China's central bank raised interest rates over the weekendfor the second time in just over two months, making investors nervous over the country’s economic future. But Jim Oberweis of Oberweis Asset Management said to continue investing in the country as longer-term returns will be worth the bumpy ride.
“Look at the causes of why China is having an inflation problem: they are having a problem because growth is very strong relative to the rest of the world and so that the government is taking the right steps,” Oberweis told CNBC.
While the move could be painful in the short-term, perhaps curtailing growth and bringing down valuations, longer-term, it’s a “prudent policy,” he said.
“It’s a policy that permits sustainable growth,” Oberweis explained. “[Beijing] doesn’t want the poor to fight inflation. That’s how leaders in China have lost power in the past and today’s leadership is acutely aware of that.”
Looking ahead, Oberweis said areas such as environmental and consumer plays are poised to benefit; while the housing sector will see further correction.
“It’s going to be a wild ride. You have to have tolerance for risk and a tolerance to weather long-term volatility, but if you can do that, I think there’s an opportunity for substantially higher rewards.”
Oberweis’ picks include Sina , China Liansu and China Everbright International .
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Scorecard—What He Said:
- Oberweis' Previous Appearance on CNBC (Sept. 15, 2010)
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More China Market Analysis:
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- Options Action: Playing the Chinese IPO Boom
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Disclosures:
No immediate information was available for Oberweis or his firm.
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