Thursday, December 30, 2004

China Revisited

I was wrong about the two China ETFs which I wrote last week - PowerShares Golden Dragon Halter USX China Portfolio (Dragon ETF) and the iShares FTSE/Xinhua China 25 Index Fund (iShare Xinhua ETF).

I read the Motley Fool article and I agree with what they said. The Dragon ETF is better compared to iShare XinHua ETF because:

1. It covers 38 stocks compared to 25 from Xinhua iShare.
2. It covers those China companies which are listed in US as ADRs. In my opinion, having listed in US means that the transparency and the reporting requirements are stricter.

You can read the Motley Fool article here .

Another news article caught my eyes. It goes as follows:

"Mr Jim Rogers, who co-founded the Quantum hedge fund in 1970 with Mr George Soros, says the trading fiasco that cost state-run China Aviation Oil Holding Co US$550 million (S$902 million) is an omen of tougher times ahead for Chinese companies and their investors.

"I can hardly wait," he said.

"There will be a hard landing in 2005 and I'm going to buy when that happens," says Mr Rogers, 62, a New York investor who manages about US$500 million in funds based on his Rogers International Commodity Index.

Make no mistake, he thinks there is a good buy from China, just that he would rather bottom fishing when it crashed. Maybe the valuations now are high. Could he be right? We shall see...

Wednesday, December 22, 2004

Intel Inside

Once "Intel Inside" was a popular advertising logo for computers makers, like Dell, Compaq and IBM. But things are quite different if you have Intel inside your portfolio.

It has not been doing well as the inventory is getting bigger. Not to mention a series of misteps like losing the 64-bit CPU chip game to AMD, at the moment. The only good news is that AMD is not able to capitalize on this - See Full Story

Tempted to sell Intel away. But Lehman analyst upgrade the stock today and it shot up 2%. He said stronger end-demand trends for the fourth quarter and better visibility into the first quarter.

What did he say again?

Sounds like a SELL to me. :)

Tuesday, December 21, 2004

BMC and Single Country ETF

No, I am not talking about the software company BMC.

I mean Brazil, Malaysia and China.

The Single-Country ETF have a good run-ups recently. Especially Brazil and Singapore for the past 3 months. I am a fan of Brazilian soccer, and new to their companies and businesses. But thier government-owned oil company Petrobras is no stranger to me.

Why is Brazil so hot? I have no idea. Their single-country ETF has gone up 26% in just 3 months. But my guess it is too high to go in now.

Malaysia stock market has gone up a fair bit recently (4% in the past 3 months). Many speculate that their currency Ringgit (RM) would be re-pegged from the 3.80 to US Dollar. It is dragged down by the weak US Dollar despite strong growth in exports. The property is picking up. I am tempted to act on the possible re-peg. So it seems logical to invest in their stocks market.

Still considering. (Hey, Time is Money! Don't Think Too Long!)

Investing in China has always been risky - the sustainability of its expansion, corporate governance of its firms, and integrity of its property rights. But those listed in HongKong Hang Seng or US stockmarkets (as ADRs) has better corporate governance. Are there any ETFs for China companies? Turned out that there are two:

1. iPower Shares Golden Dragon Halter USX China Portfolio (PGJ)
The PowerShares Golden Dragon Halter USX China Portfolio comprises U.S.-listed companies that derive most of their revenue from China. The fund's two largest holdings are PetroChina and China Mobile, which comprise 12% and 11.5% of the 38-stock portfolio. The ETF is rebalanced quarterly.

2. iShares FTSE/Xinhua China 25 (FXI)
This is a new ETF from State Street Global Advisors which has been introduced in October this year. It tracks 25 companies that trade on the Hong Kong Stock Exchange. The fund keeps nearly 60% of its assets in its top 10 holdings and a similar amount in just three sectors: energy, telecommunications, and industrial stocks.

Given the cheap expense ratio of 0.74%, FXI seems better. No wonder it has grown to over $409 million in assets since inception, and rose 29% on an annualized basis in the 12 months since end September.

Probably too high for me again. :(

In Commodities We Trust

Trying to search for a commodities index fund or ETF, but didn't manage to find one. The closest thing I have found is an ETF called (IGE), which mirrors Goldman Sachs Natural Resources Index. .

This ETF does not invest in the commodities, but the US companies in the commodities businesses. It consists of 75% oil and oil services. As I am long in Big Oil, I think it is a good proxy to include Oil and other commodities as well.