Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



China's Megatrend Stock Bets

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Where do you invest when you have $2.4 trillion in foreign exchange of reserves (and growing) and you're already overweight U.S. Treasury bonds? The China Investment Corporation (CIC), a Chinese sovereign wealth fund, gave us a glimpse of the answer this week with its first 13-F filing with the SEC. The document, which lists 84 holdings in U.S.-traded shares with an aggregate value of $9.6 billion, makes for very interesting reading and suggests China is placing bets on some huge trends.

Although the filing is incomplete and covers only a small portion of the $300 billion fund's investments, it highlights China's efforts to diversify out of the dollar. The iShares MSCI Emerging Market Index ETF (NYSE: EEM  ) and the iShares EAFE Index ETF (NYSE: EFA  ) are among the top 10 filings listed in the index [EAFE: Europe, Australasia and Far East].

The bull in an energy shop
CIC also appears to be betting on a trend of which China is arguably the largest driver: increased demand for energy and commodities. No one is better placed than China to understand the rise in commodity/energy demand from emerging economies. Last year, it became the largest buyer of Brazilian exports, and the largest trading partner of Australia ... and probably of Iran. All three nations are major commodity/energy exporters. The iShares S&P Global Materials ETF and the SPDR Energy Select Sector ETF (NYSE: XLE  ) are the 6th and 7th largest positions listed in the filing, respectively.

Gold fever
Finally, if you own nearly $800 billion in U.S. Treasury securities and you're concerned about the value of the dollar, how do you hedge yourself? Gold is one option. CIC has taken significant positions in the SPDR Gold Shares ETF (NYSE: GLD  ) and the Market Vectors Gold Miners ETF (NYSE: GDX  ) (these positions are dwarfed by the Chinese central bank's three-fourths year-on-year increase in gold reserves).

While CIC made large investments in Morgan Stanley (NYSE: MS  ) and Blackstone (NYSE: BX  ) through private placements, individual investors are on a level playing field when it comes to buying the ETFs mentioned above. In fact, I'd recommend that asset allocation-oriented investors spend some time thinking about these very same themes, which are likely to have an enormous impact on asset values over the next three to five years and beyond.

China is concerned about the value of the dollar and U.S. investors should be as well. Tim Hanson explains why it's time to get out now!

If you're concerned about the threat of inflation – and other risks facing the economy -- focus on companies with sustainable dividend growth. The team at Motley Fool Income Investor can show you how to build -- and manage -- a portfolio of high quality company stocks with robust dividend yield. To find out their six 'Buy First' stocks, take advantage of a 30-day free trial today.

Fool contributor Alex Dumortier loves macro-themed investing and can be followed on Twitter; he has no beneficial interest in any of the stocks mentioned in this article. Try any of our Foolish newsletters today, free for 30 days. Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1109890, ~/Articles/ArticleHandler.aspx, 10/22/2016 2:25:04 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 17 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:01 PM
BX $24.07 Up +0.45 +1.91%
The Blackstone Gro… CAPS Rating: *****
EEM $37.60 Down -0.01 -0.03%
iShares MSCI Emerg… CAPS Rating: ***
EFA $58.19 Down -0.13 -0.22%
iShares MSCI EAFE… CAPS Rating: **
GDX $24.62 Down -0.19 -0.77%
Market Vectors Gol… CAPS Rating: ***
GLD $120.83 Up +0.09 +0.07%
SPDR Gold Trust CAPS Rating: **
MS $33.44 Up +0.54 +1.64%
Morgan Stanley CAPS Rating: ****
XLE $70.19 Down -0.46 -0.65%
Energy Select Sect… CAPS Rating: ****