China is too big to ignore. Its growth has been fantastic, so is its inflation which it has been trying to curb.
In Jan, 2011, its imports have gone up by 50% while its exports have gone up by 38% compared to the corresponding period a year ago. It has now overtaken Japan as the 2nd largest economy in the world as reported in the media.
If you are interested to invest in small-cap Chinese stocks that are listed in the NYSE or Nasdaq, be wary that China is infamously popular for fraudulent accounting. In this respect, you have therefore to be particularly careful. To mitigate this risk, do not invest in any company that has high debt, poor cash flow and low earnings. Another factor worthwhile remembering is that growth is of utmost importance. Without growth, a company is best avoided.
One company that I like is BioStar Pharmaceutical (BSPM). The stock is lasted traded at $2.47.
An excerpt: The Company's most popular product is its Xin Ao Xing Oleanolic Acid Capsule, an over-the-counter ("OTC") medicine for chronic hepatitis B, a disease affecting approximately 10% of the Chinese population. In addition to its hepatitis product, Biostar currently manufactures two broad-based OTC products, two prescription-based pharmaceuticals, one medical device and five health supplements. Read more here.
Ronghua is the CEO of BSPM. He is a member of President Hu Jintao's economic advisory group and a representative of medicine. This is a competitive advantage for the company.
For the first 11 months of 2010, the company has shown tremendous growth. Its rural distribution network has surpassed 9500 locations. Going by the numbers, BSPM is a fast-growth stock, probably among the fastest in China. If there is no hanky-panky in the accounts, this one is worth going after. At $2.47, the PE (ttm) is 6.53, and its forward PE for Dec 31, 2011 is estimated to be 3.17. The company has no debt.
In the stock market, risk is always there. If you want the tiger calves, you have to go into the tiger's den.
Nothing Venture, Nothing Gain.