Shanghai Surprise


After China’s stock market posted its steepest monthly loss (18%) in 12 years, what’s the next way to play this volatile market?

Here’s what Tim Seymour, aka The Ambassador, recommends doing.

Although China’s growth story is real, some pundits are saying the market has gotten ahead of itself, says Tim. So the next trend might be consolidation, otherwise known as good old mergers and acquisitions.

Why? Because the run-up gives Chinese companies a valuable currency in which to buy-out competitors; their own high-flying stock.

And as these firms gobble each other up, you've got two ways to trade it:

One is to spot the takeover targets, he says. Look for tiny players in an industry dominated by one massive firm. PetroChina (PTR), for instance, appears to have a stranglehold over the oil space - so find the small fry that could be PetroChina's next meal.

But if that seems too risky, take the other side and bet on the big boys, adds Tim. Industry titans like China Mobile (CHL) and Aluminum Corp. of China (ACH) stand to get larger and stronger. As they devour the competition –it could makes them a good long term trade.

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Despite the recent decline, Seymour thinks China is a great long-term trade, overall. In this space, he likes China Mobile, best. Pete Najarian and Guy Adami agree, whole-heartedly.

Check out these other posts in our series on emerging markets.

> "From Russia With Love"
> "Follow The Oil Money"> "Brazil: Bank It On Rio"
> "Mumbai Moneymakers"


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