Chinese Stocks Like Longtop Financial Technologies (LFT) Are Set to Soar

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Stock	Grade
ASIA Asiainfo Holdings Inc.
CSKI China Sky One Medical Inc.
LFT Longtop Financial Technologies Ltd. (ADS)
SNDA Shanda Interactive Entertainment Ltd. (ADS)

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Here's a question for investors: What country has the hottest stocks in the world right now?

Answer: China.

It's true. Subscribers to my Global Growth service have been racking up huge gains by investing in this emerging giant. We're sitting on profits of over 50% in China Sky One Medical (CSKI). We're up over 60% in Asiainfo Holdings (ASIA). Since I first recommended Shanda Interactive (SNDA) less than four months ago, the stock has exploded for a 65% gain.

I can't stress this point enough: Investors need to have a good slice of their portfolio invested in Chinese stocks.

The potential for China is far too large to be overlooked. As Chinese stocks continue to grow their earnings, even in a global recession, they'll attract international investors and move up no matter what happens to the broader market, just as we saw last week as the major indexes lost ground.

China's Stimulus Program Is Working

Let's take a look at China's economy.

The stimulus program enacted earlier in the year was incredibly effective. Compared to our slow-moving $787 billion stimulus package, of which a mere $45 billion has entered the economy, China's "smaller" $585 billion plan has already been spent in full, meaning the People's Republic has outspent the U.S. approximately 13 to 1, and it's clearly paying off.

The economic influence in the world is unquestionably shifting from the U.S. to China. The fact that China is no longer buying our Treasuries is one of the reasons why Treasury yields are higher. President Obama may talk tough about reducing debt, but the current spending levels will continue to erode the value of the U.S. dollar and send Treasury bond yields even higher in 2009.

In the meantime, China continues to push the offensive against America's currency in an effort to gain economic clout.

China's yuan is tied to a basket of currencies, and Beijing is now calling for a similar valuation for a new world reserve currency. It's obvious that Chinese leaders are suggesting the yuan replace the U.S. dollar -- quite an ambitious proposal!

Naturally, most of China's bluster is just politics and based on Beijing's desire to assert its status as one of the world's leading economies.

But make no mistake: China is smart and has no intention of losing money by keeping its excess currency reserves in U.S. dollars. The country is now diversifying into gold, copper and other commodities, as well as re-investing in its own economy instead of throwing money at us, wasteful America.

I can't really blame them!

Longtop Financial Technologies Is Modernizing Chinese Banking

There are several great ways to invest in China's future. One of my favorite Chinese stocks is Longtop Financial Technologies (LFT).

The company makes software for financial companies in China. In particular, it manages Chinese ATMs, tellers, call centers and Web sites. Longtop's business products help banks conduct transactions like international finance, payments and settlements, including credit card operations. Among its customers are leading Chinese banks, including China Construction Bank, Agricultural Bank of China and Bank of China.

Just like everyone else, China's economy has slowed, but it's still going strong and providing modern amenities to underdeveloped rural regions throughout the country. Banks and all the services that go with them are a booming business right now, as millions of Chinese continue to make the transition to a 21st century economy and modern personal finance instruments like debit cards.

Longtop just reported outstanding earnings for their fiscal fourth quarter (ending in March). Sales jumped 60%, and earnings soared 76%.

The CEO added, "We are off to a promising start in fiscal 2010."

Banks continue to dominate the company's customer base, with insurance companies being the next most important industry. Trading volume has surged in the past few weeks, pushing the stock price higher.

Longtop Financial Technologies is a very strong buy.

Is this market rally for real? A lot of companies beat earnings expectations last quarter, but many of those gains were due to cost-cutting, not increased revenue. You still have to be selective in choosing stocks that have solid fundamental reasons for growth. Louis Navellier screens his picks against strict momentum growth criteria. Click here to get his new FREE special report, Top 5 Stocks to Own Now, absolutely FREE!