Best of the Week
Most Popular
1.Stock Market Continues Defying Gravity, Dow New All Time High - Nadeem_Walayat
2.America Superpower 2016 - Ian Bremmer
3.The US Dollar and the Precious Metals Complex - Rambus_Chartology
4.UK Immigration Crisis Could Prompt BREXIT, Propelling Britain Out of EU Despite German Factor - Nadeem_Walayat
5.The “Real Flash Crash” Will Scare You to Death - Shah Gilani
6.Gold Price Trend Forecast - Bob_Louka
7.UK Deflation Warning - Bank of England Economic Propaganda to Print and Inflate Debt - Nadeem_Walayat
8.Gold Lifeboat to Global Economies “Titanic Problem” Warn HSBC - GoldCore
9.Will Interest Rates Ever Rise? - BATR
10.Who’s Killing the Stock Market? - Shah Gilani
Last 5 days
Stock Market Choppy Uptrend May Have Topped - 30th May 15
Options Pricing - Covert Gamma, Portfolio Insurance, and STDs - 30th May 15
U.S. Crude Oil Production Sets New Modern Record - 30th May 15
Gold Still Waiting - 30th May 15
Investing’s Great Struggle - 29th May 15
How Rich Countries Get Rich - Freedom, Global Poverty, and the Failure of Foreign Aid - 29th May 15
Goldman Sachs Warns “Too Much Debt” Threatens World Economy - 29th May 15
Skunk Works Engineers Supersonic Profits - 29th May 15
Gold, Silver and US Dollar Strength - 29th May 15
This New Currency Could Wipe Out the Euro - 28th May 15
US Housing Market - Something Smells Fishy - 28th May 15
US Economy – Semi b2b Amps Up its Trend - 28th May 15
U.S. Fed Exported QE Travesty: Meet The BLICS Nations - 28th May 15
World War D—Deflation - Secular Bear Markets Analysis - 28th May 15
George Soros Warns of “Third World War” - 28th May 15
Why You Shouldn't Try to Invest Like Warren Buffett - 28th May 15
Stock Markets Buy and Hold is Back! - 28th May 15
We're Now Frighteningly Vulnerable to a Bond Market Crash - 28th May 15
Austerity, Economics and Religion - 28th May 15
National Holidays London and the Magic of Legoland UK Review - 27th May 15
Imminent Stocks Bear Market Signaled by Dow Theory ... - 27th May 15
Gold Price Has Bottomed – More Evidence - 27th May 15
Three Reasons You Shouldn’t Try to Invest Like Warren Buffett - 27th May 15
Gold Is “100% Guarantee from Legal and Political Risks” States Russian Central Bank - 27th May 15
Don't Drown in the Sea of Global Debt - 27th May 15
Three Reasons Why Carl Icahn Is Wrong About Apple Stock - 27th May 15
Crude Oil Price Stochastic Signals - 26th May 15
Why the Stock Market Will Crash - 26th May 15
GDP, Inflation, Employment Economic Statistics: It’s All a Lie - 26th May 15
Introduction to Peak Food - 26th May 15
Should We Dump the Euro? - 26th May 15
A Geopolitical Net Assessment of Europe - 26th May 15
Stock Market Top in Place? - 26th May 15
Best Cash ISA SBI 2.3% - 2.8 Year Fix, UK Interest Rates 2016 - 26th May 15
China Sets Up Gold Bullion Fund For Central Banks - 25th May 15
Is The Silver Trade Getting Crowded? - 25th May 15
Money Murder Mystery: Who Killed the Stock Market? - 25th May 15
Why Do We Celebrate Rising U.S. House Prices? - 24th May 15
Mario Draghi’s Slippery Downward Slope - 24th May 15
Gold : Truth is Stranger than Fiction - 24th May 15
Facebook Stock Price Forecast - 24th May 15
Make a Killing on the Coming Energy "Debt Bubble" - 24th May 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Biggest Debt Bomb in History

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

© 2005-2015 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

Biggest Debt Bomb in History