The sound of the thundering pack of China bears in the media over the last week is even louder than the usual shrill.
China is bustling
We know there are credit problems (always in the headlines), we know there is market reform needed that will take years not months to enact (headlines post-Plenum), we know there is shadow banking that needs to come into the light (yesterday’s headlines), but all of this is missing a fantastic rally in Chinese listed ADRs that US investors can trade and are exposed to parts of the “old economy” that are working (energy, casinos), and parts of the “new economy” that are delivering on real growth expectations (ecommerce, internet, technology).
Today headlines from Chinese ADR land include: Melco Crown (MPEL, quote) hitting all-time high on Morgan Stanley upgrade and recent traffic numbers from Macau.
Yingli (YGE, quote) is up another 10% today and 45% in 5 days as they say they will be profitable for the first time in 3 years in 2Q.
Chinese solar makers are recovering from a 2yr slump in demand as real installation megawatt growth is taking place and there is some sanity on the production side.
See Trina Solar (TSL, quote) as well which has returned to near 52 week highs after 3Q knockdown on the same trends.
YouKu (YOKU, quote), “China’s YouTube” is + 15% YTD as increased video downloads are driving monetization efforts. Renren(RENN, quote), a social networking and gaming site is +10%, while Sina(SINA, quote) “China’s Twitter” is +5% and outperforming its American torch-bearer this year.
Sina has a valuation that is much more attractive to Twitter and offers a more diversified revenue model.
So while pundits get lost in the persistent and easy attacks on China, investors should do their best to listen with a noise filter on and find companies who are truly growing and truly exposed to massive changes that are taking place in the Chinese economy and consumption story.