CHICAGO, May 12 (Reuters) – As the financial world casts its
eyes on the initial public offering of Chinese Internet company
Alibaba (IPO-ALIB.N: Quote, Profile, Research, Stock Buzz), likely the largest ever tech IPO, the
bigger picture of Chinese economic growth is in question.
Since most of China’s big export customers are showing
sluggish or no real growth this year, the world’s second-largest
economy may be taking a breather after nearly a generation of
expansion. Manufacturing in the People’s Republic showed a
fourth straight month of slowdown in April.
Despite myriad concerns about Chinese stock markets, real
estate and banking systems, the long view on China is still
bullish. For one, Neena Mishra, director of ETF research for
Zacks Investments in Chicago, sees a little slowing in China in
the near term. But, she notes, it’s “not likely China will see a
hard landing” akin to a meltdown given its $3.8 trillion foreign
exchange cash pile and growing middle class. She still sees some
relatively good values in Chinese stocks, and “wouldn’t be
surprised to see that market moving up.”
Lately, Chinese stocks have not reflected the long-range
growth optimism as global investors fear contraction. The
largest exchange-traded fund of major Chinese stocks , the
iShares China Large-Cap ETF, which holds half of its
portfolio in financial services and energy stocks, is down
nearly 10 percent year to date through March 9 and off about 7
percent for the past 12 months.
In the short term, you would be better off investing in a
broader portfolio of emerging markets stocks and reducing direct
exposure to China.