Investing in China

As we know that the world is facing the economic crisis currently. One of the questions arises is which countries will be the first few countries to recover from the economic crisis. Many people would like to know so that they can invest in those countries for long term investment. According to the reference, China economy is among the top 10 world powers whose economy has expanded in recent months. This has been proven by its Gross Domestic Product which grew by more than 7.1 percent in the first half of the year. With its strong growing GDP, this has made it the first major country to emerge from the current global slump and it is poised to take over Japan as the world's second-largest economy perhaps by late this year. Besides that, the BRIC (Brazil, Russia, India, China) concept introduced by Goldman Sachs in 2001 again strongly suggested that investing in China is promising. According to Goldman Sachs, over the next 50 years, Brazil, Russia, India and China could become a much larger force in the world economy. If the expectation of Goldman Sachs is true, the future of investing in these 4 countries is bright.

However, another question arises. How can individual invest in other countries like China, India and others? There are many ways to invest in foreign countries. One of the ways to invest in those countries is through mutual fund. There are a lot of funds introduced to the market so that the investors can invest in other countries and these funds are professionally managed by the fund manager. If you are interested to invest in those funds, just contact any financial planners especially unit trust consultants for more information.

Although investing in China seems like a good opportunity, the investors should still be aware of the risks investing in the countries. For example, the exchange rate risk. In this example, we assume 2 RenMinBi (currency of China) can exchange for RM1. If RenMinBi appreciates and RM depreciates after certain periods of time, in this case we assume 2.5 RenMinBi can only exchange for RM1. Therefore, our profit might shrink or we might even face losses. There are other risks such as the rules and regulations that does not favor foreign investors, political risks, market risks and other risks that might affect our investment in foreign countries. There are even some economists who think the future of China is not promising.

If you read a lot in newspapers, then you can know there are many opinions from various parties. Thus, if you would like to invest in foreign countries, it is important for you to do some research before you make any investment.

Reference:
China economy growing again while US limps
http://biz.thestar.com.my/news/story.asp?file=/2009/7/26/business/20090726090400&sec=business