Best of the Week
Most Popular
1.UK House Prices BrExit Crash NOT Likely Despite London Property Market Weakness - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit Implications for UK Stock Market, Sterling GBP, House Prices and UK Politics... - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.FTSE and Sterling Brexit Trading, Deconstruction of the EU Referendum Result - Nadeem_Walayat
7.UK Interest Rate Cut to 0.25% Imminent and More QE Money Printing - Nadeem_Walayat
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.The Stock Market is Reading it Wrong! - Chris_Vermeulen
10.Breakouts Galore in Gold and Silver - Jordan_Roy_Byrne
Free Silver
Last 7 days
Underpriced Silver Is the “Rip Van Winkle” Metal - 25th July 16
Declines in Multiple Market Indexes - 25th July 16
Retailers Are Doomed as Most Americans Are Too Poor to Shop - 25th July 16
Here’s One Currency That Could Go to Zero - 25th July 16
Stock Market Top is Expanding - 25th July 16
Silver Manipulation – Because They Needed the Eggs - 25th July 16
Silver Market COT Stuns: What's Going On Here? - 24th July 16
Gold Demand Remains Stable During Sector Weakness - 24th July 16
Sernova, Diabetes and Haemophilia - 24th July 16
Russia: Tensions, Turmoil, and Western Hubris - 24th July 16
Soybean Commodity Price to Soar Again - 23rd July 16
SPX Stock Market Uptrend Continues - 23rd July 16
Gold And Silver – Debt Addiction Will Carry Precious Metals Higher, Guaranteed - 23rd July 16
Pokemon Go - How to Play, First Use, Balls, Stops, Catching Pokemon's... Great Excercise! - 23rd July 16
7 Signs That the Gold Market Remains Resilient - 23rd July 16
Basic Income in The Time of Crisis - 23rd July 16
Silver Bull Faces Correction - 22nd July 16
The Serious Warning No One’s Talking About - 22nd July 16
Stock Market Insight from Greed, Volatility, and Put/Call Ratio - 22nd July 16
What Will Happen To the Stock Market When Interest Rates Rise? - 22nd July 16
How to Escape the World’s Biggest Ponzi Scheme - 22nd July 16
Addicted to Debt - We Can’t Borrow from the Future Anymore - 21st July 16
Not Everything Is Bullish for Gold - 21st July 16
Don’t Get Sucked Back Into the Stock Market - The Big Picture Hasn’t Changed - 21st July 16
Silver – Caught Inside - 21st July 16
Forex: "The Markets Are Getting Exciting!" - 20th July 16
China Economic Troubles - Is Kyle Bass Finally Getting His Revenge? - 20th July 16
Why Lithium Will See Another Price Spike This Fall - 20th July 16
The Peak Oil Paradox Revisited - 19th July 16
SPX Challenges the Upper Trendline - 19th July 16
Missing ’28 Pages’ of the 9/11 Report Released into Blitzkrieg of World Events - 19th July 16
Likelihood of Organized Disruption at GOP Convention - 19th July 16
More on the ‘Breadth Thrust’ and Stock Market Internals - 19th July 16
FX Traders: Get a Free Week of Forecasts (Details inside) - 19th July 16
Ups and Downs in Gold and Crude Oil Price - 19th July 16
Keep an Eye on ‘Bitcoin’ as the Next ‘Financial Crisis’ Starts! - 18th July 16
Erdogan Might Have Known about the Coup but Didn’t Prevent It on Purpose - 18th July 16
More Deflation Ahead: Silver, Gold And Their Mining Stocks A Must-Have - 18th July 16
Stock Market Minor Top? - 18th July 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Forex Forecasts

Three Profitable Investment Trends in China

Companies / China Stocks Jun 10, 2008 - 08:37 AM GMT

By: Money_and_Markets

Companies

Best Financial Markets Analysis ArticleI just returned from China and boy was it an informative trip.

Of course, you have to understand that when I travel to Asia, I don't limit my conversation to just corporate bigwigs. I chat up anybody who can give me information about the economy and that includes people like taxi drivers, bellmen, waitresses, retail clerks, other traveling businesspeople, and even students.


This trip was no exception. In many ways, I learned more from regular, everyday Chinese people on the frontlines than CEOs. Today, I'd like to share three potentially lucrative trends I witnessed firsthand on the streets of China.

Trend #1) A different type of oil.

Oil prices have been dominating the headlines but the average Chinese consumer isn't that concerned about the high price of gasoline. Why not? Because most people in China ride bikes (scooters that get 100 miles a gallon) or use public transportation. So the cost of oil isn't a major issue to them.

There is an oil, however, that the Chinese do care deeply about: cooking oil, the price of which has skyrocketed along with other food products.

 
As fields of rapeseed are harvested for bio-fuel, the price of cooking oil has soared across China.

The latest inflation data for China showed that while overall consumer prices increased by 8.5%, food prices climbed by a whopping 22.1% over the last 12 months. Food inflation is a heck of a lot more important than energy inflation in developing countries because the working class has to spend a disproportionate amount of their income on food.

How can you make money with this trend? My advice would be to give some thought to investing in companies in the Chinese food chain. This includes nearly everything agricultural; seed, fertilizer, and beef/chicken/pork producers. I would also recommend taking a hard look at Real Wealth Report , a newsletter that has absolutely nailed the most profitable way to invest in food stocks.

Trend #2) Aussies, Aussies everywhere .

The number of Australians visiting China — both for business and personal travel — has exploded. I don't know what the exact numbers are, but I was amazed at how many Australians I saw running around China compared to my previous trips.

Being the nosy guy that I am, I talked to every Australian that I could. While every one of them had a different story, I found that many of them were employed in or somehow benefiting from high commodity prices.

Australia is one of the richest natural resource countries in the world and the huge demand for those resources from China has enriched Australia.

How can you make money with this trend? You may want to consider investing in the same Australian companies that are making it possible for all those Australians to visit China: Alumina (AWC), BHP Billiton (BHP), Lihir Gold (LHR), and Rio Tinto (RHP) are just a few examples to consider.

Trend #3) The restaurant business is booming!

For the first time, I was invited into the home of a Chinese family. 'Home' is actually a generous description because nobody — including the fabulously rich — lives in a home. Everybody lives in what we would call a condo and most are so small that there is barely enough room to sleep, let alone cook a meal.

The home I visited had one tiny bathroom, one large communal room that doubled as both a living room and bedroom, and a kitchen that was roughly the size of a small closet. Keep in mind that this layout was crammed into roughly 600 square feet!

" Now you know why we eat out so much. We have no room to cook ," said my host.

It's no wonder that China has four million full-service restaurants, seven times as many as the U.S. And China's 1.4 billion people spent more than 1 trillion yuan (U.S. $126 billion) dining out last year, a 13% increase from 2006 according to the Chinese Ministry of Commerce. Over the last 15 years, restaurant sales have increased by more than 10% a year.

McDonald's is not the largest U.S. restaurant chain in China. That position belongs to KFC, owned by Yum! Brands, which currently has more than 900 quick-service restaurants.
McDonald's is not the largest U.S. restaurant chain in China. That position belongs to KFC, owned by Yum! Brands, which currently has more than 900 quick-service restaurants.

How you can make money from this trend? Lots of American restaurant companies are aggressively expanding to China, and none has been more successful than Yum Brands (YUM).

The name may sound funny, but the Little Sheep (0968.HK) is another restaurant chain worth your investigation. Little Sheep is a chain of 'hot pot' restaurants that is famous for its Mongolian-style mutton dishes.

Little Sheep is hugely popular in China. In 2006, it grabbed an amazing 11.8% of all the full-service restaurant business! There are currently only 350 Little Sheep restaurants across China, but the company will be using the proceeds from its recent IPO to finance an aggressive expansion plan. At 27 times 2008 earnings, the stock is a little pricey, so I would wait for a pullback.

My overall conclusion on China ...

Let the indomitable Chinese spirit power your investment returns.

The first thing I saw when I stepped off the plane in Hong Kong was martial arts movie star Jackie Chan singing on TV. Chan, along with 400 other Asian celebrities, were participating in a televised concert to raise funds for Sichuan earthquake relief.

While watching Jackie Chan sing (he isn't bad, by the way), I was struck at how unified a country of 1.4 billion people had become. The death and economic toll are tragic, but the spirit and perseverance of the Chinese people was heartwarming.

That same perseverance is the reason why the Chinese economy is growing so rapidly and the #1 reason I'm so bullish on China. I don't credit the government for embracing capitalism or manufacturers for taking advantage of China's cheap labor. What I credit is the industrious work ethic of the Chinese people I met on my trip, and hundreds of millions of others just like them.

Bottom Line: Make sure your portfolio has a meaningful exposure to China and its industrious Asian neighbors. How meaningful? That depends on your time horizon and tolerance for risk, but I think anybody who has time on his/her side might want to give serious consideration to putting at least 20% of their equity portfolio into Asia. I really believe that Asia may well be the most profitable part of your portfolio going forward.

Best wishes,

Tony

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2016 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

Catching a Falling Financial Knife