Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21
Financial Market Forecasts 2021: Navigation in Uncharted Waters - 10th Jan 21
An Urgent Message to All Conservatives, Right-Wingers and Patriots - 10th Jan 21
Despite Signs to the Contrary, Gold Price at or Near Top - 10th Jan 21 -
Ultimate Guide On The 6 Basic Types Of Index Funds - 10th Jan 21
Getting Vaccinated at TESCO - Covid-19 Vaccinations at UK Supermarket Pharmacies and Chemists - 10th Jan 21
Cheers for the 2021 Stock Market and These "Great Expectations" - 9th Jan 21
How to Plan Your Child With Better Education - 9th Jan 21
How To Find The Best Casino - 9th Jan 21
Gold Is Still a Bargain Buy - 8th Jan 20
Gold Price Set to Soar as Hyperinflation Looms - 8th Jan 21
Have Big Dreams? Here's How to Pay for Them - 8th Jan 21
Will the Fed Support Gold Prices in 2021? - 8th Jan 21
Stocks trading strategies for beginners - 8th Jan 21
Who is Buying and Selling Stocks in 2021 - 8th Jan 21
Clap for NHS Heroes 2021 as Incompetent Government Loses Control of Virus Again! - 8th Jan 21
Ultimate Gaming and Home Working PC System Build 2021 - 5950X, RTX 3080, Asus MB - Scan Computers UK - 7th Jan 21
Inflation the bug-bear looking forward through 2021 - 7th Jan 21
ESG ETF Investing Flows Drive Clean Energy to Fresh Highs - 7th Jan 21
5 Financial Market Surprises in 2021 - 7th Jan 21
Time to ‘Reset’ Your Investment Portfolio in 2021? - 7th Jan 21
Bitcoin Price Collapses almost 20% at the start 2021 - 7th Jan 21
Fed Taper Nervous Breakdown - 6th Jan 21
What Will the U.S. Dollar Ring in for 2021? - 6th Jan 21
Stock market frenzy- Ride the bandwagon but be sure to take along some gold coins - 6th Jan 21
Overclockers UK Custom Build Gaming System Review Heat Test and Final Conclusion - 6th Jan 21
Precious Metals Resuming Bull Market, Gold, Silver, GDX Trend Forecasts 2021 - 5th Jan 21
Trump’s Iran-COVID-Gate Anniversary  - 5th Jan 21
2021 May Be A Good Year For The Cannabis / Marijuana Sector - 5th Jan 21
Stock Market Approaching an Important Target - 5th Jan 21
Consumer Prices Are Not Reflecting Higher Inflation; Neither Is The CRB - 5th Jan 21
NEW UK Coronavirus PANIC FULL Lockdown Imminent, All Schools to Close! GCSE Exams Cancelled! - 4th Jan 21
The Year the World Fell Down the Rabbit Hole - 4th Jan 21
A Year Like No Other for Precious Metals… and Everything Else - 4th Jan 21
The Stocks Bull Market is Only Half Completed - 4th Jan 21
An In- Depth Look At Gold Price Trend - 4th Jan 21
Building America Back After a Dark Covid Winter - 4th Jan 21
America's Dark Covid Winter Ahead - 4th Jan 21
Buy a Landrover Discovery Sport in 2021? 3 Year Driving Review - 3rd Jan 21
Stock Market Major Peak in Early April 2021 - 3rd Jan 21
Travel and Holidays 2021 - Flight Knight Cabin Bag Review - 3rd Jan 21
�� Happy New Year 2021 Fireworks and Drone Light Show from London and Sheffied - BBC�� - 2nd Jan 2
The Next IMMINENT Global Catastrophe After Coronavirus - 1st Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

ETF's To Ride China's Economic Growth Boom

Stock-Markets / China Stocks Nov 17, 2010 - 07:46 AM GMT

By: Tony_Sagami

Stock-Markets

Best Financial Markets Analysis ArticleThe political and financial leaders from the world’s 20 largest economies, or Group of 20, gathered in Seoul, Korea last week to solve all the world’s economic problems.

Well, at least they think they can but that is the foolish arrogance of all politicians who think that government policy is more effective than free markets. Not much happens at these G-20 meetings, and this one was no different. There was a lot of finger pointing and tough talking, however, and most of it was directed at China from our White House.


Treasury Secretary Geithner and President Obama have been complaining for China to let its yuan appreciate. The current administration seems to think that forcing China to push its currency higher will solve all of the United States’ economic woes.

The G-20

The Group of Twenty (G-20) Finance Ministers and Central Bank Governors was established in 1999 to bring together industrialized and developing economies to discuss key issues in the global economy.

The G-20 is made up of the finance ministers and central bank governors of 19 countries and the European Union: Argentina, Australia, Brazil, Canada, China, European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, and the United States.

Not only are Obama and Geithner wrong, the Chinese really don’t give a darn what they think. In fact, the Chinese are getting pretty sick and tired of getting blamed for U.S. economic problems and think that the United States needs to show some monetary restraint.

“Don’t make other people take the medicine for your disease. Quantitative easing will have a very big impact on developing countries including China,” said Yu Jianhua, the director general at China’s Ministry of Commerce.

China has a point. Like the boy who cried wolf, the rest of the world doesn’t want to take economic advice from a country that is printing money, spending money, and building deficits big enough to choke a dinosaur.

Plus, why is it that you never hear the White House complain about the big trade surplus numbers that Germany, which hit $23.5 BILLION in October, and Saudi Arabia run with the United States?

The reality is that the Chinese economy is booming, and our leaders should be taking lessons from them instead of telling them what to do.

China’s Two Economies

China has two very different economies. The first is the export-driven manufacturing economy; the other is the domestic consumption-driven economy.

China’s economic resurgence from the poverty of communism has been fueled by its low-wage, low-cost factories turning out the items that fill the shelves of stores like Wal-Mart, Toys R Us, and Target.

Thanks to the success of China’s manufacturing center, Chinese incomes have risen and created a balloon of middle class consumers with money to spend. This domestic demand was initially the icing on China’s economic cake, but it also came to replace the manufacturing business from the global recession.

Rising incomes in China have created middle class consumers with money to spend.
Rising incomes in China have created middle class consumers with money to spend.

The newest data shows that China’s manufacturing sector is revving up. That tells me that China is headed back to its 10%-plus growth rate.

Clue #1: The October trade numbers show that China ran a $36 billion trade surplus in October. China has been running $20 billion monthly surpluses for years, so $36 billion is bigger than usual. That is clue #1 that the manufacturing sector is quietly enjoying a return to its glory days.

Clue #2: China’s exports increased by 22.9% from the same period a year ago. This impressive growth doesn’t mean that the global recession is gone for good, but it shows that the world still wants a whole lot of whatever China is making.

Clue #3: Imports rose by 25.3%. That number is pretty darn impressive because import numbers can be greatly skewed by oil prices. Since oil was much higher 12 months ago, this import increase means that China is buying/importing products that are bought by Chinese consumers.

This tells me:

  1. The rebound in exports/manufacturing gives China’s leaders the flexibility to permit their currency to appreciate a little bit. China does not want to clobber its exporters by making their products more expensive to overseas buyers unless the underlying business is strong enough. Currency funds/ETFs, such as the WisdomTree Dreyfus Chinese Yuan Fund (CYB) will profit from an appreciating yuan, and the Merk Hard Currency fund (MERKX) will profit from a falling dollar.

DISCLOSURE: My Asia Stock Alert subscribers already own CYB and MERKX and are sitting on some handsome profits.

  1. The more important takeaway is that the combination of booming exports and a strong domestic economy foretells a return to the 10%-plus economic growth rates that China enjoyed last decade. That was also the decade when Chinese stocks SKYROCKETED!

By the way, Chinese real estate prices increased by an average of 0.2% in October on the heels of a 0.5% increase in September. I’ve been telling you for years that fears of a Chinese real estate bubble were unwarranted.

What we’re looking at is a country with (a) a thriving export/manufacturing sector, (b) a vibrant consumer-spurred domestic economy, and (c) a resilient real estate market with slow, steady growth.

That is a country you want to invest in. The easiest way is through exchange traded funds, and there are three that will give you instant and wide exposure to China.

iShares FTSE/Xinhua China 25 Index (FXI): Seeks to track the performance of the FTSE/Xinhua China 25 index. This index consists of the largest 25 Chinese companies listed on the Hong Kong Stock Exchange.

PowerShares Golden Dragon Halter USX China (PGJ): Seeks results that correspond to the returns of the Halter USX China index. This index consists of 103 Chinese companies whose common stock is publicly traded in the United States. The index uses a formula that prevents the largest market-cap companies from becoming too large a component of the index.

SPDR S&P China (GXC): Seeks to replicate the total return performance of the S&P/Citigroup BMI China index. This index consists of the largest 342 companies that are publicly traded and domiciled in China.

Don’t make the mistake of being under-invested in China because that is where the biggest stock market profits will be made.

Best wishes,

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.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

sceptic
18 Nov 10, 04:24
china

why no word is written about tremendous capital misallocations like real estate (huge bubble)? Chinese story has been all played 2 years ago. emerging markets and commodities bubbles are set to burst. time to get bullish was 2 yrs ago, now it's about time to be bearish.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules