Got Yuan?

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Yuan CNY RMB Pic

It’s the Chinese Yuan (CNY), or Ren Ming Bi (people’s money). In early march, when I was in Shanghai, one USD is worth 7.72 Yuan, now it’s about 7.56 Yuan, a loss of about 2% in about 4 months. It appears this trend is not going to stop for a while. This is scary if you happen to make money in USD, save it USD and plan to retire one day in China. Because the dollar may drop faster than the rate of saving. So how do we play this?

Besides buying Chinese real estate, or buying the A-shares in Shanghai or Shenzhen (or H-shares in HK), there are other options. The mutal funds with a focus on China, or Chinese ADRs (stocks) traded in NYSE or Nasdaq. Some of the well known names include:

FXI: the full name is iShares FTSE/Xinhua China 25 Index, you can see its holdings here: it’s basically a basket of Chinese red chips traded in HKSE, such as CNOOC (CEO), Petro China (PTR), China Mobile (CHL), China Life (LFC). Those stocks are also traded as ADRs in NYSE (you may click on the ticker above to check out each stock).

LFC: on the surface LFC is a life insurance company in China. It’s more than that. It actually is a holding company of many domestic companies. For instance, it has significant stakes of MingShen Bank (600016), and Citic Securities (600030), both of them are listed in Shanghai Securities Exchanges (SHSE).

Both FXI and LFC have done very well lately, as you may know, because of the red hot Chinese stock market. I don’t personally own them. But my friend Sun has LFC, and it has done very well for him (of course he bought it long time ago so his cost is much lower). I think those two are good options if one doesn’t want to spend much time on stocks: keep in mind if you plan to hold it for long time, you can wait for a pull back to build your position.

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