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Why China Stocks Remain Tops in My View

Stock-Markets / Chinese Stock Market Jan 25, 2011 - 06:16 AM GMT

By: Profit_Confidential

Stock-Markets

George Leong writes: China is on the right path to developing into a rising world economic power as well as a basin for incredible and sustained growth across many sectors, including industrial, mining, energy, services and technology. The reality is that, if it is saleable and in demand, then you know that China will likely have the consumer market for it. China knows that and so do many of the other global multinational companies, including many in the United States.


All you have to do is to just think about the sheer size of the country’s middle class, which is mind-boggling and clearly reflects the amazing potential in China. The World Bank estimates that, within five years, there will be 542 million middle-class consumers in China. Yet that may be conservative, as I have seen top-line estimates at around 700 million.

The groundwork has been laid. The workers are marching in from the farm. And the end goal is to build the world superpower in economics and political influence.

For 2010 and 2011, China’s Gross Domestic Product is estimated to grow by over 10%, according to the Organization for Economic Co-operation and Development (OECD). In fact, economic growth in the Asia Pacific region is promising, including seven-percent projected growth in the developing Asian economies and a stellar 8.3% in China’s neighbor, India. China is working hard on increasing its trade and alliance with India.

And, while retailers in the United States are currently struggling to lure shoppers to their stores, it is a vastly different story in China, where consumers are spending on about everything. Domestic sales in China are predicted to reach $2.1 trillion in 2010 versus $1.8 trillion in 2009, according to the Chinese Academy of Social Sciences.

The current per-capita income in China is just below $4,000 a year; yet, it has more than doubled over the past few years and wages are heading higher. We are seeing more strikes in China, which is new to the country and reflects the demand for higher wages and prosperity.

With this comes more spending. Consider this: at the present time, only a small fraction of China’s GDP is driven by consumer spending compared to about 70% in the U.S. China wants to drive consumer spending long-term and this will drive organic domestic GDP growth.

“If you build it, they will come” appears to be the motto in China these days. Just take a look at Beijing and Shanghai and you will notice the commercialism that has sprung up in that country. It was only a few decades ago where China was still somewhat closed to outside firms and domestic entrepreneurship. That has changed and the associated growth has been stellar.

Wait another 10 years and I’m sure the country will continue to grow into a mega-market for goods and services.

By George Leong

http://www.profitconfidential.com

We publish Profit Confidential daily for our Lombardi Financial customers because we believe many of those reporting today’s financial news simply don’t know what they are telling you! Reporters are trained to tell you the news—not what it can mean for you! What you read in the popular news services, be it the daily newspapers, on the internet or TV, is the news from a “reporter’s opinion.” And there’s the big difference.

With Profit Confidential you are receiving the news with the opinions, commentaries and interpretations of seasoned financial analysts and economists. We analyze the actions of the stock market, precious metals, interest rates, real estate and other investments so we can tell you what we believe today’s financial news will mean for you tomorrow!

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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