Broken China? Beijing’s Troubled Sector

Fast Money Portfolio
Fast Money Portfolio

In the latest installment of Fast Money portfolio the traders look at China and whether growth can remain strong.

Jing Ulrich, managing director & chairman of global markets, China, JPMorgan is among the most respected authorities on China and she tells us when thinking about China it’s important to differentiate between the macro and the micro.

“At the macro front, the Chinese story has been a great one - over the last 30 years GDP has averaged 10% per annum,” she says. "Although the economy in China has been decelerating (lately), we think in the second half of 2012, the pace of growth will recover. Overall the economy is in reasonable shape."

If you're an investor who plays global growth that's a largely bullish thesis. It suggests that China will avoid a hard landing.

Trader Tim Seymour adds that China's demand for cooper remains robust. He suggests playing the thesis long Freeport McMoRan, the world's largest copper miner.

However Jing Ulrich says it's also important to look at China from a micro, or corporate, perspective - and at that level, the outlook is less bullish.

“Some companies (in China) didn’t deliver very good profits despite macro strength,” she says. “This means companies need to get more efficient.”

Ulrich believes areas of the materials sector in China are especially challenged.

“There’s over-capacity in steel and cement – that’s going to impact earnings in 2012,” she says. “And the steel sector in China is over supplied – a lot of steel companies are losing money. Raw material costs remain very strong – the industry is slowing – the sector is not in good health.”

Although Ulrich didn’t suggest any kinds of investments, if you’re looking play any kind of China thesis, Fast trader Brian Kelly suggests doing it with the CAF, rather than the FXI . “The CAF gets you exposure to the A-shares,” he says.

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Trader disclosure: On March 1, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Adami is long ( C); Adami is long (GS); Adami is long (INTC); Adami is long (AGU); Adami is long (MSFT); Adami is long (NUE); Adami is long (BTU); Kelly is long (XLF); Kelly is long (KRE); Kelly is long (SPY) Puts; Kelly is short Japanese yen

For Jeff Weiss
No disclosures

For Jeff Klinefelter
Piper Jaffray makes a market in the securities of the following companies, and will buy and sell the securities of these companies on a principal basis: AEO, ANF, ARO, BODY, CROX, CTRN, DECK, GCO, GES, GIII, GMAN, GPS, HOTT, KORS, KSS, PSUN, ROST, RUE, SKUL, TGT, WTSLA, ZUMZ

Piper Jaffray or its affiliates beneficially own 1% or more of any class of common equities of the following companies: JCP

For Jim Iuorio
Iuorio is long (SPY) calls

For Jing Ulrich
No disclosures

For Rich Greenfield
No disclosures with wires.