Rudy Martin: The biggest investment opportunities don’t necessarily start with big events.
By the time “everyone” sits up and takes notice of a shift in an industry or in the market itself, it could present a good time to add some extra shares. The biggest winners, however, would likely be those who are already sitting pretty in a core position in an accelerating trend.
But I’m not a fan of jumping in on brand-new, unexplored investment territory, either. Let the early investors with cash to burn take those risks. It’s much-better to watch them … and wait.
For the best upside potential, you want to get in to an opportunity just ahead of the rest of the investing public. They start small, but can last for a long time and produce huge investment profits.
Here’s one I’m watching right now that looks to have some pretty big payoff potential …
China’s political leadership has hinted repeatedly this year that the world’s most-populous nation will reduce central control in favor of more economic freedom. The latest evidence: last month’s opening of the China Pilot Free Trade Zone in Shanghai.
The 11-square-mile new free-trade economic zone will cut red tape and encourage foreign investment in the country’s tightly controlled service industry.
At the zone’s opening ceremony, Commerce Minister Gao Hucheng said it would act as “an experimental field to conduct economic reform.” He added that the zone should promote economic development nationwide as well as Shanghai. That means this is only the first part of a bigger plan.
Changes in China’s economy frequently start as small moves that expand rapidly after demonstrating tangible results. I believe Shanghai’s free trade zone is a precursor of a major shift to a freer economy.
Other Chinese cities and provinces, including Tianjin and Guangdong, are already lobbying for similar districts. Beijing sources reacted favorably, which suggests approval is only a matter of time.
These new trade zones will have fewer restrictions on foreign investment. Interest rates will be set by markets, not bureaucrats. Just as important, China’s heavily regulated yuan currency will be free to exchange with other currencies. This is a major departure from past practices.
Regulations in as many as 18 economic sectors, ranging from finance to shipping, will be looser inside the Shanghai trade zone.
“Now the country’s premier, Li Keqiang, has signaled that he is preparing to experiment with ways (of) loosening the government’s tight grip on foreign investment, the currency market and the banking system,” commented Shanghai correspondent John Sudworth of BBC News.
Chinese and foreign business leaders are still cautious. They will not celebrate until they see details of the new regulations. No one wants to face the consequences of crossing undefined boundaries.
Accelerating economic reform will ultimately benefit most sectors of China’s economy and boost investment returns accordingly … but some industries will be ahead of the pack.
Opportunity # 1: Banking and Finance
Foreign banks can set up shop directly in the free-trade zone. They will also be able to open joint-venture banks with mainland partners, either state-backed or from the private sector. For the first time, the overseas partner can now own the majority stake.(...)Click here to continue reading the original ETFDailyNews.com article: The Sectors Of China’s Economy That Will Boost ReturnsYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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