Page 25 - Aruba Today

BUSINESS A25
Of Mutual Interest:
As the rest of the world dumps Chinese stocks, some wade in
STAN CHOE
AP Business Writer
NEW YORK (AP) — While
the rest of the world scram-
bles to get out of the crum-
bling Chinese stock mar-
ket, a trickle of investors is
heading straight into the
wreckage.
Managers of Chinese stock
mutual funds have seen
huge drops many times
before, and they even find
things to like about them.
Instead of taking cover,
and preserving cash in
their portfolios, this time
these managers say they
are buying stocks of com-
panies set to take advan-
tage of how the Chinese
government is reshaping
the economy.
This most-recent plummet
has been even swifter and
sharper than past ones, but
managers of Chinese stock
funds say it’s also brought
down share prices enough
that they’ve been buy-
ing companies that they
thought were too expen-
sive just a few months ago.
“With a volatile market
like China, buy it when
the world hates it and sell
when no one’s worried,”
says Jim Oberweis, who
runs the Oberweis China
Opportunities fund. “That’s
worked pretty well over the
last 20 years in China, and
now sure seems to me like
a period where everyone
hates it.”
Only time will tell if he and
other Chinese stock fund
managers are right. They
could have made the
same argument after each
of the Chinese market’s
many sell-offs the last five
Facebook posts strong 4Q earnings report
MICHAEL LIEDTKE
Associated Press
SAN FRANCISCO (AP) —
Facebook is growing at an
exceptional pace as it en-
ters adolescence, propel-
ling it into a better position to $1.56 billion, even as
to challenge Google as
the Internet’s most power-
ful company.
Facebook’s fourth-quarter
report Wednesday pro-
vided the latest gauge of
the company’s impressive
strides. It marked the first
time that Facebook’s quar-
Investors monitor stock prices on an electronic display in a bro-
kerage house in Beijing. While the rest of the world scrambles
to get out of the crumbling Chinese stock market, a trickle of
investors is heading straight into the wreckage.
years, and it wouldn’t have
netted them much, if any-
thing.
The MSCI China index has
had seven declines of
at least 10 percent over
the last five years, includ-
ing the 19 percent tumble
since late October, which
itself followed a 34 percent
plunge from April into Sep-
tember by just weeks. After
all those ups and downs,
the MSCI China index has
lost 12 percent over the last
five years and is close to its
lowest level since the sum-
mer of 2009.
That’s why fund managers
say an investment in Chi-
nese stocks will require lots
of patience, maybe even
a decade. Oberweis’ fund,
for example, has lost 15.9
percent over the last year,
even though it’s been one
of the top performers in
its category. But over the
past 10 years, it’s returned
an annualized 8.9 percent,
better than the S&P 500’s
6.1 percent annual return.
terly revenue has surpassed
$5 billion — more than fad-
ing Internet star Yahoo
now generates in an entire
year. Facebook’s earnings
also more than doubled
the Menlo Park, California,
company invests heavily in
virtual reality, artificial intel- more mobile advertising
ligence, Internet access in
remote parts of the world
and a mobile ad network
for services other than its
own.
The performance lifted
(AP Photo/Mark Schiefelbein) as “Old China” and owns
China’s economy grew last
year at its slowest pace in a
quarter century, and econ-
omists expect it to slow
even more this year. Part of
that is by design. The Chi-
nese government is steer-
ing the economy toward
consumer spending and
away from exports and in-
vestments in infrastructure.
It hopes that will yield a
more sustainable, though
slower, rate of growth.
The government is also
pushing anti-corruption
measures and efforts to
make the country’s huge
state-owned banks and
telecom communications
companies more efficient.
The goal is to try to slow
growth without stopping it.
The worry is that the gov-
ernment will lose control
of the slowdown, and the
economy will fall hard.
“It’s painful at the moment,
and there could be some
more pain to come,” says
Jasmine Huang, manager
of the Columbia Greater
Facebook’s stock by
$11.37, or 12 percent, to
$105.82 in extended trad-
ing after the report came
out.
Although Google remains
three times larger by rev-
enue, Facebook has been
closing the gap as it sells
on its addictive social-net-
working app. And it’s just
beginning to mine revenue
from its trendy Instagram
service and a rapidly ex-
panding video library.q
Friday 29 January 2016
China fund. “Eventually it gun-shy about Chinese
will be good for the econ- stocks. “For five years now,
omy.” if you’ve made money,
Huang is avoiding com- it’s been hard to get, and
panies from what’s known you’ve lost it quickly in
these sell-offs,” he says.
no raw-material producers But the most recent drops
and few companies in the for Chinese stocks have
industrial and energy sec- brought them close to their
tors. But instead of hiding cheapest level since the
out in cash, she has been financial crisis, relative to
investing in “New China.” their earnings. The MSCI
She has been focusing on China index was recently
e-commerce companies, trading at about 8.5 times
where she expects rev- its expected earnings per
enue to grow even if the share over the next 12
overall economy stumbles months. That’s down from
because more Chinese a price-earnings ratio of
shoppers are going online. nearly 10 at the start of the
She also sees big growth year and approaching the
for health care companies. 6.8 ratio of 2008.
They make up only about 2 Mattock, like Huang, has
percent of the MSCI China steered his fund toward
index, and she says they stocks that he sees profiting
could grow to become from China’s shift toward
the 10 or 20 percent of the consumer spending. His
market that health care top holdings at the start of
represents in developed the year included Tencent,
markets. which operates the popu-
Andrew Mattock, lead lar WeChat social media
manager at the Matthews service, and JD.com, one
China fund, understands of China’s largest e-com-
if investors are feeling merce sites.q