Now is the right time to step into the share market

Forget the scares, valuations are low in absolute and relative terms and all that is needed is a trusted and experienced mainland stock picker

PUBLISHED : Monday, 17 June, 2013, 12:00am
UPDATED : Monday, 17 June, 2013, 5:17am

Nothing seems to arouse more emotion among ordinary investors than the topic of investing on the mainland.

Most investment topics are fairly mundane affairs that might only cause eyebrows to furrow, as in "I wonder if I could make any money investing in Vietnam" or "How can I put some more money to work in emerging markets?" or "I wonder how the US market will do this year". But not the mainland.

There seems to be a button that gets pushed whenever the mainland investment story is raised.

God forbid you are at lunch during a mainland discussion because then you need to push aside your salad as you know you are going to get treated to an epic saga about how millions have been made or lost there due to some combination of friends who cultivated or failed to cultivate relationships with the "correct" government officials, partners who have not returned from extended holiday, hot or sour initial public offerings, and the inability to enforce claims.

To put things into a bit of perspective for us sitting just outside the mainland's borders, I wonder whether there are any investors on the Mexican side of the border who have spent decades explaining to their friends and acquaintances that they are worried about what might happen in the United States and therefore it is best to do nothing and wait until the right investment opportunity arises.

And, while this conversation is going on, companies on the other side of the border continue to do what others have done for ages: offer a product or service, charge a price, and earn a profit or go out of business.

Yet here we sit and watch as pundits spread fear that mainland stock prices continue to go nowhere as investors gravitate towards the US economic recovery, as investors stay on the sidelines because of poor corporate governance, as US regulators scrutinise audit transparency, as the latest scandal is exposed and as short sellers cause fear.

While many investors are exiting or sitting around waiting, my advice is to find a trusted, experienced mainland stock picker and invest. Run, don't walk, to his or her office and get going.

There is no better time than now as stock valuations are low in absolute and relative terms.

The next time you hear one of these scary mainland investment stories, simply nod your head in agreement and smile as you recall that you got into the mainland market when everyone else was focused more on rumour than fact, and you did it at bargain prices.

To share your happiness, when the mainland stocks in your portfolio begin to perform thereby causing your momentum, performance-chasing friends to pile in (as investors have done for millennia), offer to buy them a salad with a bit of your gains. And don't forget to take profits at that point.

Robert Jones is head of FCL Advisory, which advises family offices and wealthy individuals