By Matt McCallFeb 13, 2020
Some of the best hypergrowth investing opportunities on the planet are in China.
And… some of the worst news on the planet is in China.
No wonder the number of Google searches for “Chinese stocks” recently hit a one-year high. Investors are trying to understand what’s going on.
I recognize the seriousness of the coronavirus. I feel for all who are affected. It’s scary when a new virus seems to be spreading and has killed more than 1,300 people.
At the same time, I feel that we’ve lost valuable perspective.
Just this morning, I saw a headline on Yahoo Finance that read:
Stocks tumble as coronavirus fears reignite
Wow, stocks must be getting hammered, right?
Nope. The Dow was down 0.49%, and the S&P 500 just 0.33%. Hardly a “tumble.”
And these minor dips are from new all-time highs… just yesterday!
Let’s think about this rationally. Here’s what you need to know…
The market hates uncertainty. It always has, and it always will.
There is uncertainty with the coronavirus right now. We can’t say exactly how long the outbreak will last, or how many more cases will emerge. We don’t know the precise economic impact… or if there will be much of one at all.
But there’s plenty that we do know.
We know that China and other nations are actively trying to contain the coronavirus. And we know that the scientific community is working hard to understand and deal with it.
We also know that most cases are not serious. Every death is a tragedy, but the fatality rate for the coronavirus is thankfully well below other major viruses. Business Insider published the chart below with data through February 4. The fourth column shows how much lower the fatality rate really is.
From the market’s standpoint, health scares tend to cause short-term selling but historically do not have a long-lasting impact on stocks. There have been 12 U.S. disease outbreaks over the last 40 years, and in every case but one (the HIV/AIDS epidemic in 1981), the S&P 500 was higher six months later and one year later.
We also know that China is willing to support its economy if necessary, and the U.S. Federal Reserve is watching the situation here.
When you add it all up, the takeaway is clear: Please do not let the coronavirus and juiced headlines scare you out of the stock market. Don’t let them scare you out of opportunities in select Chinese stocks either.
You probably know about China’s economic boom the last two decades and the massive money that has been made in various industries. Gains so big that you think a decimal point is out of place.
After spending more than a week there last year, I came away more convinced than ever that there will be another leg higher in the economic boom. The coronavirus may have put that on a temporary hold, but you can still make a lot of money in the right companies.
When you’re talking about a nation with 1.4 billion people – more than 4X the number of people in the United States – even “just” 6% economic growth means a lot of money is changing hands among a lot of people, businesses, and the government.
I mentioned the government’s willingness to step in to minimize the economic impact of the coronavirus. Yes, there are negatives associated with the power of China’s government, but when it comes to investing, the truth is you shouldn’t bet against it.
Ten years ago, China’s government was determined to grow the nation’s technology industry. It was a great opportunity for investors.
At the same time, a little-known technology company was gathering assets and extending its tentacles into all aspects of tech. It was a major beneficiary of the government’s support. Today, Tencent Holdings (TCEHY) is one of the largest companies in the world. The stock rose an eye-popping 67,000% from its IPO in 2004 through January 2018.
We saw the same thing in China’s legendary infrastructure boom. PetroChina (PTR) is a large energy company that literally helped fuel the massive growth, and the stock grew 17X from its IPO in 2000 through the high in 2007.
And there is Anhui Conch Cement (AHCHY). The Hong Kong listing of this company was a microcap stock trading at a mere 0.17 Hong Kong dollars in 2000. Today it as at HK$57. That’s a 33,000% return!
The best way to make big money in the coming years is to invest in smaller companies before they grow large. I’m recommending a couple of small Chinese stocks right now that are set up for big gains. The coronavirus doesn’t change my long-term outlook.
One is a small biotech company based in Shanghai. This company provides unique services to other biotech companies, and its recent IPO was in high demand.
Chinese biotechnology companies represent a rare 100X opportunity thanks to both coming demographic changes as well as the government’s support and targeted growth for the industry. I am confident that the sector will grow at least 110-fold in size over the next five to 10 years, and early investors could see gigantic gains.
The other company is changing how people get around in crowded cities… and there’s no better place to do that than China. This company is definitely “hunting elephants” – meaning it is going after a huge market – as it looks to disrupt the mobility of more than half the world’s population that currently live in cities. It is the leader in its industry and will benefit big time from the urbanization of Asia and around the globe. It is small and cheap, which gives it massive potential over the next decade.
American business history is chock full of small businesses that grew large and handed their shareholders 20-fold, 50-fold, even 100-fold or more gains. This long list includes some of the best-known companies in the world today: Starbucks (SBUX), Alphabet (GOOGL), Microsoft (MSFT), Netflix (NFLX), Oracle (ORCL), Under Armor (UA), Facebook (FB), Amazon (AMZN), Chipotle (CMG), Home Depot (HD), CarMax (KMX), and Tesla (TSLA).
Similar opportunities exist in China. There are more Anhui Conch Cements out there, and now is the time to buy them. The coronavirus may be a detour on the way to the next leg higher, but one of the greatest economic stories of the century isn’t going away anytime soon.
P.S. Those two small Chinese stocks I like right now are among those in my just-released Microcap Millionaire Portfolio.
In addition, I have my favorite 5G microcap, Internet of Things (IoT) microcap, blockchain microcap, and others set up for big gains in the coming years.
Making big money in microcaps just makes sense. It’s much harder for Apple (AAPL) to go up 10X when it’s valued at $1.4 trillion than it is for a small cap to go from $1 billion to $10 billion.
My system is designed to identify small stocks with the best chances to grow large… and make investors a lot of money in the process.
I explained it all in the recent Microcap Millionaire Project event, attended by more than 10,000 of your fellow investors. You can watch the full presentation here.
I also released my nine favorite microcap stocks… and I’ve just added a 10th. Each one is in a high-growth industry that could soar 1,000% or more. Click here to learn more.
Click here to listen to Matt McCall’s MoneyLine podcast! This week, Matt discusses Amazon’s (AMZN) ascent to the $1 trillion value milestone. What does its rise tell us about investing and, more importantly, how do we find the next Amazon? Matt also dives into the upside potential of microcap stocks and unveils a new portfolio aimed at the smallest stocks in the market.
You can subscribe to this podcast on iTunes, Stitcher, Spotify, or wherever you listen to podcasts.
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