3 Reasons Why China Stocks Still Have Plenty of Room to Grow

Load Up on China Stocks
Before the Year-End Rally

If you haven’t been investing in China stocks this year, you’ve been missing out. It has, by far, been the fastest-growing economy in the world
and is now on track to report more than 8% economic growth in 2009.

This economic strength has undoubtedly supported China stocks around the world. In fact, China’s A-Share stock market in Shanghai has rallied 65%
year to date, making the S&P 500’s 18% gain look positively paltry in comparison.

Fact is, there are trillions of dollars sitting on the sidelines that are finally finding their way back into the stock market. So even though China
stocks have soared this year, I think there’s plenty of firepower left to fuel this dragon, and I expect Chinese shares to push higher through year-end.

That means now is the perfect time to be loading up on select China stocks, before they push even higher.

Now, let’s talk about my top China stocks that are directly in line to profit from the three most investable trends in China right now.

NEXT – Top China Trend #1 – Health Care

Top China Trend #1 –
Health Care

Health Care — I don’t think there’s a hotter topic in the world right now. In addition to President Obama’s efforts to drastically reform
the U.S. health care system, other countries are also developing their own medical reform plans.

In fact, earlier this year, the Chinese government announced its plan to spend $124 billion over the next three years to improve China’s health
care system. The main focus of this plan is to provide basic medical insurance to its citizens, build more hospitals and clinics, as well as encourage
more private medical institutions.

Overall, China’s health care reform will greatly increase the country’s social safety net, as it will provide accessible health insurance and more
affordable medical treatments. In turn, this will play a vital role in boosting China’s economic growth and consumer spending, as the Chinese will
no longer need to save so much in case of unexpected medical bills.

And the government’s renewed focus on the health care industry is creating incredible investment opportunities. I expect businesses within the health
care sector to receive a nice boost within the coming months. And that includes my #1 pick in this space…

NEXT – Best China Health Care Stock

Best China Health Care Stock – Mindray Medical (MR[1])

Mindray Medical’s (MR[2]) business strategy is simple and effective: It develops and sells cutting-edge, high-quality medical devices — like patient monitoring devices, life support products, in-vitro diagnostic instruments and medical imaging systems at affordable
prices — typically 30% to 40% cheaper than its competitors. And it dedicates 10% of total sales to its 900-member, in-house R&D team in order to
continue developing state-of-the-art products that can compete with global medical giants.

So as the Chinese government applies pressure to improve China’s health care system and reduce medical costs, low-cost medical device providers
like Mindray stand to benefit greatly. In fact, since China’s health care reform plan was announced in early April, Mindray’s shares have climbed
58%!

Discover how to create a China investing strategy that works[3].

NEXT – Top China Trend #2 – The Internet

Top China Trend #2 – A Mushrooming Internet Population

Booming doesn’t even begin to describe China’s Internet industry. In 2008, China’s Internet population grew nearly 42% to 298 million users. And
it has continued to rapidly expand in 2009 — at the end of June, China’s Internet population jumped to 338 million. That’s more than the entire
population of the United States!

And despite the global economic slowdown, this sector continues to grow by more than 20% per year.

What’s interesting is that despite this rapid growth, the Internet penetration rate is still just 25.5%. By comparison, the U.S. has a penetration
rate of about 75%. And this spells nothing but opportunity when you consider the fact that China has a population of 1.3 billion people.

This growth has been particularly profitable for my favorite Chinese Internet company…

NEXT – Best China Internet Company

Best China Internet Company – Baidu (BIDU[4])

China’s Google, Baidu (BIDU[4]), claims practically all of the Internet searches in China: It has a 75% market share. In comparison, Google
only has a 20% market share in China. And recently, Baidu surpassed Yahoo to become the second-largest search engine in the world.

How have they done it? That’s simple — Baidu complies with the Chinese government’s Internet regulations and has a strong home-field advantage with
its knowledge of China, the Chinese language and Chinese culture. That’s what has helped make it the number-one web site in China for years now. Most
importantly, this popularity has shown up in the company’s bottom line, posting a better-than-expected 37% increase in revenues during the second
quarter.

Shares are up more than 200% year to date, and as China’s Internet population continues to expand rapidly, you can bet Baidu is directly in line
to profit.

NEXT – Top China Trend #3 – Real Estate

Top China Trend #3 – China’s Red-Hot Real Estate Market

While the U.S. housing market continues to struggle, China’s real estate market is really heating up this year, despite the global economic slowdown.
In fact, housing prices in some of China’s major cities have already surpassed their 2007 highs.

What’s causing the jump in China’s real estate market?

China’s growing money supply, which has increased nearly 28% this year. That, and lower interest rates, are fueling the economic recovery in China.

What’s interesting, though, is that despite the jump in Chinese housing prices, demand remains robust. There is no property tax in China, and most
Chinese view real estate as a great long-term investment. That’s why so many Chinese are literally lining up to purchase luxury condos in Shanghai
and Beijing, a stark contrast to eight months ago when money was tight, and there were few buyers.

The best way to take advantage of rising property values in China? By buying China’s leading real estate services developer…

NEXT – Best China Real Estate Stock

Best China Real Estate Stock –
E-House (EJ[5])

E-House (EJ[5]) positions itself as an asset-light real estate services firm that helps real estate developers sell properties. Because of the
increase in monetary supply, there’s been an incredible increase in property sales volume. For the second quarter, the company reported a 172% increase
over the same quarter last year!

What’s even better is that I think the Chinese property market is still in the early stages of a new bull market. So demand remains high, and E-House
stands to benefit greatly in the months to come. Shares are already up nearly 170% year to date, but there’s plenty of room to run. Don’t miss out!

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