Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Stock Market Pause Should Extend - 21st April 19
Why Gold Has Been the Second Best Asset Class for the Last 20 Years - 21st April 19
Could Taxing the Rich Solve Income Inequality? - 21st April 19
Stock Market Euphoria Stunts Gold - 20th April 19
Is Political Partisanship Killing America? - 20th April 19
Trump - They Were All Lying - 20th April 19
The Global Economy Looks Disturbingly Like Japan Before Its “Lost Decade” - 19th April 19
Growing Bird of Paradise Strelitzia Plants, Pruning and Flower Guide Over 4 Years - 19th April 19
S&P 500’s Downward Reversal or Just Profit-Taking Action? - 18th April 19
US Stock Markets Setting Up For Increased Volatility - 18th April 19
Intel Corporation (INTC) Bullish Structure Favors More Upside - 18th April 19
Low New Zealand Inflation Rate Increases Chance of a Rate Cut - 18th April 19
Online Grocery Shopping Will Go Mainstream as Soon as This Year - 17th April 19
America Dancing On The Crumbling Precipice - 17th April 19
Watch The Financial Sector For The Next Stock Market Topping Pattern - 17th April 19
How Central Bank Gold Buying is Undermining the US Dollar - 17th April 19
Income-Generating Business - 17th April 19
INSOMNIA 64 Birmingham NEC Car Parking Info - 17th April 19
Trump May Regret His Fed Takeover Attempt - 16th April 19
Downside Risk in Gold & Gold Stocks - 16th April 19
Stock Market Melt-Up or Roll Over?…A Look At Two Scenarios - 16th April 19
Is the Stock Market Making a Head and Shoulders Topping Pattern? - 16th April 19
Will Powell’s Dovish Turn Support Gold? - 15th April 19
If History Is Any Indication, Stocks Should Rally Until the Fall of 2020 - 15th April 19
Stocks Get Closer to Last Year’s Record High - 15th April 19
Oil Price May Be Setup For A Move Back to $50 - 15th April 19
Stock Market Ready For A Pause! - 15th April 19
Shopping for Bargain Souvenirs in Fethiye Tuesday Market - Turkey Holidays 2019 - 15th April 19
From US-Sino Talks to New Trade Wars, Weakening Global Economic Prospects - 14th April 19
Stock Market Indexes Race For The New All-Time High - 14th April 19
Why Gold Price Will “Just Explode… in the Blink of an Eye” - 14th April 19

Market Oracle FREE Newsletter

Top 10 AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Goldman Forecasts China Economy in the Ascendency

Economics / China Economy Jun 11, 2009 - 09:36 AM GMT

By: Richard_Shaw

Economics

Best Financial Markets Analysis ArticleGoldman Sachs now forecasts that the China economy will overtake the US as the world’s largest economy by 2027.  Several emerging market countries are predicted by Goldman to overtake key developed market countries in the not too distant future.


They predict near term-growth for China at 8.3% in 2009 and 10.5% in 2010, compared to the world economy at -1.1% for 2009 and 3.3% for 2010.

Ranking countries by projected GDP for 2027, Goldman sees:

  1. China
  2. United States
  3. EU-5
  4. India
  5. Japan
  6. Germany
  7. Russia
  8. UK
  9. Brazil
  10. France

By 2050, Goldman sees this ranking:

  1. China
  2. United States
  3. India
  4. EU-5
  5. Brazil
  6. Russia
  7. UK
  8. Japan
  9. France
  10. Germany

The World Bank president says that China is the force that is stabilizing the world economy and may be the force to pull the world out of its slump, while acknowledging the fragile nature of the world situation and its vulnerability to new shocks.

We have consistently suggested that investors consider higher emerging markets equity exposures than are typically recommended.

Generally, we suggest that wherever you are in the allocation spectrum between equities, bonds and other; that your equities portion thinking begin with a world market-cap mixture from which you deviate based on perceived opportunity and risk.  We think the opportunities in emerging markets are greater than the opportunities in the US and EAFE countries, but with more volatility.

Consistent with the shift in the balance of economic power from developed toward emerging countries is the recent transfer of ownership of auto brands: Jaguar to an Indian company, Hummer to a Chinese company, Opel to a Canadian company with the help of equity from a Russian state controlled bank, and now Volvo being considered for purchase by a Chinese company.

Those auto changes are tangible examples and illustrations of continuing growth and financial power shift toward emerging countries — and of course, let’s not forget the central role China is playing in buying US massive Treasury issuance.

Once the lender to emerging markets, the US is now the borrower from them.  Once the financial disciplinarian to emerging markets, the US is now the one being cautioned to show discipline itself by China, its banker.

We own an emerging market basket (VWO), as well as China (FXI) and Brazil (EWZ) directly; and are overweight emerging markets within our equity allocation.

The emerging markets are closer to a bull condition than the US or other developed markets.  Accordingly, they should be somewhat more fully invested in an intended ultimate allocation than the US or EAFE countries by those who are reinvesting in stages based on evolving trends.

The primary trend is still down for most major indexes, as well as for China, but we may be in the process of approaching a new up trend (which would be indicated by an upward slope to the 200-day moving average by the cautious and conservative) — then again the situation is far from certain.

We are not out of the woods yet, so there is still plenty that can go wrong.  Keeping a sharp eye on developments, or better yet persistent trailing stop loss orders, is the prudent thing to do.

By Richard Shaw 
http://www.qvmgroup.com

Richard Shaw leads the QVM team as President of QVM Group. Richard has extensive investment industry experience including serving on the board of directors of two large investment management companies, including Aberdeen Asset Management (listed London Stock Exchange) and as a charter investor and director of Lending Tree ( download short professional profile ). He provides portfolio design and management services to individual and corporate clients. He also edits the QVM investment blog. His writings are generally republished by SeekingAlpha and Reuters and are linked to sites such as Kiplinger and Yahoo Finance and other sites. He is a 1970 graduate of Dartmouth College.

Copyright 2006-2009 by QVM Group LLC All rights reserved.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Do your own due diligence.

Richard Shaw Archive

© 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

6 Critical Money Making Rules