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Cash in on China

07/29/2005 12:00 am EST


Neil George

Editor, Profitable Investing

"CNOOC's bid to acquire Unocal has set off another round of complaints over the China threat," says Neil George, who is not only a savvy domestic analyst but one with firsthand experience working in China. "We can cave to the rhetoric or cash in China’s expansion."

"Investing in China is about buying into companies and markets that are cashing in on the long-haul expansion in this stirring economic titan. That is why our Growth Portfolio holds a big chunk of holdings that are well invested and already cashing in on China. Archer Daniels Midland (ADM NYSE) keeps selling tons of raw and processed ag products in China. And by working with that nation’s regulators, it continues to expand China’s demand for ADM’s genetically modified organism (GMO) products, from beans to grains. ADM is a buy up to 25. The firm is profiting right along with its partner Monsanto (MON NYSE) in the GMO markets. Monsanto continues to develop seed and other related products that are addressing the local needs of Chinese growers and processors, including its newer engineered rice products. This is yet one in a litany of advantages that warrants buying Monsanto up to 75.

"Others on our list are also continuing to get it right for the long haul in selling more stuff in China. News Corp. (NWS NYSE), based right here in the US, isn’t just one of the largest media companies in Asia. It’s managed, through years of work with the Chinese government, to become one of the biggest non-Asian companies in broadcast media in China. The company saw China’s demand in the making decades ago and made its investment early. The breadth and recognition of the Chinese divisions alone are reason to continue to buy News Corp up to 29.

"And selling more stuff to China isn’t just limited to US-based companies. China’s neighbor Korea has been a major source of profits for us during the last several years and that will only increase in the years to come. It’s led by Samsung Electronics, which continues to successfully sell countless components and finished goods to an eager consumer economy in China. With China being a source of low-priced skilled labor, Samsung is also able to source some of its goods both for Chinese and global consumers right in the mainland. Samsung Electronics is a prime play on China and a buy up to 530. And Samsung is just the beginning. From Posco’s iron and steel mills, to cars and ships from the likes of the Hyundai companies, Korea is an eager partner in China’s success. This is why we’re still enthusiastic about all of the companies embedded in the Korea Fund (KF NYSE), which is a buy and hold up to 30."

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