Happy Chinese New Year! Tomorrow marks the start of the Year of the Dog – see my own decorations in the picture. As a Dog myself (in Chinese horoscope terms, that is) I’m hoping to double up on any good luck available.
One of the Chinese New Year traditions is to give money to younger relatives (and also employees) in little red envelopes. The money is called “lai see” – a phrase which can also mean “tips” or giveaways. So here’s my five “lai see” for those considering pushing a little money out East. Although here’s a warning klaxon if you were born in the year 1970: it’s supposed to be a bad year for our career prospects and health so you might want to reconsider …
1. Last year I advised against investing in China due to concerns over the amount of debt both the population and the government had taken on. As it turned out, investors overlooked those problems and the economy and share prices did well. Experts now think that growth in 2018 won’t be as strong but it can still be respectable. In any case, China is a closed economy and the government can frankly do whatever it likes to keep everything afloat.
2. President Trump – himself a Dog – has outlined some fairly crazy economic policies which are, at the time of writing, were keeping the US dollar weak. This will benefit China as its currency is partly pegged to the value of the dollar and would make Chinese exports cheaper to the rest of the world. It will also keep speculative money in China because it can’t get a better rate back home.
3. It’s easier and less risky to invest in a fund which spreads its money between lots of different companies rather than buying the shares of just one. You can choose a fund which invests just in Chinese companies but personally I’d prefer a fund which invests in companies from other countries as well as China. This helps diversify the risk.
4. Some of the most successful Chinese companies are in the tech sector. They include Alibaba (a sort of Amazon) and Tencent (which owns a sort of Facebook called WeChat). You could get access to them via a global technology fund which would also probably hold Facebook and Google. This might be a slightly less rollercoaster route than investing in a pure Chinese fund.
5. China and the so-called developing markets are high risk areas. You could as easily lose your money as double it. Only commit a very small part of your overall savings to this area.
Kung hei fat choy! This actually means “may you enjoy prosperity” so here’s wishing all Skinted Minted Mums a little more cash in their pockets for 2018.
Don’t forget you can ask questions about investments and other money matters at our Skinted Minted forum here.