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This was supposed to be a very bad year for Chinese tech stocks.
A very bad year.
After all, President Donald Trump took office in January after months of criticizing China's trade policies. And since then, he's been heard screaming for tariffs.
So it's no surprise that the know-nothings on Wall Street and in the establishment media continue to warn of a trade war with the world's most populous nation. (After all, that's where tariffs would put us.)
However, both the media and the Street both are missing a key fundamental driving China's economy - internal growth, especially on the Internet, untouched by trade.
It's a sector that must be in your portfolio.
And I've dug up a way for you to get into the Chinese web sector - with very little risk to your portfolio.
So far in 2017, it's demolished the S&P 500 by more than sixfold.
And there's plenty more of that ahead...
Where Optimism Pays Off
This is not news to you folks.
Exactly two weeks after Inauguration Day, I told you not to give into pessimism about China. I said I didn't believe we'd see a trade war - and I showed you a great way to play China's high-growth e-commerce sector.
Now that most second-quarter earnings reports are behind us, I wanted us to take a look at just how well our China e-commerce play has done.
You might wonder why I was so bullish on China's e-commerce stocks earlier this year when most other analysts saw trouble ahead.
That's a fair question, given that I'm a Silicon Valley guy, not a China guy. Here in the Valley, I've served as a strategic advisor to a dozen tech startups and was an advisory board member of a venture capital firm. I talk to tech CEOs all the time - in fact, sometimes we go sailing together on San Francisco Bay.
And it's those Silicon Valley sources that let me in on this modern Chinese secret.
Just about every tech exec I talk to emphasizes the importance of China. It's now the world's second-largest economy - and one with a massive shift to urban centers and a rising middle class who are spending a lot of their money while online.
Last year, 43 million more Chinese citizens logged onto the web for the first time, according the China Network Information Center. As a result, some 731 million Chinese are now online. That makes China's web population more than double the size of the one we've got here in the United States.
And it's still has a lot of room of growth. Here at home, roughly 85% of us are online these days, but in China, they're just a little over halfway there.
That means 700 million more Chinese are heading online over the next few years. Even if we cut that in half, to be conservative, that still means more than 1 billion Chinese people will soon be getting the news, viewing videos, using email, and, of course, shopping via the web.
The analysts at Forrester note that online sales, including those from mobile devices, stood at roughly $307 billion in 2014. By 2019, that figure will have more than tripled to $1 trillion.
And when it comes to making big money on this red-hot sector, I have an insider's edge here as well...
Your Piece of a $1 Trillion Pie
See, Kevin Carter is one of those Silicon Valley executives I know - we have lunch together pretty frequently. Carter is the founder and chairman of the Emerging Markets Internet & E-Commerce ETF (NYSE Arca: EMQQ).
This exchange-traded fund is based on the Emerging Markets Internet & E-Commerce Index. This is a group of companies that derive at least half of their revenue from emerging markets and frontier economies and have at least a $300 million market cap.
Make no mistake. The emerging and frontier markets this ETF targets are set for explosive - or better - growth.
Back in 2010, world consumption was split $12 trillion to $26 trillion in favor of developed economies. By 2025, the projection is a $30 trillion to $34 trillion split.
Over that 15-year cycle, developed economies will grow by a respectable 25%. But emerging markets will roughly triple.
With this fund we also get some geographic diversity as well. It's mostly focused on China, but EMQQ also holds stocks in Africa, Eastern Europe, India, and Latin America.
EMQQ's top holdings include Chinese e-commerce stars like Alibaba Group Holding Ltd. (NYSE: BABA), Tencent Holdings Ltd. (OTCMKTS: TCEHY), and JD.com Inc. (Nasdaq ADR: JD). But it also owns a number of lesser-known e-commerce stocks that are focused on emerging growth sectors.
Take a look...
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.