Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
How to Trade Binance Vanilla Options for the First Time on Bitcoin Crypto's - 2nd Aug 21
From vaccine inequality to economic apartheid - 2nd Aug 21
Stock Market Intermediate Top Reached - 2nd Aug 21
Gold at a Crossroads of Hawkish Fed and High Inflation - 2nd Aug 21
Bitcoin, Crypto Market Black Swans from Google to Obsolescence - 1st Aug 21
Gold Stocks Autumn Rally - 1st Aug 21
Earn Upto 6% Interest Rate on USD Cash Deposits with Binance Crypto Exchange USDC amd BUSD - 1st Aug 21
Vuze XR VR 3D Camera Takes Near 2 Minutes to Turn On, Buggy Firmware - 1st Aug 21
Sun EXPLODES! Goes SuperNova! Will Any planets Survive? Jupiter? Pluto? - 1st Aug 21
USDT is 9-11 for Central Banks the Bitcoin Black Swan - Tether Un-Stable Coin Ponzi Schemes! - 30th Jul 21
Behavior of Inflation and US Treasury Bond Yields Seems… Contradictory - 30th Jul 21
Gold and Silver Precious Metals Technical Analysis - 30th Jul 21
The Inadvertent Debt/Inflation Trap – Is It Time for the Stock Market To Face The Music? - 30th Jul 21
Fed Stocks Nothingburger, Dollar Lower, Focus on GDP, PCE - 30th Jul 21
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
WEALTH INEQUALITY WASN'T BY HAPPENSTANCE! - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Resource Stocks that are Chinese Takeover Targets

Commodities / Resources Investing May 13, 2008 - 05:43 PM GMT

By: Money_and_Markets

Commodities

Best Financial Markets Analysis ArticleTony Sagami writes: As I've told you before, I believe the #1 rule for making money in the next decade is to get long whatever the Chinese are buying.

After all, China will need to consume an unprecedented amount of natural resources to fuel its red-hot economy and feed its 1.4 billion people. And in a moment, I'm going to give you four specific areas to target, and the company in each area that looks most like a takeover candidate.


But first, I want to tell you about ...

Four Recent Chinese Deals That Prove My Point!

In just the last week, we witnessed a flurry of deals that prove just how hungry China is for natural resources.

Deal #1 : The State Administration of Foreign Exchange (SAFE), which manages China's $1.4 trillion foreign exchange reserves, bought a 1.6% stake worth $2.8 billion in French oil firm Total and 1% of British Petroleum for $2 billion.

Deal #2 : Baoshan Iron and Steel is expected to buy a 9% stake in Australian miner BHP Billiton. And it's worth noting that Aluminum Corp of China, also known as Chalco, partnered with Alcoa to buy a 9% stake in BHP rival Rio Tinto earlier this year.

Baoshan Iron and Steel is China's flagship, state-of-the-art steel producer.
Baoshan Iron and Steel is China's flagship, state-of-the-art steel producer.

Deal #3 : Chinese Iron and Steel Group is going to increase its stake in Australian prospector Apollo Minerals to 19.9%.

Deal #4 : Sinosteel of China bought a 2.4% interest in Murchison Metals and offered $954 million for the Midwest shares it does not own.

Even more telling perhaps, are the deals that did NOT happen:

First, Steelmaker Shougang's attempt to buy 19.7% of Australian miner Mount Gibson Iron was blocked after running into strong opposition from Australian regulators.

Second, China National Petroleum Corporation (Petro China) tried to purchase a $20-billion stake in Spanish oil company Repsol but was rejected.

So there's no doubt in my mind that China is on a buying spree. And I'm not just talking about oil, either. Fact is ...

The Chinese Have a Ravenous Appetite For Virtually ALL Commodities!

While I don't have any inside knowledge about what companies the Chinese have in their sights, I do know what industries are strategically important to their lofty growth objectives.

Energy: Do you remember China Petroleum's failed takeover attempt of Unocal in 2006? China needs energy — and lots of it — so you can expect frenzied buying activity to lock up reliable supplies of multiple sources of energy. In my book, oil, natural gas, coal, and uranium are all key players.

My #1 pick for an energy takeover: Cameco (NYSE:CCJ), the largest uranium producer in the world.

Base Metals: After fuel, the next thing China needs the most are the basic minerals and metals to build things like roads, bridges, skyscrapers, dams, ports, and power plants. That means that China will need all the aluminum, copper, iron, potash, bauxite, zinc, tin, and cement it can get its hands on.

My #1 pick for a base metals takeover: Companhia Value (NYSE:RIO), which is a diversified Brazilian mining company and the largest producer of iron ore and nickel in the world.

With 1.4 billion people to feed, China has stopped exporting rice.
With 1.4 billion people to feed, China has stopped exporting rice.

Food: Rice shortages have been plastered all over the news recently and while rice is a crucial staple of the Chinese diet, they also need pork, wheat, soybeans, poultry, edible oils, dairy, and seafood.

My #1 pick for a food takeover is Sadia S.A. (NYSE:SDA), a Brazilian food company that specializes in poultry and pork — two of China's favorite protein sources.

Water: I can see the day when one of the most valuable commodities in the world will be water. One-third of China's rural population — an estimated 360 million people — does not have access to safe drinking water because more than 70% of China's rivers and lakes are polluted. Some of China's rivers are black like soy sauce from industrial effluent and untreated sewage!

My #1 pick for a water takeover is China Water Affair, a Hong Kong-based sewage treatment and water supplier that operates in a handful of Chinese provinces.

And while there's no "sure thing" in the financial markets, I can say with confidence that the Chinese will be very aggressive buyers in these sectors.

So, Here's What I Suggest For Most Investors

While I think the four companies I just mentioned are attractive takeover candidates, you might also consider focusing on sector exchange traded funds (ETFs) that zero in on these key industries. Here are four ETFs that target each of the above sectors.

1.) Energy: Energy Select Sector SPDR (XLE)

2.) Base Metals: PowerShares DB Base Metals (DBB)

3.) Food: PowerShares Dynamic Food & Beverage (PBJ)

4.) Water: Claymore S&P Global Water Index (CGW)

I should also mention that the Chinese are buying lots of other things, too. They're buying homes, cars, electronics, clothes, cell phones, English lessons, gambling vacations, and video games. For that reason, I think these areas present spectacular investment opportunities as well.

While you can't throw a dart at Chinese stocks and be successful, there is zero doubt in my mind that China deserves a special and significant place in your portfolio.

Why? Because we've only seen the tip of the great Chinese stock market boom!

Heck, Jusatin Lin Yifu, the chief economist of the World Bank and head of Peking University's China Center for Economic Research, forecasts that the Chinese economy will be 2.5 times as large as the U.S. by 2030.

"I believe China's economic momentum is very likely to maintain a similar growth rate of the past 25 years, at about 8%, " said Yifu.

Growth of 8% a year until 2030? If Yifu is even remotely close to being right, China will be the investment of the century!

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

© 2005-2019 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