Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
AMD Ryzen 4900x / 5900x and 4950x / 5950x Zen3 4th Gen IPC and Clock Speed and Core Specs - 14th Aug 20
Stock Market Gap Fills Suggests Market Momentum May Stall - 14th Aug 20
Silver May Be Overextended – But It’s STILL Cheap - 14th Aug 20
A Short Guide To Making Your First Stock Market Investment - 14th Aug 20
Is Tech Reality Affects our Dating Possibilities? - 14th Aug 20
Will You Make Money in the New Silver Bull Market ? - 13th Aug 20
Hyper-Deflation Capital Destruction And Gold & Silver - 13th Aug 20
Stock Market Correction Approaching - 13th Aug 20
Silver Took the Stairs to $21 in 2008, Took Escalator to $29 2010. Is Silver on Elevator to 120th floor today? - 13th Aug 20
President Trump Signs Additional COVID Relief – What To Expect from the Markets - 13th Aug 20
Has Gold's Upward Drive Come to an End? - 13th Aug 20
YouTuber Ads Revenue & How to Start a Career on YouTube - 13th Aug 20
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

China Infrastructure $600 Billion Stimulus Windfall Profits for Investors

Stock-Markets / Chinese Stock Market Feb 06, 2009 - 04:23 AM GMT

By: Money_and_Markets

Stock-Markets

Best Financial Markets Analysis ArticleTwo weeks ago I talked about the U.S. infrastructure spending that's soon going to hit the economy and how it will benefit a handful of companies.

Today, I'm going to talk about an even greater windfall for savvy investors. That is, investors who don't stick their heads in the sand.


I'm talking about China's massive infrastructure program: More than $600 billion that will be invested to boost the standard of living in China's rural areas.

Look. I don't deny that China's having its share of problems as a result of the global financial crisis. It is. Growth has slowed, to sub-8% GDP.

China's banks are now the strongest anywhere. In fact, Chinese banks total assets jumped 18.6% in 2008 to $9.1 TRILLION &mdash almost equal to the entire GDP of the U.S.
China's banks are now the strongest anywhere. In fact, Chinese banks total assets jumped 18.6% in 2008 to $9.1 TRILLION — almost equal to the entire GDP of the U.S.

But that's still multiples higher than any other country on the planet!

Plus, China's banks are now the strongest anywhere. In fact, non-performing loans, or NPLs, fell by $102 billion in 2008 to $83 billion … just 2.45% of the total loans outstanding. That's amongst the lowest NPL ratios of any country.

Moreover, Chinese banks' total assets jumped 18.6% in 2008 to $9.1 TRILLION. In other words, its bank assets are equal to almost the entire GDP of the U.S.

And despite all the gloomy talk on China,

There Are Plenty of Signs of The Economy's Resilience …

  • Consumer spending during the Lunar New Year holiday, which ended last week, rose 13.8% over last year.
  • Grocery store sales were up a whopping 23% during the week-long New Year holiday. And …
  • Sales of household electric appliances jumped 17.8%.
  • For all of 2008, retail sales rose a very healthy 21.6% , versus 16.8% in 2007.
  • Despite a slowdown in exports, China's industrial output grew 12.9% for all of 2008 , while …
  • Fixed asset investment surged 25.5% , up from 24.8% in 2007.
  • Despite the slump in the stock market and lower capital gain revenues, overall tax revenues contributed to a 19.5% surge in China's fiscal revenues in 2008. Proof positive that China's economy remains robust.

    And that's not all …

  • Despite what all the doomsayers are claiming, China's economy created 11.13 million new jobs in 2008!

I suspect that's going to be a drop in the bucket compared to the job creation we will see in the years ahead as $600 billion gets invested largely in rural infrastructure.

In fact, according to the China Banking Regulatory Commission (CBRC), that $600 billion will stimulate $2.9 TRILLION in total lending that will be pumped into the rural economy in the next 12 years.

That will open the floodgates, not only for the banks that will provide the lending, but for companies involved in irrigation, clean-water systems, power plants, roads and highways, rail lines, home and business construction, medical facilities, and more.

Below are some of the companies on my radar screens that I'm keeping my eye on. Note: Some are traded in Hong Kong. For more info on these companies and how to invest in Chinese stocks, be sure to follow my signals and instructions in my Real Wealth Report

  • Anhui Conch Cement (AHCHF.PK). Anhui is China's biggest cement maker. Based in Beijing, the company produces and sells various types of cements used to build structures, power plants, roads and more. It has focused its efforts on developing the western region of the country.

    According to the latest data, the company's net profit in the first nine months of 2008 rose 34.27% year-on-year while operating revenue rose 28.55%.

    The company is expanding in Sichuan to help build the 175,000 homes that are under construction there, and is investing 17 billion yuan to add 50 million tons of annual capacity in western China over the next five years.

    Anhui is one of several companies chosen by the government to receive preferential treatment in securing credit for expansion projects as well as for mergers and acquisitions.

    I believe this company is in a great position to rake in some serious profits as it provides its services and products in China's rural areas.

  • China Communications Construction Company Ltd. (CCCGF.PK). A transportation infrastructure company that's also involved in dredging and port machinery manufacturing. It is China's largest port, road, and bridge construction and design company. It has also played a large role in the design and construction of several railway projects in China.

    China Communications Construction Company is in line to become a big recipient of development projects in the west of the country.

  • China Mobile Ltd. (CHL). This huge telecommunications company services China's 31 provinces, autonomous regions and administered municipalities in Mainland China and Hong Kong.

With more than 457 million subscribers, China Mobile is the largest telecommunications company in the world and continues to experience double-digit subscriber growth rates — 20% in the first 10 months of 2008!

  • New Oriental Education & Technology Group (EDU). Chinese people are known for placing a lot of importance on formal education. As the rural areas are developed, New Oriental should see a boom in students as it expands to the countryside.

    Already, China produces more engineers (400,000) annually than Japan (200,000) and the United States (60,000). Its students are getting increasingly competitive globally for the limited spaces in top institutions. Companies like EDU aim to capitalize on this and tailor their services to an increasingly affluent populace that places great importance on education.

    New Oriental Education & Technology specializes in university admission assistance to students and also trains its students in foreign languages.

    EDU has a quarter billion dollars in cash and no debt. Its five-year earnings growth rate: 69%. Net profit margin: More than 37%.

  • China Railway Group Ltd. (HK: 0390). Hong Kong-listed China Railway Group stands to reap huge profits from Beijing's budget to invest more than $4 billion in 150 railway projects over the next three years.
  • ABB Ltd. (ABB). Zurich-based ABB Ltd is one of the world's leading electrical power engineering companies. Operating under five segments, the company has operations in more than 100 countries.

    ABB's work in China dates back to 1907, so the company has extensive experience and relationships there. Its major presence in China is through its power systems division, which serves electric, gas and water utilities, as well as industrial and commercial customers.

    Its most-recent contract with China (September 2008) is a $36-million project for a new solar products manufacturing plant in Xinyu City. ABB will be the main electrical contractor and will provide all systems, equipment and related engineering for the project.

What About China's Stock Market?

It reminds me of 2002, when the world was fixated on potential horror stories in China's economy and clueless about the reality in China.

Back then, I told my subscribers to buy with both hands. And what happened? The Shanghai Composite soared more than 300% in the ensuing five years.

Today, what you're hearing about China … tales of the rural areas going through an uprising, derailing growth, protests in the countryside, banking problems, bad loans, a slowing economy, etc. — are almost as far from the truth and reality as they were back in 2002.

As $600 billion gets invested largely in rural infrastructure projects, I expect to see the Shanghai Composite TRIPLING.
As $600 billion gets invested largely in rural infrastructure projects, I expect to see the Shanghai Composite TRIPLING.

My forecast remains firm: I expect China's stock market to head substantially higher this year; retracing at least 50% of its 2008 decline and pushing the Shanghai Composite to as high as 3,700 — from its current 2,000 level. And within the next three years, I see the Shanghai Composite TRIPLING.

Bottom line: China is one area of the world you should consider buying into.

In addition to the above stocks, also consider my two favorite China plays: The iShares FTSE Index (FXI) , an ETF that tracks China's Shanghai stock market, and U.S. Global Investors China Regional Opportunities Fund (USCOX), a mutual fund that invests at least 80% of its money in the China region.

Best wishes,

Larry

P.S. Be sure to check out my blog between my weekly Money and Markets columns for my thoughts on what's going on in the markets. And you can interact with me directly by leaving a comment.

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

6 Critical Money Making Rules