China is the second largest economy only behind the US. The Chinese stock markets have performed horribly in 2011, booking losses of +20% across their exchanges.
The overhang of a potential economic hard landing and investor distrust in a recent bout of corporate accounting scandals has punished the Chinese equities market.
China has finally switched gears and has embarked on easing monetary policy. They have a lot of ammunition after several rounds of tightening. While there is fear of a banking crisis and a housing bust, the government has amassed a 3 trillion dollar foreign exchange reserve war chest, mostly in US dollar denominated assets.
There could be some major upside as China has been oversold throughout 2011. The best and safest way to play China is through the iShares FTSE China 25 index Fund. (Sym: FXI). The ETF is comprised of big blue chip companies like Petro China and China Mobil. In fact, 40% of the weighting is in energy and communications—two extremely important, profitable and fast growing sectors in China.
FXI closed recently at 35.45…
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