The Chinese stock market bears are no doubt going to seize on the collapse in Chinese exports this month to strengthen the case against investing in China.
But this just means it's an even better time to put some money in the Chinese stock market.
These "bearish" indicators have been routine over the past year. Near the end of 2014, investors saw a slowdown in retail and output. In January, China notched its weakest growth in 24 years. And car sales have begun to fall in what has become the world's most robust automotive market.
And then, there were reports today (Monday) that exports fell 15% in March from the same period last year.
The headlines are fueling further negative investment sentiment for China.
But getting out now or brushing off the Chinese stock market altogether is a mistake.
"A big percentage of the time, the best time to buy something is when everyone else hates it," Money Morning Executive Editor Bill Patalon said. "China has been out of favor and there are a lot of concerns about it, but the reality is that over the long-haul, I don't think you're going to stop the social and economic progress that you're seeing. I think that's what you have to look at."
With China, investors are looking at a country with 1.4 billion people. This has already spawned a massive consumer market that is going to grow in the years to come. And both the growth of the economy and the middle class is only going to bolster the case for investing in China.
This past year, the Chinese economy overtook the United States in purchasing power parity (PPP) terms. According to consulting firm A. T. Kearney, GDP per capita in PPP terms has grown from $5,040 in 2005 to $11,940 in 2013. That's projected to grow to $20,810 in 2020, according to the Economic Intelligence Unit.
"The economic forces that are at play there - you're just not going to stop it," Patalon said. "The economic center of the world is shifting to Asia. And China is going to be the linchpin to all that. You have to have some money there."
That being said, China won't come without its problems.
"Right now they're talking about growth slowing and all these credit problems over there," Patalon said. "There's instability socially, there's a big problem with income inequality, there are issues with food quality, there are a lot of issues about patent protection and intellectual property - and all that stuff is true."
But investors can't ignore the growth potential of China. While everyone else is looking the other way, now is a good time to start buying.
Here's where you can begin investing in China today...
Invest in the Chinese Stock Market with This ETF
The simplest way to get in front of what promises to be a massive growth story in China is a broad exchange-traded fund (ETF).
Investors should consider the iShares China Large-Cap ETF (NYSE Arca: FXI).
A broad market ETF may sound simple, but you'll want to be savvy with how you invest. FXI is a good vehicle to spread risk across the board in what is a promising - yet still uncertain - emerging market. But it's not as simple as pouring all your money into FXI.
FXI is, first and foremost, a long-term play. It's not a speculative China ETF play. So you shouldn't be looking to throw a lot of capital into it now while Chinese sentiment is becoming more bearish in the West's eyes and hope to get out when it becomes more positive.
"You don't want to overinvest in it, you don't want to back up the truck and buy it," Patalon said. "It's something you should be willing to buy and put away, knowing that you're not even going to look at it for a couple of years."
From there you'll want to buy on the dips incrementally.
[epom key="ddec3ef33420ef7c9964a4695c349764" redirect="" sourceid="" imported="false"]
The FXI portfolio has 50 equity holdings from the Chinese stock market, with an average market cap of $89.1 billion, according to Morningstar.
Here's a rundown of some of the more notable holdings.
Tencent Holdings Ltd. (OTCMKTS ADR: TCEHY) is the largest holding for FXI, at a 9.1% portfolio weight. Tencent entered into a partnership with JD.com Inc. (Nasdaq ADR: JD) last year. This gives Tencent some skin in the game when it comes to one of the most exciting opportunities in China right now - e-commerce.
China Mobile Ltd. (NYSE ADR: CHL) is a telecom giant that comprises 7.9% of FXI's holdings. China Mobile is positioned well with Japan actively working to weaken the yen. This will only help because Chinese telecoms "are going to be buying lots of Japanese electronics now that they're being put on sale because [Japan's] currency is going down," Money Morning Chief Investment Strategist Keith Fitz-Gerald said.
Lenovo Group Ltd. (OTCMKTS ADR: LNVGY) has a relatively small 1.8% weight in the FXI portfolio. But you can't deny Lenovo's allure as the premier Chinese computer company. This Chinese tech play has been eating up the hardware that International Business Machines Corp. (NYSE: IBM) doesn't want. Not content with the purchase of only IBM's PC division in 2005, in the last year, Lenovo bought up IBM's low-end server business as well. This is a great move for the Chinese tech giant. IT is fast moving away from mainframe-centric data center architecture to one that favors a farm of smaller, low-end servers. And the x86 business Lenovo just nabbed from IBM is going to get in front of this shift.
Chinese Growth Fears Have Beaten Up Bitauto Holdings Ltd...This stock is a play on two very important sectors in the Chinese economy - both its massive automotive industry and its growing e-tailing market. But the release of soft growth numbers has hit Bitauto stock on both fronts. That's why it's a bargain right now...