How To Play A "China Bubble"
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Date updated:08-13-2007

Being that China still protects the yuan from appreciating to some extent, how will they protect it from appreciating against the USD if the Fed cuts interest rates? Will China cut rates as well? If so, will this eventually lead to a "China bubble"?

Letting my imagination wonder (big time), here's how I'd play it...


By: Matthew

symbol name last price % change open
  • +
  • PTR
    Petrochina Co Ltd
  • $118.28
  • 0.00%
  • $117.89

Play: PetroChina (PTR) Reason: A "China Bubble" means massive consumption of natural resources - even more massive than we are seeing currently. Regardless of whether or not China puts caps on gas prices, PTR's profit - and its stock - would surge significantly...

People owning PTR also tend to own: CAMCEOCLBCOPDODRYSFCX

TheStreet.com Rating: C- What is this?

  • +
  • IAU
    Ishares Comex Gol
  • $96.48
  • 0.00%
  • $96.24

Play: iShares Comex Gold Trust (IAU) Reason: Similar to above, in terms of MASSIVE natural resource consumption. In addition, the liquidity boom that would likely come from a China/US rate cut (my thinking is that other countries would also increase their money supplies, due to not wanting to be at a "competitive disadvantage") would increase inflation fears - as well as inflation - tremendously. Thus, hello shiny yellow stuff...

People owning IAU also tend to own: BTEINTCIOOIVVRNPCXTLTVFIFX

TheStreet.com Rating: No Rating What is this?

  • +
  • EEM
    Ishares Msci E.m.
  • $34.14
  • 0.00%
  • $34.23

Play: iShares MSCI Emerging Markets Index (EEM) Reason: A simultaneous China/US rate cut would spur massive increases in risk-appetite. EEM would be a beneficiary of this, as would...

People owning EEM also tend to own: AAPLBACBBYBGTCSCOCTSHDEO

TheStreet.com Rating: No Rating What is this?

  • +
  • FXI
    Ishares Tr Ftse I
  • $38.68
  • -2.15%
  • $38.56

Play: iShares FTSE/Xinhua China 25 Index (FXI) Reason: This thing really moves whenever speculation increases. I'd be here before I'd be in a mutual fund... ... Hey, China wouldn't be the only beneficiary of this. Who's the other great long-term growth story, along with China?...

People owning FXI also tend to own: ACIAINVANRAPCBBDBTUCHK

TheStreet.com Rating: No Rating What is this?

  • +
  • INP
    Ipath Etns Linked
  • $52.14
  • 0.00%
  • $51.71

Play: iPath MSCI India Index ETN (INP) Reason: GIVE ME MORE RISK!!! Especially when that risk takes the form of a terrific long-term growth play, which India most definately is... Plus, their financial markets are much more sophisticated than China's, and thust might actually run more than China's in the case of a "China Bubble".

People owning INP also tend to own: BPTCOHDBAEVEPEWDEWMEWT

TheStreet.com Rating: No Rating What is this?

  • +
  • RIO
    Companhia Vale Do
  • $17.42
  • 0.00%
  • $16.55

Play: CVRD (RIO) Reason: Who does China fight with about iron-ore prices? RIO! The fact that RIO already has so much hot money seeming to pour into it only further supports this thesis...

People owning RIO also tend to own: CMTSORCLSNYAMRCBTCNQ

TheStreet.com Rating: C What is this?

  • +
  • PRASX
    T. Rowe Price New
  • $12.54
  • -1.03%
  • $N/A

Play: T. Rowe Price New Asia, Ex-Japan (PRASX) Reason: China and India wouldn't be the only two countries benefitting from this boom in the Asian region. As recent studies have pointed out, China is investing heavily in other Asian countries. Thus, everyone in the Asian region should benefit from the "China Bubble".

People owning PRASX also tend to own: ABRAEOCSCOENPARGFXCYTHABDX

TheStreet.com Rating: No Rating What is this?

  • +
  • CAT
    Caterpillar Inc.
  • $37.45
  • 0.00%
  • $37.51

Play: Caterpillar (CAT) Reason: The equipment behind the boom...

People owning CAT also tend to own: AAALLAPCBABACCCBH

TheStreet.com Rating: C What is this?

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Start Price

Return Value

Start Date

PTR 125.92 -6.07% May 7th
IAU 68.26 +41.34% May 7th
EEM 124.73 -72.63% May 7th
FXI 110.20 -64.90% May 7th
INP 57.42 -9.20% May 7th
RIO 43.88 -60.30% May 7th
PRASX 15.90 -21.13% May 7th
CAT 73.10 -48.77% May 7th
JOYG 52.22 -31.83% May 7th
GWR 27.21 +14.52% May 7th
BHP 51.63 +16.37% May 7th
FDX 109.50 -47.35% May 7th
SLB 74.61 -20.68% May 7th
HNP 41.05 -32.57% May 7th
SNP 89.99 -12.09% May 7th
CEO 89.26 +58.93% May 7th

Average return:

-18.52%

Success rate:

25%

Tracking Started: 05-07-2007

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