Investors looking to move beyond U.S. borders are often attracted to emerging markets for an increased potential for growth. It is rare that a discussion of emerging markets comes up without anyone mentioning China. And there is a good reason for this. Growth in China has often topped double digits and still greatly exceeds the growth in most developed markets. But with the potential for growth comes risk. China is still a country with an autocratic government where government interests frequently result in the supporting of Chinese owned companies over foreign companies. For those looking to get in on the emerging market other developing nations are often compared to, investing in China may deserve a closer look. Here we will take a look at a small selection of companies with Chinese market exposure.
Emerging market airlines
While there are numerous flights offered to and from China by airlines around the world, those looking to focus on air travel within China should take a look at Chinese based airlines. China Eastern Airlines Corp. Ltd. (ADR) (NYSE:CEA) and China Southern Airlines Co Ltd (ADR) (NYSE:ZNH) are two of the largest Chinese airlines traded on the NYSE.
Both China Eastern Airlines Corp. Ltd. (ADR) (NYSE:CEA) and China Southern Airlines Co Ltd (ADR) (NYSE:ZNH) have rallied alongside the market and other major airlines since the summer of 2012 gaining 48 percent and 32 percent respectively. Neither airline pays a dividend, but this is typical in the airline industry, not just among foreign airlines. What could make these airlines appealing though is that the P/E ratios of both carriers are in line with airlines in the American market. But unlike the American market, which is fairly saturated, the Chinese market could continue to see higher than average growth as more people move to cities and a stronger middle class increases leisure travel.
While Google Inc (NASDAQ:GOOG) has a strong presence in much of the world, China’s Baidu.com, Inc. (ADR) (NASDAQ:BIDU) is giving Google a run for its money in China. Like Google Inc (NASDAQ:GOOG), China’s Baidu.com, Inc. (ADR) (NASDAQ:BIDU) does more than just Internet searches. Among its portfolio of offerings, one of the company’s divisions involves itself in travel booking. China’s Baidu.com, Inc. (ADR) (NASDAQ:BIDU) owns the travel booking company Qunar which, despite just being one part of China’s Baidu.com, Inc. (ADR) (NASDAQ:BIDU), has passed Chinese travel booking site Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) in airline ticket sales.