In a Business Week article, Lei Wang, co-manager of Thornburg International Value Fund has top holdings in Chinese stocks:

1. Hong Kong Exchanges & Clearing

Although Exchanges, which operates stock and futures exchanges as well as their related clearing houses, was down 48% in the first half of the year, Wang is upbeat about its future growth. Wang predicts more money from mainland China will go overseas, both from institutional and individual investors. “Exchanges eventually will allow dual listing by foreign companies and become the first parking lot for those who seek global investment diversification,” says Wang.

2. China Mobile Communications (CHL)

a. China Mobile, with 407 million subscribers, is the largest and still the fastest-growing mobile phone operator in China. It’s difficult for its two major competitors to play catch-up while China Mobile boasts the best network and 87% share of the market of new subscribers.

b. With Apple abandoning profit-sharing arrangements with carriers that offer its popular iPhone, China Mobile will probably to be the one to introduce iPhone to China

c. China Mobile will maintain its dominance in the marketand unlike many global wireless phone companies, it doesn’t have any debt.

3. China Life Insurance (LFC).

a. So far, life insurance has low market penetration in China. While the industry accounts for 4% of U.S. gross domestic product, it only takes up 1.7% in China.

b. China Life is in the sweet spot to catch that growth.

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Matthews China Fund manager Richard Gao thinks the Chinese economy will be less export-dependent and more domestic-driven. As it is for most investors, for Gao, diversification is key. He likes companies that have diversified businesses across China, not just in top-tier cities,” he says.

Among Matthews China Fund’s top 10 holdings:

1. Shangri-La Asia

According to Gao, the five-star hotel chain has established a strong brand in Asia. It has 36 hotels in mainland China, more than half of its Asian outlets.

2. NWS Holdings

This Hong Kong company invests heavily in all types of infrastructure in China, from toll roads, power plants, and water treatment to exhibition space and transportation.

3. SINA

According to Gao, China has the largest Internet user base in the world, and Sina.com is the most popular Web portal in China with a more than 30% growth rate.

China Merchants Bank

4. China Merchants Bank

a. It’s the best-run bank in China

b. It has a more experienced management team; and a strong wealth-management business.

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