Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
Foundation – Fall Of The American Galactic Empire - 27th Mar 17
Stock Market More Correction Ahead - 27th Mar 17
US Dollar Inflection Point - 27th Mar 17
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17
Physical Metals Demand Plus Manipulation Suits Will Break Paper Market - 20th Mar 17
Stock Market Uncertainty Following Interest Rate Increase - Will Uptrend Continue? - 20th Mar 17
Precious Metals : Who’s in Charge ? - 20th Mar 17
Stock Market Correction Continues - 20th Mar 17
Why The Status Quo Is Under Increasing Attack By 'Populist People Power' - 20th Mar 17
Why the SNP WILL Destroy Scotland, Exit UK Single Market for EU - IndyRef2 - 19th Mar 17
Crypto Craziness: Bitcoin Plunges on Fork Concerns, Steem Skyrockets and Dash Surges Above $100 - 19th Mar 17
What ‘Ice-Nine’ Means for Your Money - 19th Mar 17
Stock Market 4 Year Cycle - 18th Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

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