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Chinese stocks expensive compared to other BRICs

By Lora Coventry
Thursday April 15, 2010 at 11:30

“To capitalise on the country’s strong economic performance, investors should instead seek out companies in Russia, Brazil and other developing markets that are directly benefiting from China’s expansion - offering similar growth potential but, crucially, at cheaper prices,” it says.

It points to steel manufacturing in China as an example, saying it has been rapidly expanding to feed the country’s booming housing and infrastructure build-out.

As the world’s largest buyer of iron ore – the primary raw material for steel production – China drives the global market, boosting companies such as Brazilian mining giant Vale. During the fourth quarter of 2009, Vale derived 44 per cent of its iron-ore sales from China.

“The country’s huge demand for energy, metals and other commodities to support manufacturing and infrastructure development has created very attractive equity opportunities in other emerging markets,” Claudio Brocado, portfolio manager on Batterymarch’s emerging markets investment team says.


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