Chinese Stock Picks from a Top Dreyfus Fund Manager

Hugh Simon is harnessing the heat of the hottest economy: his Dreyfus Pacific/Asia Fund is up more than 91 percent year-to-date, and almost 60 percent over three years. He's also portfolio manager of the Dreyfus Premier Greater China Fund.

Surveying the market for domestic Chinese stocks, Simon favors "the areas of consumption and infrastructure spending."


He likes the Shandong Chenming group, whose third-quarter profit nearly doubled over the last year.

Simon likes China Telecom, the country's biggest fixed-line phone operator and a potential major player in mobile phones, with China positioned to become one of the world's most lucrative cell-phone markets.

Simon is also partial to Bengang Steel, particular because of its "captive iron ore" assets.

"We're worried about iron ore prices rising a lot next year," Simon says. He sees Bengang as "quite an attractive way to play the growth in railway infrastructure spending."

AviChina, a vehicle manufacturer, draws Simon's interest because of its short-range aircraft products. "Boeing and Airbus are going to come under competition, and...it's a way to play a sector that's going to grow in the long term, we believe."

Another Simon selection is Shanghai Friendship Stores. "It's what's interesting about China," he explains.

"Consumer spending, longer-term growth, and as you put together a portfolio over a medium to long term, what one wants to do is get exposure to different areas of the economy that can grow over the long term."