Investors leveraged to Chinas should be careful
Published 11-DEC-2020 11:17 A.M.
|
2 minute read
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
The war of words and sanctions from China has escalated over the past week and this is causing concerns not only for industry in Australia but also for all Australians.
There is a consensus from the public that China is buying up Australia, so what are the facts?
According to the Department of Foreign Affairs and Trade, the foreign investment statistics indicate that China is sitting in ninth place with just 2 per cent of the total investment in Australia, while Hong Kong is in fifth place with 3.7 per cent.
The leading foreign investors in Australia include the US with 25.6 percent followed by the UK sitting at 17.8 per cent.
Despite China only ranking in ninth place, it does make strategic investments such as the acquisition of the milk processing company Bellamy’s, which it did last year and they continue to buy farmland around Australia.
The Chinese tended to buy more of our residential and commercial property after the government changed the foreign investment rules over a decade ago, causing our property markets to rise strongly, which has presented challenges for Australian families wanting to buy their own home.
While the government wound back these rules in recent years, resulting in fewer purchases by the Chinese, this may not last forever.
China is our biggest trading partner and there is no question that they need Australia to help their growth plans, so you have to wonder why they are going down the path they are at present, as they seem to be achieving the opposite of what they want.
Australians are fed up with the recent attacks from China and are asking our politicians to not just stand firm, but to strengthen laws around Chinese investment in Australia.
The Chinese have so far stayed away from implementing tariffs on iron ore, which is the one thing they need from Australia, and I do not believe this will change, which means our miners will be safe in the near future.
However, investors need to exercise caution if they own companies that heavily export to China, like Treasury Wines Estate. In fact, now is not the time to cherry pick stocks that have fallen heavily because of the tariffs in an attempt to grab a bargain, as this is very high risk.
Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online at www.wealthwithin.com.au
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.
