‘Chimerica’ Stocks: How to Profit
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‘Chimerica’ stocks and how to profit from companies that do their business in China has been creating a huge amount of buzz on the internet since investment guru Tom Dyson at Daily Wealth started to write about the subject.
“Chimerica stocks are Chinese companies,” says Tom. “They do business in China, with Chinese management, Chinese employees, and Chinese currency. They make products for Chinese consumers.
The key is that these Chinese companies list on US stock exchanges.
Chimerica stocks list in the US because they can’t list in China or Hong Kong. “Going public” in China takes about three years. But in America, it only takes about six months. According to Barron’s, “Even now, for every company that goes public [in China] there are probably a hundred in the queue, and a lot of companies want money sooner rather than later.”
How does this happen?
A shell company is a stock without a business. The business has no assets or operations, but it still has a name and a stock symbol. To list in America, Chinese companies find an American shell company and back themselves in. Lawyers call this a “reverse merger.”
Why are Chimerica stocks good for investors?
According to Barron’s, they sell for an average 10 times earnings. The price-to-earnings ratio of the Shanghai Composite – China’s main stock exchange – is 27. Chimerica stocks are cheap because Chinese investors cannot open brokerage accounts in the United States to buy these stocks. American investors don’t know about them. Analysts don’t cover them.
Tom has put together a list of these stocks, which can be found here: Tom Dyson’s list of Chimerica stocks.