Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Reasons Why China Will Continue To Gobble Up Natural Resources

Companies / China Stocks Jul 15, 2009 - 03:20 PM GMT

By: Uncommon_Wisdom

Companies

Best Financial Markets Analysis ArticleTony Sagami writes: Alcoa is always one of the first companies to report its quarterly earnings, so the Wall Street crowd is typically very eager to hear what the aluminum giant has to say.


Well … Alcoa reported better-than-expected results, and that made the bulls very happy. As always though, the devil is in the details …

First, Alcoa lost a bundle of money — $454 million and a painful 44 percent drop in year-over-year earnings — so business still stinks … just not as bad as Wall Street was expecting.

Second, this is the third quarter in a row that Alcoa has lost money, so being an Alcoa shareholder hasn’t been rewarding. Alcoa was over $40 last summer but is now less than $10 a share.

And if it weren’t for China, Alcoa’s share price would probably be a lot lower.

In fact, China is the only region in which Alcoa expects to see some growth. Alcoa CEO Klaus Kleinfeld, said that while global demand for aluminum is expected to decline by 7 percent in 2009, but that figure would balloon to -10 percent if not for China.

That means that China is one of the few parts of the world where business is improving.

“China is clearly out of the woods. Things are bottoming out, and they are even coming back in some sectors,” Kleinfield said.

The underlying reality is simple — countries with growing economies consume lots of natural resources.

Aluminum isn’t the only natural resource that China is gobbling up. For example, China’s copper consumption grew from about 1.8 million tons in 2000 to nearly 5 million tons in 2008. China consumed 13 percent of the global supply of cooper in 2000, but increased that to 28 percent in 2008.

China is also the world’s largest consumer of zinc, lead, nickel, and aluminum in the world.

As I mentioned in my Saturday video update, China just spent $1.5 billion to buy a 17 percent stake in Teck Resources (TCK), a Canadian gold, copper, zinc, and coal mining giant.

What about energy? In 2003, China passed Japan to become the second-largest consumer of energy after the United States. That’s why the Chinese government said it will increase its strategic crude oil reserves by 160 percent to 270 million barrels in the next five years and spend $4.4 billion to build those storage facilities.

Two Reasons Why China Will Continue To Gobble Up Natural Resources

As an investor, you need to ask yourself whether or not China will continue to gobble up natural resources at that hungry pace?

The answer is ‘yes’ because of two things: (1) 1.4 billion citizens and (2) $1.9 trillion of cold hard cash that is burning a hole in the Chinese government’s pockets.

Whether you’re talking about basic materials, energy, or food, there is no question China is going to keep on consuming a bigger piece of the global natural resource pie and push the prices of those commodities higher.

What you need to do is get ahead of that Chinese buying binge and get ‘long’ whatever the Chinese are buying. In the case of my Asia Stock Alert subscribers, we already own stocks like Yanzhou Coal (YZC) and Sino Gold (SGX).

Don’t forget to connect the dots to other businesses that will benefit from China’s appetite for natural resources:

  • Shipping companies that deliver those natural resources to China i.e. Genco Shipping & Trading (GNK)
  • Construction companies that build the power plants i.e. ABB Ltd. (ABB)
  • Food companies that feed those 1.4 billion hungry mouths i.e. Zhongpin (HOGS)
  • Construction equipment makers i.e. Komatsu (KMTUY)
  • Alternative energy companies i.e. Trina Solar (TSL)
  • Companies that help provide clean water i.e. Duoyuan Global Water (DGW)

If you’re more of a mutual fund kind of investor, take a look at U.S. Global China Opportunity (USCOX), a China-focused mutual fund that has a heavy weighting of natural resources and commodity stocks.

There are lots of ways to profit from the coming natural resource boom. How you do it is up to you, but I strongly suggest that you get ‘long’ whatever the Chinese are buying. It should be one of the most profitable moves you could make.

Regards,

Tony

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.

Uncommon Wisdom 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