How to buy into China through UK companies

By Author Charlie Gibson Mar 07, 2006

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Although private individuals can’t directly buy Chinese shares, there are at least six indirect ways to gain exposure to the “Great Second Chinese Industrial Revolution”, says David Stevenson in the Investors Chronicle.

The first is “through a big institution buying ‘B’ class shares in a Chinese company” or by buying Hong Kong-listed ‘H’ shares. The second is to invest in a satellite market such as South Korea, Taiwan and Malaysia, which should benefit from Chinese growth. The third is to choose from the “large number of Nasdaq and New York Stock Exchange listed Chinese shares”.

The fourth is to select a pooled investment, such as a low-cost index tracker (for example, iShares FTSE/Xinhua China 25 Index ETF) or specialist investment trust (for example, Barings Greater China Fund). The fifth is to buy into any of the “major” Chinese companies that are listed on the London market via global depository receipts (for example, Sinopac, Datang Power, Air China, Zhejiang Expressway and Jianxi Copper). And the sixth option is to invest in UK companies that have exposure to areas of the Chinese consumer market that have already “taken off”.

Two companies that fit into the sixth category are EBT Mobile China (AIM: EBT, 27p) – a retailer known as the “Carphone Warehouse of China” – and MonsterMob (MOB, 368p), a specialist supplier of ring tones, multimedia messaging and Java-based games to the Chinese mobile phone market. The market is forecast to grow from 340 million subscribers currently to around 600 million by the end of this decade.  Four recent acquisitions have led analysts to predict an almost-doubling in MonsterMob’s net profits this year to £19m, or 26p per share, putting the shares on a rating of just 14.6 times current year earnings – not bad for a company growing rapidly in one of the world’s most exciting marketplaces.

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Published in Tips & advice | More articles by Charlie Gibson

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