Three plays on green China

Fund manager Philip Ehrmann aims to invest in companies that are geared to long-term trends in sustainable environmental, social and economic growth in China. Here, he picks three of his current favourites.

After 20 years of spectacular growth, China became the world's third-largest economic power, with GDP growing 13% year-on-year in 2007. But momentum began to weaken last year, largely due to tighter fiscal and monetary policy. Export growth has also been hit by the financial crisis and the downturn in developed countries. In response, China's central bank has slashed interest rates since September 2008. The government has also introduced measures, such as a $586bn stimulus package, to boost the economy. These moves are intended to speed up China's long-term aims to steer the economy from export-led growth towards broader-based, domestically driven activity.

I aim to invest in companies that are geared to long-term trends in sustainable environmental, social and economic growth in China. Take China South Locomotive and Rolling Stock (HK:1766). China has committed $1 trillion to developing transport infrastructure between 2006 and 2010, with $193bn allocated to railway-based projects over the next five years. This is the most significant railway undertaking in the world today. The stimulus package also included a $110bn budget increase for railway construction over the same five-year period. The budget for buying new trains was also raised by about 67% for the next four years.

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China South LocomotiveHK$4.46HK$1.86HK$3.85
China EverbrightHK$4.16HK$0.42HK$1.53
Shandong WeigaoHK$14.80HK$5.76HK$13.26