Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China World Wide Investing Ushering in the Next Asset Model

Stock-Markets / Investing 2011 Feb 08, 2011 - 11:13 AM GMT

By: Justin_John

Stock-Markets

Best Financial Markets Analysis ArticleThis is not a typical day trading article but rather medium term fundamental patterns which ultimately define every move including bond markets and currency markets.

The Heritage Foundation’s China Global Investment Tracker documents large Chinese investment overseas outside of bonds. The volume of this investment has exceeded $200 billion in the past five years. The tracker also contains information on nearly $100 billion in large construction contracts since 2005. These numbers will only rise as China seeks to find outlets for closing on $3 trillion in official foreign exchange reserves.


By year the amount are tracked here:

China has been increasing its overseas investments from 2005. Nearly $57 bn dollar of non bond investments were made in 2010.

So where is China investing? Well Take a Guess! IT IS EU.

Australia takes the cake as the single largest country with nearly $34 bn are invested. US is second with nearly $28 bn invested. But if we consider EU as a whole then EU beats the US and Australia handsomely with $35 bn investments. Brazil is the third-largest target for Chinese investment, trailing only Australia and the U.S., though Nigeria and Iran also boast large engineering contracts.

The growing traction between EU and China has been of tremendous concern in Washington though never spoken publicly. China move towards EU as its favored destination is a significant step in delevering itself from the US dollar.

China Investments by sectors

China has invested nearly $100 bn in overseas energy resources and $60 billion in the metals sector. That explains the overwhelming ride in the commodities market in 2010. And yet Gold is just at $1350/ounce. Hopefully Gold bulls will take note that Gold is way too over supplied in a world surrounded and ruled by bond markets.

Another line of thought….

The growing proximity between China and EU will ultimately take EURO to levels unforeseen. We have a long term and medium term bullish perspective on the EURO. What happens to the US ? Well US will crash down from a developed economy to a third world economy once China completely migrates its forex reserves away from the US dollar into EUROs. The process is progressing as seen above. Soon China will not need to buy any US dollar bonds to peg its currency and finally can sen its existing reserves as well as they would have been converted into other currencies.

China is really going to dump the US bond markets and we will see that long awaited bond market failure. The failure at first may not seem to be a failure as yields rise to a fantasy recovery which only the FED can understand, later on to be led by commodities and finally in the final stages when China, India and Russia will all dump the dollar bonds into an abyss of no return. We will not have a US dollar in about 2 years time. Looks aggressive? Wait for the unraveling to begin no later than October 2011 as 10 year yields will cross 4.5%.

We stand by our call that US economy is dusted and over. We are in the last few months of a massive bull trap before the asset re pricing that is to hit the whole world in 2011/12. Asset repricing is a painful process where sovereign debt and assets are restructred and written off as investors will take a hit on their holdings. Who will emerge as the new axis powers of this decade from Asset Repricing of 2012? China, India, Brazil and Russia. Countries who will dump the US dollars and migrate to the EUROs through FDI investments into EU and Asia-Australia. What happens to EU debt problem? Well the asset re pricing will write off a lot of debt in Europe but EU will be relatively stable cause of China holding and backing in the bond markets. Infact EU will raise rates even while asset re pricing process kicks-on which attract even further capital. The 2010 floated euro fund (EFSF) will serve as a proxy treasury for the new model to be ushered in.

But the scope of this article was not to discuss the asset re pricing model but rather to throw light on the Chinese strategic investments. The trend is to diversify Chinese reserves to acquire resources around the world with EU leading the path and attention of Chinese investments.

Source: http://dawnwires.com/investment-news/...

By Justin John

http://dawnwires.com

Justin John writes for DawnWires.com and is a Director at a European Hedge Fund.

© 2010 Copyright Justin John - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 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