China’s Ongoing IPO Stock Market Boom

By: Tony_Sagami

Bill Gates and Warren Buffett, two of America’s best known billionaires, were in China last week for some business and charitable work.

Buffet has a large investment in Chinese automaker BYD Company, and Microsoft has offices all over China as well as a research center. Both, however, were there to talk to some of the richest men and women in China about incorporating philanthropy and charitable giving into their daily lives.

This issue isn’t about philanthropy; it is about billionaires — Chinese billionaires and how they made their fortunes.

How many billionaires do you think there are in the world? According to Forbes, there are 1,360 billionaires.

And while the United States may be the “Land of Opportunity,” China is producing billionaires at a pace we haven’t seen since the dot-com boom days.

How many Chinese billionaires do you think there are? According to the Hurun Rich List, China has 189 billionaires making it the No. 1 country in the world. Yup, China has more billionaires than even the United States of America.

I and the people at the Hurun Rich List believe, however, that there are a lot more than 189 billionaires in China.

“China probably now has the largest number of billionaires anywhere in the world. We already know of 189 U.S. dollar billionaires in China this year, but you can safely say that we have missed at least half again, meaning there are between 400 and 500 USD billionaires," said Rupert Hoogewerf of the Hurun Rich List.

Who are these Chinese billionaires?

NUMBER ONE! The richest man in China is beverage king Zong Qinghou with a personal wealth worth an estimated $12 billion. Zong and his family own 60% of the Wahaha Group, which dominates China’s soft drinks market. He moved ahead of last year’s richest man, Wang Chuanfu of car and battery maker BYD Corporation. Wang, with a net worth of $4.6 billion, is the 12th richest man in China.

NUMBER TWO! Li Li, the CEO of Shenzhen Hepalink Pharmaceutical, is No. 2 on the list with a personal fortune of US$6 billion. Hepalink makes heparin, a blood thinner purified from pig intestines that is used to prevent blood clots. The Chinese drug industry is where the U.S. drug industry was in the 1950s, and there is a fortune to be made in this industry, both for the Chinese businessmen and American investors smart enough to cherry pick the best of the bunch.

NUMBER THREE! In third place is China’s richest woman, Zhang Yin of Nine Dragons Paper Holdings. Not only is she the richest woman in China, but she is also the richest woman in the world. How did she make her fortune? By providing cardboard boxes used to ship all the Chinese goods to the United States and Europe.

NUMBER FOUR! Some of the biggest fortunes made during the California gold rush were by merchants selling shovels and pickaxes to miners. Liang Wengen of Sany Heavy Equipment followed that same business model by selling construction equipment used in China’s gigantic building boom. Interestingly, Liang is richer than any property developer in China.

NUMBER FIVE! Robin Li of internet search engine Baidu.com is fifth with a net worth of US$5.3 billion. Baidu has kicked Google’s butt in China, and Li has entrenched his company as the dominant internet portal and starting point for anybody surfing the Chinese internet.

What’s the point of this list? My point is that you could have in most cases made a small mountain of money by investing alongside these brilliant Chinese businessmen (and businesswomen).

More importantly, a steady stream of these dynamic and growing Chinese companies has been regularly selling their initial public offerings (IPOs) on the New York Stock Exchange and the Nasdaq.

In just the last month, there has been a mini-explosion of Chinese IPOs that you could have bought in to.

• Global Education & Technology Group (GEDU), a Chinese provider of education services including foreign language training and test preparation.
• SouFun (SFUN) and Daqo New Energy (DQ), successful Chinese solar energy companies.
• Country Style Cooking (CCSC) is one of my very favorite restaurants in China.
• ChinaCache (CCIH), a Chinese deliverer of internet content.
• China Ming Yang (MY), a Chinese wind energy innovator.
• Ambow Education (AMBO), another Chinese education company.

There’s even more. Two more Chinese companies are scheduled to go public in the next two weeks. TAL Education, which will trade under the symbol (XRS) is a Chinese after-school tutoring services provider and Chinese pharmaceutical R&D outsourcing company ShangPharma, which will trade under the symbol (SHA).

You need to do your own homework to determine if any of these Chinese companies are appropriate for your personal situation, but I think that most investment home runs are going to be found on the other side of the Pacific Ocean.

Remember, these Chinese IPOs are being sold right here in the U.S.A., so you don’t need to open an exotic overseas brokerage account to buy them. Buying shares of these U.S.-listed IPOs is as easy and as cheap as buying shares of General Electric or Microsoft.

And there is no excuse for not knowing about them either. All you have to do is sign up to follow my FREE Twitter account (http://twitter.com/tony_sagami), which is where I post my most market-sensitive information.

The fact that China has more billionaires than any other country in the world should NOT be lost on you, and I submit that you should do very well by investing side-by-side with the best, brightest entrepreneurs in the world, many of whom happen to live in China.

Best wishes,

Tony

DISCLOSURE: My Asia Stock Alert subscribers already own BYD Company. Investing like Warren Buffett has long been a profitable investment strategy, and BYD is Buffett’s first Chinese investment. It’s an investment that both he and I expect to be a big, long-term winner.

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