 Good day fellow investors! Today I'll share with you the five, among others, most important factors I use when I look at Chinese stocks to buy. And those factors have worked remarkably well in the past for me as if you have been following this YouTube channel you have seen. Now let's start with some general info and then dig into the factors. The interesting thing about China is that Chinese people cannot buy companies like Alibaba because they cannot invest in stocks traded around the world. They can only invest in domestic Chinese companies. And that really distorts the Chinese market because foreigners see China as a sentiment play and domestic investors can't really invest in the best companies in China because those are traded somewhere else. So there is a lot of irrationality that a rational value investor takes advantage of. If we look at the iShares China ETF you can see very positive 2014 raising going up in 2015 and then declining to the January 2016 lows again a year of limbo and then boom 2017 exploding to the high again reached in January and since then a slow but steady decline. So it's not really about fundamentals here it is perhaps goes slowly around fundamentals but is hugely based on sentiment. So when there is so much sentiment I wouldn't invest in an ETF I would dig into each component each stock and then see what is best what is really irrationally priced and as always look at the business look at the value of the business I am buying. So when I look into each stock on a sector on a market yes I look at each stock the last time I did that for China was a year ago year and something ago I looked at more than 80 Chinese stocks and that was just those traded on the New York Stock Exchange now I'm looking also traded those in Hong Kong but let's go through the factors that really helped me in the past to find very very good investment investments and investing winners the first thing is low price earnings ratio or future price earnings ratio the earnings are the basis of everything there has to be there have to be good underlying earnings and if that is combined with growth then you're already on a good way so strong earnings low price earnings ratio and growth because sooner or later the combination of growth and earnings comes up in the market the market gets gets a story gets what's going on or the earnings really develop well and then the market okay somebody starts buying it and then you have again positives momentum about the stock and that makes the stock price spike given the irrationalities in China it is possible to find low p growth stocks you will see later in the examples how we found them in the past now the second thing I look at are positive trends so China China is a growing economy developing very fast it went from zero to very big in the last 25 years so some sectors develop faster there some sectors develop slower it's not let's say it's not that everything develops at the same rate something goes faster something goes slower so there are a lot of fluctuations and you just have to pick that sector that trend that is growing at the faster rate but the market thinks it's not or the market doesn't recognize the above average growth one sector that I really like I still like it in China is the online growth sector it grows much faster than the economy the Chinese are very technologically friendly and everything that's related to online grows very fast some stocks are fairly priced but some are very very cheap last year summer somewhere I made a video I also recommended the stock as a buy for the platform I was working back then why why the Chinese online scantily cladded girls platform I recommended it as a buy ratio above something somewhere around 60 to 70 and then the stocks paid to 140 however you see also you have to take care of volatility reduce in relation to risk reward and now it's back to 87.6 from the highs of 140 so what was there to play it was extremely cheap I believe the price earnings ratio was 10 back in July 2017 so big road huge platform why not I said and it worked out pretty well I think the target price was at 120 so that was a good call now something else that I like to find is the undiscovered gem in an already positive sector so last year somewhere in February March I think I looked at the Chinese education sector there were a lot of Chinese education stocks that were trading on the New York Stock Exchange and some were very expensive but some were really under under the radar one stock like that was high lung education so I recommended this somewhere in 2017 nobody wanted to touch this stock it was trading at around eight dollars for a long long time and the liquidity was very very low however I compare that stock with other Chinese online education stocks this is the table from last year so don't take it for real data just to show and I've seen that the price earnings ratio was 15 the price book was very low and the price earnings ratio was low and it was in fact even lower because they just invested in a brand new school they invested in hiring the teacher so huge operating upfront costs that would increase profits in the future down the road as the school went into play so I bought so I recommended this it was low liquidity I didn't manage to buy a significant position to myself for myself but still still the story came out slowly it exploded later it was a 10 bagger now it dropped I think yesterday a lot but that's a different story already so something like that you have to have patience because you have to resist the years that nobody wants to see such a stock but if it is good if it is legit you can buy that this leads to number four be sure it's not a fraud check as much as you can as much as you can I checked whether the school was built in the city they were building it whether everything is going to plan in the past have there been some frauds has the CEO frauded shareholders or something if there is pretty much a lot of stability then you might risk something it's always risky you never know but still try to check check check another company that I recommended recently for my stock market research platform I recommended it to buy at 10 I think was CQ Holdings an online luxury platform so you have online that I'm positive about in China luxury okay growing we made an analysis everything and then what told me it was not a fraud well I found two reports one from Paribas one from Deloitte one independent and that independent report really gave a great analysis of the Chinese online fashion retail luxury and that was made for the fashion industry mostly but CQ came all there at all the goods points so it was an unbiased view made by professionals so I said okay this could not be a fraud check check check check check and I said okay let's take the risk because the risk reward especially if the company continues to grow like it did is was extremely positive and then number five embrace short-term volatility this is key another company that I discussed already here on youtube and said it was a buy is Xinyuan real estate I said it was a buy somewhere 570 I think last year in a video then it went above seven I think close to eight and now it is below four again so again if you look at this as if you didn't sell at seven as I did most with most of my position then you did not good but that's always risk reward something very difficult to think about when investing in Chinese stocks so similarly why why spike then it's down big time so expect a lot of volatility and the key with that volatility is to know really the company really really well what's going on and what can happen the pain for Chinese real estate continues and that's why you see Xinyuan going down they have a lot of debt a lot of cash but that's something that you can have to follow constantly on a model so that's something very important the better you have the earnings model the more you know about the company the better you will understand the company and then you will know okay given the volatility of the market which is based on sentiment is Xinyuan now a buy or not the more you know the easier you will get that answer on on this or any other Chinese company I still have to make a model on Xinyuan in detail and readjust for some things to see hopefully it will go even more lower where it might be an even better bargain we'll see so keep in mind always the risks focus on the potential but always keep in mind the risk the beautiful thing is you can only lose 100% you cannot lose more than 100% of what you invest the upside is always unlimited so this is what I do now I'm researching China Chinese stocks every day I research some of them make a business report make a video about them subscribe to this youtube channel if you want to see more and more videos about Chinese stocks tomorrow we'll talk about Guangxiang Railway which is an interesting Chinese stock and there will be plenty plenty more as we go along and as I go along with my research platform if you want detailed research reports risk reward analysis and earnings models and coverage on the stocks that saves you a ton of time and I think it's worth the money then please subscribe to my research platform the link is in the description below please add some factors in the comments share what has worked for you or what hasn't worked for you that's equally important thank you I'll see you in the 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