Cashing in Double Digit Profits

We’re cashing in our gains once again at the China Stock Digest! Just last Tuesday we alerted you that we were raising our “Profit Protector” stop loss thresholds on all holdings in our model portfolio. With China on the rebound we wanted to protect gains as high 30 percent (or more) on some of our most recent purchases.

It looks like we made the right decision. During a broad market pullback three of our holdings hit their profit protector prices and were stopped out. We’re now delighted to report substantial gains for our subscribers on those stocks

·         A Chinese medical supply company delivered a gain to subscribers of 31 percent. That’s a very nice return for a two week investment!

·         A top Chinese pharmaceutical company also produced double digit gains up more than 15 percent for our subscribers.

·         One of our old reliable favorites a leading Chinese telecommunications company/ also delivered gains for us as usual returning almost 9 percent to China Stock Digest subscribers over a relatively short holding period of more than two months.

The fact that we took profits on these companies doesn’t indicate that we’re pessimistic about their prospects. All three are still excellent companies, as we believe are the remaining holdings in the China Stock Digest model portfolio. We will likely return to these firms if and when they become substantially undervalued once again.

We can’t urge our subscribers strongly enough to watch their email inboxes for portfolio changes like last week’s stop loss revisions. These are important bulletins that do more than recommend new investments. They also help protect subscribers against sudden losses in today’s highly volatile investing environment.

We do expect to make new investment recommendations in the near future as the Chinese economy continues its world-beating economic growth curve. We are happy to report that China’s economy delivered GDP growth at a 6.1% rate during the first quarter of 2009. By historical standards that’s a relatively low rate of expansion for China and many stocks had fallen back in previous months in anticipation of a relatively weak first quarter.

But relative to the rest of the world China continues to boom, even while the global financial crisis drives massive corporations like General Motors to the brink of bankruptcy.

Looking to the future, China’s Premier, Wen Jiabao is predicting a “bounce” in his country’s growth curve. In a recent Asian conference Premier Wen said the economy was “better than expected.” Wen cited pick-ups in investment, consumption and industrial output, as well as ample liquidity in the banking system. In addition to a huge stimulus package, China is flooding the system with money provided by the nation’s robust banking sector.

“China got its stimulus plan started months ahead of the U.S. and it’s really working,” Frank Newman, chairman of Shenzhen Development Bank told Bloomberg news recently. Newman, who served as a deputy secretary of the U.S. Treasury from 1994 to 1995 has a unique vantage point, reporting from Shenzhen, “We see a lot of fiscal stimulus in action because we are financing it.”

It’s too early to tell whether or not western industrial economies are bottoming out, or if we are experiencing a dead cat bounce on New York’s stock markets. But there’s little doubt that China is currently leading in the race for economic recovery.

Remember, these are fast-moving times so watch your email for breaking news and investment recommendations. This is Jim Trippon, editor of China Stock Digest staying committed to your profits in China.

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