Safer ways to invest in Chinese stocks

Article Excerpt

Chinese stocks have lagged behind North American markets this year. That’s partly because investors are concerned about collapses of Chinese reverse-takeover stocks (RTOs), like Sino-Forest. That concern has spilled over to even high-quality Chinese stocks. RTOs bought bankrupt North American companies that were already listed on U.S. or Canadian exchanges. That bypassed the more rigourous initial public offering (IPO) process. Most are sound companies, but some, like Sino-Forest, have been accused of falsifying contracts and asset holdings. Still, the long-term outlook for China, and Chinese stocks, is bright. One of the best ways to profit is through low-fee exchange-traded funds (ETFs). Here are two Chinese ETF recommendations. One invests in all of the publicly traded Chinese stocks available to foreign investors. The other holds small-cap Chinese stocks. Neither fund holds reverse-takeover stocks. SPDR S&P CHINA ETF $78.27 (New York Exchange symbol GXC; buy or sell through brokers; www.spdrs.com) is an exchange-traded fund that aims to track the S&P China BMI Index. This index is…