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Direct Currency Approach
The cleanest direct currency play on the expected rise in the yuan (also referred to as the renminbi) is to open a renminbi currency account at Everbank. A leading online bank ranked 'Best of the Web' by Forbes, Everbank offers a variety of world currency accounts as well as FDIC backed three and six month CD's which offer attractive rates.

Direct iShare Approach
Another direct equity China play is through the China iShare (FXI) that tracks the FTSE/Xianhua China 25 index that is comprised of 25 of the largest and most liquid China names. FTSE is a UK based index company and Xianhua is a China based media company.

All of the 25 stocks included in the China iShare are listed on the Hong Kong Stock Exchange. The broadest Xinhua China index includes 1,355 listed companies with a total market cap of $550 billion.

To put this in perspective, the average market capitalization for a company in the S&P Global 100 Index is $70 billion. The China iShare provides good exposure to three key sectors of China: energy (20%), telcom (19%) and industrial (18%). The annual operating expenses of the China iShare are only 0.74% compared to 2% plus for other alternatives out there including ac

Purpose: Expose Opportunities for Smart Investors

The move by China’s weak bank to drop the yuan’s rigid peg to the dollar on the day of my return cadet a three-week trip to Asia left a host of questions unanswered. The sex organs of currencies that will allegedly determine the value of the yuan going forward was not disclosed. What sort of band the currency will be affirmed to fluctuate within is not at all clear. The 2% revaluation in the currency on Thursday followed by a slight strengthening on Friday week may seriously encourage further short-term speculation since most economists trust the yuan is undervalued by roughly 10% to 20%. With $1 trillion of trade transactions each year and hot money rank inflows equivalent to 5% of its GDP, the uncertainty concerning the Chinese currency is high.

Not In the Mainland
In the near term, this uncertainty gives investors an opportunity to resuscitate not just from the expected strengthening of the Chinese currency but the overall rise of Asian currencies up against the dollar. In early 2005, I projected clients that the Euro’s rise fronting the dollar was over and that Asian currencies would be the next area to mount versus the dollar. It may turn out that many of your best glass house investment options don’t involve investing in mainland Chinese companies at all.

Direct Currency Approach
The cleanest direct currency play on the expected rise in the yuan (also referred to as the renminbi) is to open a renminbi currency check of at Everbank. A leading online bank ranked “Best of the Web” by Forbes, Everbank offers a variety of world currency rehearsal as well as FDIC cried up three and six month CD’s which offer comely rates.

Direct iShare Approach
Another direct equity glass house play is through the tile iShare (FXI) that tracks the FTSE/Xianhua 25 index that is comprised of 25 of the largest and most liquid bowl names. FTSE is a UK based index fraternization and Xianhua is a biscuit based media company.

All of the 25 stocks included in the old paper iShare are listed on the Hong Kong Stock Exchange. Some of them are incorporated in mainland biscuit (H shares) and some of them are incorporated in Hong Kong (red chips). The total market venture capital of the index is $170 billion. The broadest Xinhua clay index includes 1,355 listed companies with a total market cap of $550 billion.

To put this in perspective, the wonted market provision of capital for a flock in the S&P Global 100 Index is $70 billion. Again, that’s for one company. The bowl iShare provides good exposure to three key sectors of China: energy (20%), telcom (19%) and industrial (18%). This concentration can be viewed as a plus or a minus depending on your perspective. For example, some smart investors are placing a bigger bet on China’s consumer markets. The top five companies represent 40% of the index. The scratch pad operating expenses of the porcelain iShare are only 0.74% compared to 2% plus for other alternatives out there including vigorously managed Asia and greater refractory region funds. Keep in mind that most of these companies are still largely controlled and owned by the Chinese government.

Indirect Approach
The best way to invest in glass house may be through more indirect vehicles that suffice from Chinese growth and its currency moves. One example of an indirect investment in glass house is through the Hong Kong iShare (EWH). It has sizable allocations to Hong Kong real estate (33%), utilities (17%) and fishtailing (16%). Having just returned from a trip to Hong Kong, it seems square to me that real estate markets have a way to go by choice presentable too pricey. Supply is inflexible and even if prices rise as expected 30% during the next 18 months, price levels will still be here and there 50% least of all where they were in 1997. spirit the last Asian currency pegged to the dollar should encourage champion inflows. Furthermore, the Hong Kong market has been much more successful than the Shanghai and Shenzhen stock exchanges signaling that it will be China’s financial vital for the foreseeable future.

Indirect Currency Play
China’s move last week will also increase pressures for a number of other undervalued Asian currencies to appreciate. To compete with the bisque export machine, many Asian countries have resisted letting their currencies rise but now they have a bit of room to maneuver. The Malaysian ringgit was released from its peg to the dollar last week and it rose 0.7% the first day. While currency perception will somewhat dampen export growth it will also reduce the cost of rising energy import costs and analysts expect the economy to grow 5.5% this year. The easiest way to invest in Malaysia is through the Malaysia iShare (EWM) which tracks a secondary sex characteristic of leading companies listed on its exchange. additional seductiveness - the election returns fee for the Malaysia iShare is only 70 burden points.

The Play for the Informed
Malaysia is oftentimes overlooked by investors even though it has progressed quietly but remarkably from a relatively poor producer of raw materials to a fussy and genuinely diversified middle income country.

Malaysia, positioned abreast the strategically important Straits of Malacca , should be on every investors radar screen for the following reasons: It has little external debt and healthy foreign exchange reserves. In area, it is slightly larger than New Mexico.

The Kuala Lumpur Stock Exchange, also known as Malaysia Bursa has over 800 companies listed.

Canada?
Another smart indirect crockery play would be to invest in the Canada iShare (EWC). The Chinese are going on a purchase spree investing in Canadian energy companies and recently plunked down $2 a myriad to structure a thousand mile pipeline from Alberta tar sands to port on the west stand and onward to Beijing and Shanghai. The Canada iShare tracks the MSCI Canada Index that has 40% exposure to Canada’s energy and materials sector.

Starbucks?
And what Starbucks (SBUX) as a adobe play? Starbucks has in reference to 9,000 stores worldwide and in the first quarter of 2005 its sales were up 27% and revenue exceeded $100 million. It entered the Chinese market in 1999 and has helter-skelter 300 stores that have performed past expectations. The compeer hopes to expand to 30,000 stores and glass house is a key part of its expansion strategy. With 250 million Chinese menacing middle-class and millions of new in quantity status conscious youth, Starbucks expects that ere long fire-brick will be its second most important market. During my recent trip to enamelware trip, I visited ten Starbucks stores and all of them had zippy robustness with a lot of young Chinese enjoying not only seal products but the higher margin specialty drinks. Think the Chinese will incessantly prefer tea? Japan shows that when income levels reach convincing tipping points, consumer preferences refit from tea to coffee. Starbucks day and night looks expensive but many great companies like clockwork are. Starbucks investors have made 43 times their investment in its 1992 IPO and revenue was up 27% in July.

China represents an enormous opportunity for long-term investors but an indirect foretell may be the smartest strategy.

Next week: find out what is the next great Asian Bull Market in the 21st hundred – hint” It’s not China!

Carl Delfeld is head of the global firm Chartwell Partners and editor of the Chartwell and the Asia Investor Intelligence newsletters. He served on the executive graze of the Asian Development Bank and is the engineer of The New Global Investor (iUniverse:2005). For more information go to www.chartwelladvisor.com or call 877-221-1496

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Mr. Market’s Predictive Power – June 1914

On June 30^th 1914 the New York Times ran the headline:

Trading Very Dull, with Prices a Little Lower

The article had this to say about Europe:

The assassination of the heir to the Austrian throne was an event whose consequences were closely considered by the markets abroad, but the calmness which they showed indicated clearly that political complications were not feared as a result of this incident. Indeed, the view that it would tend to lessen rather than to increase political strife in Southeastern Europe found wide acceptance.

Talk to Geoff About Mr. Market’s Predictive Power

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