Best of the Week
Most Popular
1.Dow Stock Market Trend Forecast 2015 by Nadeem Walayat - Nadeem_Walayat
2.Gold And Silver – Forget The News. Silver $12 – 14? Gold $1,000 – 1,100? 5 - Michael_Noonan
3.A TOP Formation In Apple Inc. - Crash Condition Signal Recorded - David Harris
4.Gold Gets Safe Haven Bids But COMEX Has Stopping Power - GoldSilverWorlds
5.The Swiss 10-Year Bond Illustrates Central Banks` Flawed Monetary Policy - EconMatters
6.Exponential Explosions in Debt, the S&P, Crude Oil, Silver and Consumer Prices - DeviantInvestor
7.“Forgive Us Our Debts” – Only Way To Prevent Economic Meltdown - GoldCore
8.Is Russia Planning a Gold-Based Currency? - Marcia Christoff-Kurapovna
9.Stock Market Trend Forecast 2015 Video - Nadeem_Walayat
10.Gold GDX ETF Technical Analysis - Austin_Galt
Last 5 days
Subprime Rising - U.S. Debt Breaking Bad Part 2 - 1st Mar 15
Gold CoT Improving, But ... - 1st Mar 15
UK General Election 2015 Seats Forecast - Who Will Win? - 28th Feb 15
UK General Election 2015 - Forecasting Seats for SNP, LIb-Dems, UKIP and Others - 28th Feb 15
Stocks Bull Market Continues - 28th Feb 15
U.S. Debt Breaking Bad - 28th Feb 15
NATO Frankenstein - When Centralization Scales Beyond Our Control - 28th Feb 15
Gold And Silver Insanity Prevails; Precious Metals Without Direction - 28th Feb 15
Fed Raising U.S. Interest Rates - Shovelin’ Schmitt Against the Tide - 28th Feb 15
Don't Let This Stock Market Myth Cost You Your Gains - 28th Feb 15
Recession is On The Way; Beat The Stock Market Crowd, Panic Now! - 28th Feb 15
Stock Market Indexes Creeping Towards the Edge - 28th Feb 15
GGD Going for Mexican Gold - 27th Feb 15
Foreign Real Estate Is the New Swiss Bank Account - 27th Feb 15
10 Reasons Washington Has War Fever - 27th Feb 15
Gold and the Euro Tragedy, Iraq 3.0, Ukraine Conflict Three Ring Circus - 27th Feb 15
Deepak Chopra - New Age Genius or Bullshit Expert? - Video - 27th Feb 15 - Videos
New Greece Drachma Revealed Amid Bank Runs - Greeks Buy Gold Sovereigns - 27th Feb 15
Will Month Long Stocks Rally Continue? - 27th Feb 15
The Only Public Hedge Fund You Should Own - 27th Feb 15
UK House Prices Trend 2015 and the May General Election - 27th Feb 15
Why America is Ungovernable - The Republicans’ Civil War - 27th Feb 15
Gold vs Gold Stocks: Bullish Anomaly Developing? - 27th Feb 15
I Heart Capitalism, Nasdaq Stocks, Then And Now - 27th Feb 15
The Fed’s History of Assassination - 27th Feb 15 i
Gold Bull Market Forecast - Money Will Rotate Into These Dead Investments - 27th Feb 15
"Audit the Fed"? We've Already Done That (Well, Kind of) - 26th Feb 15
Forget Peak Oil; Worry About Peak Demand - 26th Feb 15
Currency Wars, Again - 26th Feb 15
The Fed Waited Too Long: Here Comes Inflation - 26th Feb 15
Investing Inertia Won’t Keep Your Cash Safe - 26th Feb 15
The Net Neutrality Scam - 26th Feb 15
Will Conservatives Out of Control Immigration Crisis Boost UKIP Election 2015 Prospects? - 26th Feb 15
EU Warns Ireland and Euro Zone of Debt Dangers - 26th Feb 15
Commodity Prices Set To Plunge Below 2008 Lows - 26th Feb 15
Ukraine Hyperinflation as Currency Plunges 44% in One Week! - 26th Feb 15
The State of the Global Markets 2015 - 53 Page Report - 26th Feb 15
NASDAQ New 15 Year High - Stock Market Death By Overdose - 25th Feb 15
12 Reasons Why Barry Ritholtz and Many UK Experts Are Mistaken On Gold - 25th Feb 15
Sugar Commodity Price To Sweeten Up - 25th Feb 15
Investor Profits from China 2,000-Year Unstoppable Trends - 25th Feb 15
How to Borrow Cheaply from a Government-Owned Bank - 25th Feb 15
Debt Be Not Proud - 25th Feb 15
Liberal Democrat Election Blood Bath - Could Nick Clegg Lose Sheffield Hallam? - 25th Feb 15
Wheat Commodity Price Technical Trend Forecast - 24th Feb 15
Bitcoin Price Might Stay below $250 - 24th Feb 15
Another Important Stock Market Inflection Point Approaching - 24th Feb 15
Gold: The Good, Bad, and Truly Ugly - 24th Feb 15
Eurozone Gold Holdings Increase to 10,792 Tonnes As “Reserve of Safety” Amidst Crisis - 24th Feb 15
Bird Doo; Yellen Goes to Congress - 24th Feb 15
Is Gold Investing Risk Free? - 24th Feb 15
The Bull Case For Gold Price 2015, and the Bear - 24th Feb 15
Europe - The Intersection of Three Crises - 24th Feb 15
Gold Price Just Needs More Time - 24th Feb 15
Gold Price Downtrend Looks Set to Continue - 23rd Feb
Silver Price Depressing Downtrend Will Eventually End - 23rd Feb 15
5 Reasons Why You Should Sell Amazon Stock - 23rd Feb 15
Global System Catastrophe Is Key Threat To Human Civilisation - 23rd Feb 15
Greece Crisis Yields Ideal Market Opportunities - 23rd Feb 15
Gold and Silver Stocks or General Stock Market Indices? - 23rd Feb 15
Swimming With Sharks: Goldman Sachs, Schools and Capital Appreciation Bonds - 23rd Feb 15
Stock Market - The Fed Still Has Your Back - 23rd Feb 15
Soybean Commodity Price Technical Outlook - 23rd Feb 15
Gold Weekly COTs and More - 23rd Feb 15
Stock Market New Highs With Weak Breadth - 23rd Feb 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The State of the Global Markets 2015

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

Free Report - Financial Markets 2014