How to invest for the second half of 2010

In the most recent Barron's Roundtable conference, Marc Faber indicated that the stock correction was not done. He said that the market would only bottom in October/ November, and the rally would resume from a substantially lower level. He sees the market being moderately lower at end of the year from today, and a bear market next year. He also recommended shorting the Aussie dollar as a way of playing the slowdown in China. You can find the article here.

My own take on investing my money now

I am basically of the belief that this is not exactly the best time to invest in the local stock market. The STI has surged 100% from March 2009, but has only corrected about 12.8% from the top. I am expecting more to come. China is a totally different story. It made a bottom in Oct 2008 and peaked last July. It has since corrected
25%. The charts of Shanghai Index paints an increasingly attractive picture. It is currently sitting on the 50% Fibo retracement from peak to trough. Monthly and weekly stochastics are oversold. But I will not be staking everything on this one. Probably, divide my purchase into 2 or 3 parts.

Shares to look at

Financial
China Construction Bank
China Life Insurance
Industrial & Commercial Bank

Energy
China Shenhua Energy
CNOOC
Fushan
Petrochina

Resources
South Gobi
Yanzhou

Industrials
Denway

Property
Evergrande
Henderson
Hopson
Shimao
SOHO

How to invest in China

Ways to invest in China

1. Unit Trust

Not my favoured channel since it involves high mangement fees.

2. ETF

There is one ETF listed on SGX, but it requires a huge capital outlay (cash). Not for people with limited cash.

3. Individual stocks.

Difficult to invest in individual stocks in China.

4. CFDs

My preferred route since I can also enjoy leverage, and exposure to a wide range of stock counters in China. I am using CMC.

Should we buy China shares now?

The previous article puts up a case of looking at China.

In this article, Guppy argues why the Shanghai index will bottom soon. But, it is also his opinion that markets in the West have not bottomed yet, and it is a good time to book profits in those markets.

China's market preparing for a rebound

Despite the lacklustre performance of the world stock markets, the China stock markets are showing signs of revival. Just last month, Chinese shares began beating the MSCI Emerging Markets and Asia ex-Japan indexes. Is it time to invest in China again?

Is there more downside to come?

According to this article, the probability of the Dow sliding, when it has already lost 14.4%, increases to 25 out of 32. Only 7 instances in the past did the Dow stop short of 20%. Currently, the Dow is already down by 14.4%. Chances are, it will continue to go down further.

Read on...