China’s 12th Five-Year Plan

Since 1953, Chinese economic planners have undertaken the time-honored exercise of drafting a five-year plan, also know as the 中国五年计划. It’s aim is to “arrange national key construction projects, manage the distribution of productive forces and individual sector’s contributions to the national economy, map the direction of future development, and set targets”.

Last week, the Chinese Communist Party endorsed the 12th Five-Year Plan (FYP) that sets out the economic and social targets from 2011 to 2015. The published document, in Chinese, is available here. These plans are watched closely the market has it give an insight to sectors with growth potential. In the FYP, 7 strategic key industries are identified for development. They are:

1. New energy: Developing clean or alternative energy from nuclear, wind, solar and bio-fuel sources,
2. Energy conservation and environmental protection,
3. New materials: Rare earth, alloys, membranes, high-end semiconductors,
4. Biotechnology: Drug and vaccine development, advanced medical equipment, biomedical research and development,
5. New IT generation: Broadband and mobile communication networks, Internet security infrastructure and artificial intelligence,
6. High-end equipment manufacturing: Aerospace, telecom and railway equipment and marine equipment,
7. New Energy vehicles: Electric cars, plug-in hybrid cars.

UOB Asset Management released a market commentary on this topic. Hope you will find it useful.

Alternative Investments

I am sure you are aware of the recent property regulation changes to HDB ownership. If you are considering landbanking in your investment portfolio, do note that an interest in residential land, even vacant land, constitutes ownership of private property. More from this article: http://www.asiaone.com/News/AsiaOne+News/Singapore/Story/A1Story20101001-240058.html

Having alternative investments in your portfolio is important as asset classes that were previously uncorrelated performed equally bad during the last financial crisis. However, some investors may not be aware that landbanking does not fall within MAS regulations.

MoneySense has come out with a consumer guide, “Land banking – Look Before You Leap”, highlighting the risks involved in such investments. In fact, the same cautious approach should be taken towards investing into other popular, unregulated instruments like Gold Bars and Wine. Most investors find such instruments palatable because it deals with physical goods and they are promised fantastic returns. However, like any investments, risks exists and investing through unregulated platforms is not encouraged.

News of such unregulated investments:

1. Land Banking – “Get Rich Quick” Property Scheme, 200 Lose $6m in Land Deals

2. Gold Bars – Tan Kin Lian’s Blog: Invest in Gold Bars, 60 Duped in Gold Bar Scam

3. Wine – Wine Deal Goes Sour, Investors worried after firms being investigated close shop

You can still invest in Real Estate, Gold Bullion and Wine through MAS regulated securities. Let me know if you like to find out more.

Hope you enjoy the read the have a great weekend ahead!