China's $586 billion stimulus package announced today

Today China announced a $586 billion spending package to boost domestic demand while vowing to carry out "moderately easy monetary policies." China's Cabinet has approved a plan to invest $586 billion on infrastructure and social welfare by the end of 2010. They also say they will adopt an "active" fiscal policy and will offer tax help of 120 billion yuan to enterprises.



Key Questions/Points:
1) This dwarfs the $150 billion amount the U.S. spent in February to stimulate the economy.

2) Where will the Chinese get the $$$$? That question alone will cause a ripple effect as people will anticipate that they will be buying fewer U.S. treasury bonds and take more of their currency reserves back home with them to spend on their local economy. This might hurt U.S. stocks/bonds further and cause the U.S. stock market to pull back.

3) This should boost Chinese-based companies that do the bulk of their business in China and sell primarily into their economy/market. Remember 50% of their economy is export related.

Dan Ross
http://www.BetterBizIdeas.com

Great Article re: China and their growth in the next century

Bill Mann, of the Motley Fool, thinks Chinese stocks are priced ridiculously cheap right now.

http://www.fool.com/investing/international/2008/11/07/why-i-believe-in-the-chinese-miracle.aspx?source=ihprlklcb0000002


Dan Ross
http://www.BetterBizIdeas.com

The best way to invest in China?

Interesting take on how to play the growth of the Chinese economy. I think it is a pretty sound strategy. Tough to gauge everyone's EPS though right now. Everything I keep seeing right now says OPEC is cutting production, which will BOOST barrel prices and cause oil to go back up at some point.

The real question is "when will demand destruction end?"



Dan Ross
http://www.BetterBizIdeas.com

Small Cap Returns in August

From http://www.smallcapinvestor.com/

"Small-cap stocks in China posted double-digit losses on average during August, while small caps in India were virtually unchanged in the month through Aug. 25, according to a Press Trust of India report that cited data from Citigroup Global. For the region as a whole, 80% of all Asian stocks posted negative returns, with a median loss of 8.1%."

I'll follow that up by saying I found MANY, MANY chinese stocks that were down 40%-60%. I have noticed quite a few chinese small cap stocks that were posting 100% - 200% growth rates (some organic growth....others through acquisition) slowing their growth rates to 10%-30%. As consolidation in their economy & overall economy are slowing many investors are growing wary of chinese small cap stocks.

I still think there are a TON of good stocks to be found and then traded from time to time. Some should be held for the long-term. I'll be posting a listing of some of interesting finds I have come across in the next few weeks.

Dan Ross
http://www.betterbizbooks.com/