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Trade - Editor, 19 February 2008

The Changing Face of China Business (Part 2)



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The Changing Face of China Business (Part 1)

Life Insurance Stock as a China Business Entry Route

The China Life Insurance Company Limited is listed on the New York Stock Exchange as an Advance Depository Receipt (ADR). The stock trading symbol is LFC. (We have no financial interest in the stock, and mention the example here solely for the information of our valued browsers. Such a disclaimer applies equally to other stocks mentioned in this article). There have been reports in some stock market circles that the company may have incurred a net loss during the last quarter of 2007, but the management has denied this. The net income was certainly a healthy 23% for the quarter ended June 2007. The company has over 85 million policies in force, and is diversified in to health and accident insurance, apart from its core lines of personal and group life insurance.

LFC is not the only player in the insurance market of China. Some investors may prefer stocks of international companies with operations in China as well. Aegon N. V. (AEG) is an example from the European Union. This stock is available as an ADR on the NYSE, but stocks also trade in London, Amsterdam, and Tokyo. China business is not very large for this organization, but it does have a presence. Overall, stock investors have many world-wide choices to invest in the insurance part of China business.

Banking and China Business

Traditional and online versions of banking also matter for China business. Double-digit annual growth rates are impossible without liberal credit lines. Rise in employment levels also reflect in growth of savings, especially in the cultural context of China business. That is why stock investors everywhere must be keen on adding Chinese banking securities to their portfolios. Hong Kong is a very attractive source for some of the best banking stocks. Banks registered in this territory have stable shares in traditional markets, but are also well placed to take advantage of China business opportunities. The Bank of East Asia is an example. Stock is also available as an ADR on the OTC circuit (BKEAY). The company is strong in both personal and corporate banking.

Goldman Sachs and American Express are amongst the familiar names which hold stocks of the Industrial and Commercial Bank of China Limited (ICBC). This bank is substantially owned and controlled by the Chinese government. Some small stock investors from around the world may be interested in such investment opportunities. The bank has nearly 17 thousand branches serving domestic China business. It also has four subsidiaries outside China. Stocks are traded in both Hong Kong and Shanghai. The bank has earned a net profit margin of over 31% over the last four quarters, and the management is quietly confident about future prospects.

Financial and Services Sectors of China Business

The Services Sector reaches beyond banking. We have started work on the Communication Services area of China business, and how it is set to impact the world scene. Please bookmark our web site, or write to us, using our online query form, if you would like a custom alert when our forthcoming article entitled “World Impact of the Services Sector of China Business” is published. Do also write to us if you have an opinion or a special request with regard to the views we have expressed in this article. We would love to hear from you!

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