 | | Andrew Carpenter | | Something has gone terribly wrong. I must have flamed out, because I haven’t received a nasty note from anyone in at least a month… no hate mail either. When this first dawned upon me I was worried, so I called my masters at IDE to see how much the reader base had shrunk… turns out it’s grown… and by a lot, too. To tell you the truth, I kind of miss the guy who wrote every week and began “Hey Wisenheimer,” then closed with a cryptic “You’ve brought this on yourself,” like that was a secret and not one of life’s inevitabilities. Of course this means I have a lot more time to focus on answering questions about China and Asia. Those would include a question from Kurt in Phoenix about the availability of fast-growing, publicly traded manufacturing stocks from China. The truth about manufacturing in China, as it relates to publicly traded stocks, is pretty ugly right now, at least from where I sit. Most of the busiest factories are closely held, or owned by global conglomerates that have little to do with China other than accessing cheap labor. When Chinese labor gets too expensive they’ll pick up and move to Vietnam, where interestingly, the labor force is less docile, if the strikes for better working condition at Nike’s shoe factories there are any indication. Also, while the Chinese central government is hot to get tons of lousy State Owned Enterprises off its books, it will keep most of the top performers on its books for a few more years. Now, what follows is more than a simple shameless shill for my Asia Business & Investing newsletter. You see, I have a great fast-growing Chinese steel company in the long-term portfolio (one that is going to go up a zillion percent in the next three days, according to the copywriter who does AB&I’s ads). That massive gain aside, this is a stellar company, very well connected to the central government. And, I only have one very tiny worry about it, but it’s one that extends to all central China manufacturers, most of which are not as well run or as profitable as my jewel of a steel company. My worry has to do with the Olympics, of all things. As I have written AB&I readers in the past, unless the Chinese government takes drastic measures, there is no way in the world that the air in Beijing will be clean enough for Olympic athletes to perform at anywhere near optimal levels. By the way, as far back as 2005, I was predicting that Beijing smog would not be a huge international story until the year before the Olympics, and only because the majority of the sports media had yet to go there to check out the venues. So anyway, to clear the air in Beijing the Chinese government is going to have to shut down hundreds of factories in a 300-500 mile radius around the city. They will need to be shut down at least two weeks before the Olympics and for the Game’s two-week run. My happy little steel company will likely be affected because some of its operations are in central China and northwest China.
I’ve been in China during a couple of week-long National Day holidays when everything is shut down. The air clears by about the third day, blue skies rule, Beijing, Shanghai and Hong Kong are glorious. So, a massive shutdown is Beijing’s only real temporary pollution solution. Of course, it will still be very hot in Beijing, and there’s always the risk of a sand storm, but those usually come much later in the year. All this means I won’t get real serious about cruising for a new manufacturing play from China until at least this fall… I would suggest you adopt the same stance. See you Saturday in my regular IDE slot. Lock and load. Andy P.S. To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com. INTERNAL ENDORSEMENT Just this Once BELIEVE THE HYPE! It was the email that shocked the investment world. One noted investment authority told his readers to take seven huge stock market gains on one day… SEVEN HUGE WINNERS on one day that ranged from 526% to 102%... seven, and on stocks… not options. But that was just the beginning! It now looks to be setting up to happen again this year, too. That’s why you must check out the whole story right here. | | 
