Want to invest in China? The Shanghai stock market index (SSE) has returned an embarrassing -22% in the last 5 years. A buy and hold strategy would have lost money. Doh! The Chinese stock market is too mainstream anyway. So I’ve developed a better strategy to invest in the world’s second largest economy. My plan is a bit risky, and you’ve probably never heard of it before, but so far it’s proving to be very effective. If anyone else had held the same investments as me, their net worth would have also increased by more than $100,000 over the last 12 months 😀 See my fiscal updates category for details.
To successfully invest in China we have to think like hipsters, and buy stuff before it becomes cool 😉 So here is my strategy. Invest directly in China’s economy by purchasing financial assets OUTSIDE of China that the wealthy Chinese are also buying. Let’s study what the rich in China are investing in so we can predict with relative certainty how the next cohort of new Chinese millionaires will use their money as well. Then we just need to invest before they do.
So what are Chinese millionaires buying?
Generally speaking Chinese investors love real estate. An investment bank recently reported that the richest 1% in China owns about one third of all residential properties in the country. Holy hamburgers! Such property hogs 😯 They are so enamored with housing that it’s no surprise Chinese investors are looking elsewhere in the world to satisfy their real estate addiction 😕 The top three countries that are attracting Chinese investors are the U.S., Australia, and Canada.
Real estate agents do not have to disclose their client’s information to any global anti-money laundering organization. So foreign Chinese buyers can land with suitcases full of cash and get real estate deals done clean and fast.
China’s outbound real estate investment jumped by 25% in the first quarter of this year. Great Scott! The top cities to attract Chinese money so far in 2014 have been Chicago ($464 million), London ($348 million), Sydney ($243 million), Melbourne ($150 million), Los Angeles ($144 million) and San Francisco ($72 million), according to real estate firm Jones Lang LaSalle. Chinese buyers spent $30 Billion on overseas real estate in 2012. About $9 Billion of that went to the U.S. and a lot of that was in California.
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