Chinese Water Investments
Profitable Stock Opportunities from China’s Acute Water Problems
Jun 2, 2007
Less than 15% of China’s 1.3 billion people access safe drinking water from a tap.
China uses up to 15 times more freshwater overall than more developed countries while its usable water resources steadily decrease.
Further research from Aqua Terra Asset Management shows that two-thirds of China’s 600 largest cities don’t have enough water. Half of these cities have severely polluted groundwater while a quarter suffers critical water shortages. China’s northeastern provinces have it the worst, where half of China’s population has to live on only 14% of China’s total water resources.
Each with 7% of the Earth’s total fresh water, the People’s Republic has the same amount of water as Canada. However, there are 40 times more Chinese than Canadians.
China’s water reserves are a mere 25% of the global average. According to the United Nations, China is one of the 13 countries with the lowest water per capita in the world.
There are two interrelated reasons why water is a scarce commodity in China:
- As a result of accelerated economic growth, Chinese people continue to migrate from farming communities to new industrial zones that use much more water.
- Chinese waters are so polluted that they can’t support aquatic life
Here are some more alarming statistics about China’s water situation:
- Daily, half of China’s population drinks water contaminated with animal and human waste that exceeds permissible levels.
- Water-born pathogens are responsible for an excessive absentee rate for a third of China's workforce in industrial zones.
Chinese Water Opportunities
Over the next 5 years, the People’s Republic will spend over US$125 billion on its water infrastructure. This opens up China to foreign investment, and motivates participation in China’s water industry which Aqua Terra estimates will grow 15% this year accelerating up to 20% through 2010.
Investorideas.com describes two individual companies set to benefit from Chinese water demand. Hendrx Corp. (HDRX on OTCBB) is a water technology company that provides water generation, filtration, ionization and purification.
WaterBank of America (WBKA on OTCBB) makes bottled water and hygienic, ready-to-freeze ice cubes known as ICEROCKS. These products offer an alternative to unsafe water supplies and thus complement Beijing’s efforts to upgrade the country’s water resources.
Perhaps the surest investments to benefit from China’s water industry buildout come in the form of established players in the global water industry, such as:
- Water-solution companies domiciled in China, Singapore, Japan and Korea
- Large European firms like Veolia Environnement (VE on NYSE) that have already penetrated the water sector in China
- The geographically diversified Claymore’s S&P Global Water Exchange Traded Fund (CWW on TSX) which has 72% of its assets outside the U.S. including foreign equities not accessible to American investors
- Expert global water industry specialists like Aqua Terra Asset Management.
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