ETF Expert

Few people seem to argue against capturing investment gains related to China’s phenomenal ascent as an economic superpower. The massive construction related to the hosting of the 2008 Olympics means that materials companies will continue to prosper. Development in global real estate, as well as new roads and transportation corridors are booming as well.

Having lived in Hong Kong and Taiwan for several years of my life, I am not surprised at all by China’s up-n-coming wealth and consumption. In fact, the Chinese are consuming more like Americans everyday. Casinos, cell phones, jewelry, eating out – what don’t the Chinese like to do with their money?

Yet at the present time, there are 2 exceptionally volatile ETFs for the investor looking to pursue some part of the Chinese makeover. The iShares FTSE/Xinhua China25 Index (FXI) and PowerShares Golden Dragon Halter USX China (PGJ) fluctuate on a level that makes the 1999 Nasdaq look tame.

In terms of risk-reward relationships, is there a better way to profit from a transformation on the Chinese mainland? I think there are two ETF choices that may better suit investor risk-adjusted needs. Australia has a thriving economy all its own… and one might choose to invest in the iShares MCSI Australia Index (EWA) on its own merits. Yet few can deny that it is one of the largest providers of precious and industrial metals as well as materials, making EWA a sound “good neighbor” investment on China’s fortunes.

While Hong Kong may actually belong to the Chinese mainland, it is still operating like the former industrialized colony of Great Britain. And the well-established companies that list on the Hong Kong exchange, as well as do business in China, make the iShares MSCI Hong Kong (EWH) quite attractive. Holdings are as diverse as utilities, banks, telecom and real estate development.

Disclosure statement: Some of Pacific Park’s investment clients may hold positions in any of the investments mentioned above.