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Life is a highway, a Chinese highway

Today's Financial News - Posted November 6, 2009

Life is a highway, a Chinese highwayObama just imposed another set of strong tariffs on imported Chinese goods. It is proof the situation is getting tense. Take advantage of the move and buy Chinese.

By Andrew Snyder, TodaysFinancialNews.com

Baltimore – (TFN): Washington is getting serious about leveling trade with China. Call it a desperate tool to fix our trade imbalance. Or call it bowing to American manufacturers. Just don’t call it good news for growing trade tensions.

Obama is going to get some mighty weak handshakes when he heads to Asia in a few days. After imposing the largest-ever tariff on imported Chinese pipe (almost 100%), Beijing is far from happy.

As our dependence grows on China to fund the nation’s debt, this is not a good time to tick off our most important trading partners.

Unfortunately, given the relative strength of the Chinese economy, Obama’s latest trade sanction will hurt more Americans than it will Chinese. We’ve got unemployment at 10.2% and they have an economy growing by a percentage almost as high.

Where’d do you want your money?

One Chinese company getting plenty of attention is China Infrastructure Investment Corp. (NASDAQ:CIIC). The tiny, $100 million company is nearly a pure play on the country’s growth potential.

Essentially, CIIC owns a highway, the Pinglin Expressway. In exchange for maintaining and overseeing the operation of the highway, CIIC charges a toll to every vehicle that uses the road.

Last year, the company was able to turn $50 million worth of revenues into $2 million worth of profits, a steep decline from the $12 million in raked in during fiscal ’08.

The loss in profits forced share price to drop from above $5 to just over a buck per share. As I write, investors are getting $1.24 per share, an 11% premium to yesterday’s closing price.

If you are as bullish on China’s growing economy as I am, you will agree this is a great way of playing the company’s increased consumption, travel and shipping trends. In other words, it is as pure of a play on China’s future growth as Warren Buffett’s move to buy Burlington Northern (NYSE:BNI) is a play on America’s growth.

Again, I ask where do you want your money?

I am positive Berkshire Hathaway (NYSE:BRK) would much rather spend $26 billion in overseas economies, but we can all imagine the political backlash if the Oracle of Omaha becomes the Oracle of Beijing.

Buffett’s salary would be the next to be slashed.

There is a bull lose in China. No matter how hard Washington tries, it won’t be able to catch.

I say hop on it and ride the beast as long as you can.


Next Article: TFN eNews 11/06/2009: Top China growth play?

Posted by Andrew Snyder · Filed Under Featuring..., International Investing 

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