Moneymaking,Stocks,Why,China,S finance, share, loan Moneymaking StocksWhy Chinas Still the Place to Find Them
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Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 st1\:*{behavior:url(#ieooui) } /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} I have always been a China bull, even in spite of the market relapse in 2010. Yes, the Shanghai Composite Index (SCI) in China had an off year in 2010, losing 14.31%. And, yes, the SCI is lagging the U.S. indices this year. However, its loss is down to 0.32% to start the key Lunar New Year holiday in China, when hundreds of millions of people travel back home for a break. In spite of continued strong advances in Chinas Gross Domestic Product (GDP), the country is facing some problems with surging inflation and real estate prices. Prior to the holiday break, China Premier Wen Jiabao said that the government would focus on inflation and property values. Chinese inflation is a real potential threat to growth and stability not only in China, but also globally with its trading partners. We could see higher-cost Chinese-made goods. At over five percent, Chinas inflation is a problem that needs to be rectified. The average inflation rate in China from 1994 to 2010 was 4.25%, so there needs to be some work done here to relieve the inflationary pressures. Yet, overall, China is on the right path towards 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 top multinational companies, including many in the United States. Just think about the sheer size of the countrys middle classit 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. However, this may be conservative, as I have seen top-line estimates at around 700 million. For 2010 and 2011, Chinas GDP 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 Chinas neighbor, India. China is working hard on increasing its trade and alliance with India. 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. Moreover, we are seeing more strikes in China, which is new to the country and something that would never have happened only a few years ago. This trend reflects the demand for higher wages and prosperityand with this will come more spending. Its really simple. Consider this: at the present time, only a small fraction of Chinas 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. The moral of the story is that if you want to make above-average returns, you will need to have some capital working for you in China via direct stock ownership, U.S. multinationals, mutual funds, or Exchange Traded Funds.
Moneymaking,Stocks,Why,China,S