chem China Mobile Petrochina Co DF China Technology China Telecom Aluminum Corp China Fidelity China Region Starbucks Motorola Wal mart Dell Computer IBM YUM Brands
Know Any Others? Other Industries? Other Countries?
PHILADELPHIA STOCK EXCHANGE
Index, ETFs, Fund Examples •Shanghai Composite Index •China ADR Index •Hong Kong iShares •FTSE/Xinhua China 25 Fund •Power Shares Golden Dragon USX Fund •Taiwan Greater China Fund •Greater China Fund, Inc. •China Fund
Know any others?
•JF China Region Fund •iShares MSCI Hong Kong Index (EWH) •iShares MSCI Taiwan Index (EWT) PHILADELPHIA STOCK EXCHANGE
Does It Make Sense? FXI
MOT
CHL
ACH
EWH
JFC
PHILADELPHIA STOCK EXCHANGE
Food For Thought? • 80% of mutual funds under perform the S&P 500. How about the (FXI) FTSE/Xinhua Index Fund? • What’s your: Objective? Benchmark? Target? • Buy an ETF or index on the China market to match or beat 80% of money managers? • Is this acceptable? Can you beat this? PHILADELPHIA STOCK EXCHANGE
Outperform with Options? Options are available on many ETFs, Indexes and Stocks
• • • • • • •
Example: FTSE/Xinhua (FXI) Buy FXI, sell calls against (income) Buy FXI, buy atm or itm put (partial or full hedge) Buy FXI, sell call, buy put (collar hedge) Sell put to buy FXI, write calls after? Buy FXI call only, do a spread, etc. Many choices exist! Many lower the cost of entry and increase income and lower risk PHILADELPHIA STOCK EXCHANGE
Hypothetical On FTSE/XINHUA (FXI) • FXI is Trading at 58.83. Support 57.80, Resistance at 62 • Market view: Short term neutral, long term bullish • Sell 10 (cash secured) NOV 59 puts at .75 • Objective: Assignment (lower cost basis) • If FXI is above 59: Keep the premium sold, go long, repeat strategy? • If stock below 59 and assignment occurs : Your long 1000 shares of FXI at a cost basis of 58.25 •
How about this? Just buy FXI and sell DEC 62 calls off the bat?
PHILADELPHIA STOCK EXCHANGE
In Summary • Multiple strategies and opportunities exist! • Fund, Index, ETF, Stock, ADR, Options, other? • Same principals that go into US equity market strategies exist for investing in China. PHILADELPHIA STOCK EXCHANGE