Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Gold Price Closely Tracks Debt-to-GDP Ratio - 9th Apr 20
Gold, Silver and Rigged Market Socialism - 9th Apr 20
Going to School in Lockdown Britain, Dobcroft Sheffield - 9th Apr 20
Amazon Face Masks to Protect Against Covid-19 Viral Particles N95, FPP2, PM2.5, for Kids and Adults - 9th Apr 20
Is Natural Gas Price Ready For An April Rally? - 8th Apr 20
Market Predictions And The Business Implications - 8th Apr 20
When Will UK Coronavirus Crisis Imrpove - Infections and Deaths Trend Trajectory Analysis - 8th Apr 20
BBC Newsnight Focuses on Tory Leadership Whilst Boris Johnson Fights for his Life! - 8th Apr 20
The Big Short Guides us to What is Next for the Stock Market - 8th Apr 20
USD Index Sheds Light on the Upcoming Gold Move - 8th Apr 20
The Post CoronaVirus New Normal - 8th Apr 20
US Coronavirus Trend Trajectory Forecast Current State - 7th Apr 20
Boris Johnson Fighting for his Life In Intensive Care - UK Coronavirus Crisis - 7th Apr 20
Precious Metals Are About To Reset Like In 2008 – Gold Bugs, Buckle Up! - 7th Apr 20
Crude Oil's 2020 Crash: See What Helped (Some) Traders Pivot Just in Time - 7th Apr 20
Was the Fed Just Nationalized? - 7th Apr 20
Gold & Silver Mines Closed as Physical Silver Becomes “Most Undervalued Asset” - 7th Apr 20
US Coronavirus Blacktop Politics - 7th Apr 20
Coronavirus is America's "Pearl Harbour" Moment, There Will be a Reckoning With China - 6th Apr 20
Coronavirus Crisis Exposes Consequences of Fed Policy: Americans Have No Savings - 6th Apr 20
The Stock Market Is Not a Magic Money Machine - 6th Apr 20
Gold Stocks Crash, V-Bounce! - 6th Apr 20
How Can Writing Business Essay Help You In Business Analytics Skills - 6th Apr 20
PAYPAL WARNING - Your Stimulus Funds Are at Risk of Being Frozen for 6 Months! - 5th Apr 20
Stocks Hanging By the Fingernails? - 5th Apr 20
US Federal Budget Deficits: To $30 Trillion and Beyond - 5th Apr 20
The Lucrative Profitability Of A Move To Negative Interest Rates - Pandemic Edition - 5th Apr 20
Visa Denials: How to avoid it and what to do if your Visa is denied? - 5th Apr 20 - Uday Tank
WARNING PAYPAL Making a Grab for US $1200 Stimulus Payments - 4th Apr 20
US COVID-19 Death Toll Higher Than China’s Now. Will Gold Rally? - 4th Apr 20
Concerned That Asia Could Blow A Hole In Future Economic Recovery - 4th Apr 20
Bracing for Europe’s Coronavirus Contractionand Debt Crisis - 4th Apr 20
Stocks: When Grass Looks Greener on the Other Side of the ... Pond - 3rd Apr 20
How the C-Factor Could Decimate 2020 Global Gold and Silver Production - 3rd Apr 20
US Between Scylla and Charybdis Covid-19 - 3rd Apr 20
Covid19 What's Your Risk of Death Analysis by Age, Gender, Comorbidities and BMI - 3rd Apr 20
US Coronavirus Infections & Deaths Trend Trajectory - How Bad Will it Get? - 2nd Apr 20
Silver Looks Bearish Short to Medium Term - 2nd Apr 20
Mickey Fulp: 'Never Let a Good Crisis Go to Waste' - 2nd Apr 20
Stock Market Selloff Structure Explained – Fibonacci On Deck - 2nd Apr 20
COVID-19 FINANCIAL LOCKDOWN: Can PAYPAL Be Trusted to Handle US $1200 Stimulus Payments? - 2nd Apr 20
Day in the Life of Coronavirus LOCKDOWN - Sheffield, UK - 2nd Apr 20
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Why You Must Invest in China, Asia

Companies / China Stocks Jun 16, 2010 - 11:13 AM GMT

By: Tony_Sagami

Companies

Best Financial Markets Analysis ArticleAs an investor, you have choices. Lots of them.

One of the most important choices is where to allocate your dollars around the globe. It comes down to three choices: North America, Europe, and Asia.


Sure, you could add in Africa, the Middle East, and South America, but the investment opportunities are much more limited in those areas. So what is the economic outlook for the three top continents?

According to the World Bank, it expects the total global economy to grow by 2.9% to 3.3% in 2010 and 2011, but improving to 3.2% to 3.5% in 2012.

By the way, global GDP dropped by 2.1% in 2009.

The World Bank expects North America and Europe, which the World Bank describes as “high income” continents, to grow by 2.1% to 2.3% this year.

Developing economies, however, are expected to grow 5.7% to 6.2% a year from 2010-2012. The fastest growth of all will come from the East Asia and Pacific region, which the World Bank expects to grow by 8.7% in 2010 and by 7.8% in 2011.

The driver of that region’s growth, of course, is China, which the World Bank expects to grow by 9.5% this year.

The World Bank has a small army of brilliant economists planted around the globe, but I always look for confirmation. In China, confirmation of that robust growth is everywhere. In just the LAST week, I learned:

  • Foreign direct investment in China rose for a 10th month in May. Foreign companies, like Pepsi that announced it will spend $2.5 billion in China in the next three years to build new factories, are eager to tap into China’s growth and are building factories and stores all over China.
  • China is rapidly shedding its dependence on exports from its improving domestic economy. Retail sales rose by 18% in May, the third straight month of rising numbers. Rising wages are behind that growth. Example: More than 20 Chinese provinces and cities have raised minimum wages this year.
  • China has matured into the largest auto market in the world. Passenger-car sales jumped by 26% to 1.04 units in May, compared to the same period last year.
  • China’s export business is taking off too. Exports surged by almost 50% in May to $19.5 billion. Exports to Europe, China’s largest trading partner, grew by 34.4% and exports to the U.S. increased by 24.8%.
China has become the largest auto market in the world.
China has become the largest auto market in the world.

So which do you think is the most productive continent to invest your money? Europe with its expanding debt crisis and slow growth? The free spending U.S., whose national debt is on track to exceed its total economic output in a matter of months?

Or in Asia, where economic growth is strong, vibrant, and in my view, set to last for several more decades?

The answer is very clear to me. You need to keep a significant chunk of your equity portfolio in Asia. That doesn’t mean that you should sell 100% of your U.S. and European stocks because some U.S. companies, like Yum Brands and Tiffany, are doing gangbuster business in Asia.

What percentage of your portfolio you devote to Asia is a very personal decision, but I think anything less than 25% is a mistake and dooming your portfolio to underperformance, if not outright losses.

How should you go about including Asia in your portfolio? There are dozens of Asia-focused exchange traded funds (ETFs) and I’ve talked about them in this column several times.

ETFs are good, but I believe you will do much, much better by cherry picking Asia’s best companies.

First of all, there are more than 200 Chinese companies listed on U.S. exchanges like the NYSE, Nasdaq, and over-the-counter market, which means you don’t need to open a foreign trading account. It is as easy (and cheap) to buy 100 shares of China Mobile (NYSE:CHL) as it is to buy General Electric (NYSE:GE).

Here are some other examples: PetroChina (NYSE:PTR), Duoyuan Global Water (NYSE:DGW), New Oriental Education (NYSE:EDU), Mindray Medical (NYSE:MR), General Steel (NYSE:GSI), and China Housing & Land (Nasdaq:CHLN).

And that doesn’t include well-known Japanese companies like Toyota (NYSE:TM) and Sony (NYSE:SNE) or Korean companies like LG Philips (LPL).

A bevy of Asian companies are prospering on a growing demand for energy and technology.
A bevy of Asian companies are prospering on a growing demand for energy and technology.

Better yet is a very steady stream of hot-Chinese companies selling their IPOs on the NYSE and Nasdaq. Last week, for example, a company named China New Borum Corporation (Nasdaq:BORN) went public on the Nasdaq.

China New Borum is the largest wholesale supplier of corn and grain-based alcohol in China. This raw alcohol is used to make baijiu, China’s national drink that has an alcohol content of 18% to 60%!

Long-time readers of this column may remember my head-throbbing experience I had with baijiu during my trip to Xian last November:

Each one took turns making toasts, thanking me for my interest in their company, best wishes for each other’s business success, generously applauding my mediocre Chinese language skills, wished me a safe journey home and insulted some Wall Street snobs that refused to drink baijiu.

With each toast, you are expected to drain your small glass that holds about a half a shot of booze. The first two or three went down like water (famous last words) but after about the tenth or twelfth toast … I was starting to feel very … very DRUNK.

Neither I nor my Asia Stock Alert subscribers own China New Borum … yet. Baijiu is BIG business in China and when the time and price is right, China New Borum is a stock that I’d love to own.

If you’d like to be kept informed of these Asian IPOs, the best place to learn about them is at either Finance Asia (www.financeasia.com) or on my Twitter page. It is easy and free to sign up. Go to http://twitter.com/Tony_Sagami to sign up for my Twitter feeds.

Like any IPO, there are additional risks associated with buying into a young company, but the rewards have been and can continue to be tremendous.

Best wishes,

Tony

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules