"By all estimates, China will continue to be the hottest economy on the planet, and we remain bullish on its future prospects," says China expert Jim Trippon.
One favored sector in the model portfolio of his China Stock Digest is telecom. Here, the advisor takes a look at two China telecom firm -- China Netcom Group Corp. (NYSE: CN) and Chunghwa Telecom Ltd. ADS (NYSE: CHT).
"What about the potential effect of a slowdown or even a recession in the U.S. economy? We agree with
the World Bank opinion that China is well positioned to deal with the impact of slackening demand for exports
from the United States.
"The U.S. may be China's most important trading partner, but it is no longer the sole key to Chinese economic growth. The Chinese have been busily forging free-trade agreements throughout the Asia-Pacific region, and
growth in that part of the world is expected to remain robust.
"The Asian Development Bank expects economies in the region to grow at a rate of more than 6% in
2008. That kind of economic momentum in China's back yard will help sustain the anticipated level of
activity on the mainland.
"Prospects for China Netcom Group look especially bright on two fronts. The Chinese government is believed to be ready to offer mobile telephone licenses to fixed-line phone companies like China Netcom.
"Adding to the company's prospects is a government statement that 3G technology is now ripe for commercialization in the mainland. 3G will bring broadband capabilities like video to mobile phones.
"China Netcom is the nation's second largest fixed-line telephone company and is value-priced with a forward P/E of 10.09. The company also offers a relative dividend yield of 1.19%.
"Chunghwa Telecom has announced ambitious expansion plans for 2008 with a projected capital expenditure of $1 billion. Much of that money will be used to buy handsets for its expanding mobile phone business. The company will also seek to expand into other nations by acquiring a stake in other carriers abroad.
"Chunghwa Telecom remains Taiwan's most profitable telecom carrier. Dividends continue to be excellent
with a relative dividend yield of 2.364%. It enjoys a P/E ratio of 13.4, still an attractive figure for an expanding
telecom company that is continuing a share buyback program. Chunghwa remains a solid component
of our value portfolio."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
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