Top 10 Investment Plays On China’s Obsession With Academic Excellence

By: Tony_Sagami

I was less than two years old when my parents divorced in 1957. My 20-year-old Japanese mother suddenly found herself living in a strange country with no family, friends, money, food, or place to live. Yet instead of returning to Japan where her family and friends were, she scratched, rummaged, and scavenged enough to make a new life for us in America. Why?

My mother knew that a half-Japanese, half-American child had limited opportunities in Japan. It wasn’t like it is today; the wounds from World War II were too fresh. I would have never gone to a top university or landed a top job.

Even though my mother barely spoke English and seldom had more than two nickels to rub together, she fiercely held to the idea of the American dream. “In America, anybody can get rich if they work hard,” she told me.

My mother ordered me to sit in the front row right in front of the teacher’s desk. She gave me almost daily lectures on the importance of education, and punished me severely if I brought home anything less than an A. My mother was a big believer in corporal punishment and I got the spankings of my life for anything less than straight A’s.

For someone who started off as a homeless immigrant, my mother saw all her children grow up to achieve great professional success. I am sad to say that my mother died seven years ago from cancer, but I preach the same lessons about education to my children to this day.

Those same lectures about education are given every day all over Asia, and Asian students are some of the most successful in the world.

Guess Who Tops Global Education Performance?

Students from 65 countries, including the United States, recently took the Program for International Student Assessment, known as PISA, given by the Organisation for Economic Co-operation and Development (OECD).

Guess who came in first in reading, math and science? Students in China’s Shanghai Province. To view the OECD’s PISA press release, click here.

To jump directly to the PISA data table, click here.

That is very impressive given that this is the first time China had taken part in the test.

PISA tests are scored on a scale with 500 as the average. Two-thirds of students in participating countries score between 400 and 600.

On the math test, the Chinese students beat everybody by a wide margin. Second-place Singapore, which has been seen as an educational superstar in recent years, scored 562. Germany was a distant third at 513.

The United States scored 487, a score that was behind 30 other countries.

On the reading test, China had the top score again at 556. South Korea came in second with 539 and the United States came in 17th with a 500, clustered around students from the Netherlands, Belgium, Norway, Germany, France, and the United Kingdom.

In science, China was first AGAIN with a 575. Finland came in second with a 554 and the United States came in 23rd with a 502.

What is the secret to China’s academic success? Simple; they work their butts off. Most Chinese students don’t finish until 5 p.m. or 6 p.m., watch little television and play very few video games. Chinese students are prohibited from working before the age of 16, so they can concentrate on school. Plus, most students attend tutoring classes after school and on Saturdays.

“Very rarely do children in other countries receive academic training as intensive as our children do. So if the test is on math and science, there’s no doubt Chinese students will win the competition,” said Sun Baohong of the Shanghai Academy of Social Sciences.

There is a way to profit — HANDSOMELY — from the Asian obsession with education and academic success.

My Top 10 Chinese Education Stocks

Did you know that there are TEN Chinese education stocks listed on the NYSE and Nasdaq? Yup … TEN stocks.

• ATA Inc. (ATAI) provides computer-based training courses to pass professional certification exams such as banking, insurance and accounting.
• Ambow Education Holdings (AMBO) has a unique combination of hands-on personal tutoring supplemented with online training.
• ChinaEdu Corporation (CEDU) is the Chinese equivalent of the University of Phoenix, offering online college degrees.
• China Distance Education Holdings (DL) offers online education and test preparation courses specializing in accounting, law, healthcare, construction, engineering and information technology.
• China Education Alliance Inc. (CEU) sells ‘education resources’ online, a fancy name for a huge database of informative practice exams.
• ChinaCast Education Corp. (CAST) actually owns several Chinese universities and is expanding its enrollment with online degree options.
• New Oriental Education & Tech. Group Inc. (EDU) is the largest English and college entrance exam preparation school in China.
• TAL Education Group (XRS) is the largest private educational tutoring company in China.
• Noah Education Holdings Ltd. (NED) sells electronic education materials, and distributes its content primarily through handheld digital learning devices.
• Xueda Education Group (XUE) is also a private tutoring company but differs from TAL Education in that it tutors university students as well as high school students.

As you can see, there are several ways to profit from the Chinese obsession with academic excellence.

I should disclose that my Asia Stock Alert subscribers currently own New Oriental Education (EDU) and are sitting on roughly a 200% gain. That’s a big gain, but I think there are more profits yet to come in these shares.

That doesn’t mean you should rush out and buy EDU or any of the other above-mentioned stocks tomorrow morning. The education sector has been hot, and most of these stocks have already had big gains. Your best strategy would be to wait until they go on sale before committing any new money.

Meanwhile, there are plenty of other alternative investments that can help you sidestep the dangers of investing in the U.S. and also look more attractive right now.

Best wishes,

Tony

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