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
Gold Watch Out as Price May Be Staging New Momentum Base In Preparation For A Big Move Upwards - 18th May 21
Why the Demand for US Real Estate Licenses May Soon Fall into a Sinkhole - 18th May 21
Semiconductor Equipment Maker ASML Is at the Center of the Global Chip Shortage - 18th May 21
Could This Be The Hottest Investment Sector For 2021? - 18th May 21
TESLA Tech Stock Bubble BURSTS! Stock Price Heading for CRASH to below $400 - 18th May 21
The Most Exciting Biotech Stock Of The Year? - 17th May 21
Gold Mining Stocks Fundamentals - 17th May 21
Junior Gold Miners Should be Rallying – What’s Holding Them Back? - 17th May 21
Stock Market - Should You Be In Cash Right Now? - 17th May 21
Learning the Financial Markets - 17th May 21
INVESTING IN HIGH RISK TECH STOCKS - ALL OR NOTHING - 16th May 21
Is Stock Market Selling Madness About Over? - 16th May 21
Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
Budgies Birds of Paradise Indoor Grape Vine Singing, Chirping and Flying Parakeets Fun 3D VR180 UK - 16th May 21
Wall Street Roiled by Hot Inflation Data: Is This REALLY “Transitory”? - 16th May 21
Inflation Going Stag - 16th May 21
CHIA Coins After 1st Week of Plotting 140 Plot 14tb Farm. Crunching the Numbers How to Win - 15th May 21
Tips to Create the Best Cross-Functional Teams - 15th May 21
Gold: Lose a Battle to Win the War - 14th May 21
Are You Invested in America’s “Two-Hour Boom” Fast Shipping Stocks? - 14th May 21
Gold to Benefit from Mounting US Debt Pile - 14th May 21
6 Solid Signs You Should Have Your Smart Device Repaired Right Away - 14th May 21
Ways to Finance Your Business Growth - 14th May 21
Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
How Much CHIA Coins Profit from 100 Plot 10tb Farm? Hard Drive Space Mining - 13th May 21
Stock Market Bulls Getting Caught in the Whirlwind - 13th May 21
Legoland Windsor Mini land and Sky Train Virtual Tour in VR 360 - UK London Holidays 2021 - 13th May 21
Peak Growth and Inflation - 13th May 21
Where’s The Fed? Watch Precious Metals For Signs Of Inflation Panic - 13th May 21
Coronavius Covid-19 in Italy in August 2019! - 13th May 21
India Covid Apocalypse Heralds Catastrophe for Pakistan and Bangladesh - 13th May 21
TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
Gold Price During Hyperinflation - 12th May 21
Stock Market Extending Phase Two? - 12th May 21
Crypto 101 for new traders – ETH or BTC? - 12th May 21
Stock Market Enters Early Summer Correction Trend Forecast Time Window - 11th May 21
GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
Cathy Wood Bubble Bursts as ARK Funds CRASH! Enter into a Severe Bear Market - 11th May 21
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China World Wide Investing Ushering in the Next Asset Model

Stock-Markets / Investing 2011 Feb 08, 2011 - 11:13 AM GMT

By: Justin_John

Stock-Markets

Best Financial Markets Analysis ArticleThis is not a typical day trading article but rather medium term fundamental patterns which ultimately define every move including bond markets and currency markets.

The Heritage Foundation’s China Global Investment Tracker documents large Chinese investment overseas outside of bonds. The volume of this investment has exceeded $200 billion in the past five years. The tracker also contains information on nearly $100 billion in large construction contracts since 2005. These numbers will only rise as China seeks to find outlets for closing on $3 trillion in official foreign exchange reserves.


By year the amount are tracked here:

China has been increasing its overseas investments from 2005. Nearly $57 bn dollar of non bond investments were made in 2010.

So where is China investing? Well Take a Guess! IT IS EU.

Australia takes the cake as the single largest country with nearly $34 bn are invested. US is second with nearly $28 bn invested. But if we consider EU as a whole then EU beats the US and Australia handsomely with $35 bn investments. Brazil is the third-largest target for Chinese investment, trailing only Australia and the U.S., though Nigeria and Iran also boast large engineering contracts.

The growing traction between EU and China has been of tremendous concern in Washington though never spoken publicly. China move towards EU as its favored destination is a significant step in delevering itself from the US dollar.

China Investments by sectors

China has invested nearly $100 bn in overseas energy resources and $60 billion in the metals sector. That explains the overwhelming ride in the commodities market in 2010. And yet Gold is just at $1350/ounce. Hopefully Gold bulls will take note that Gold is way too over supplied in a world surrounded and ruled by bond markets.

Another line of thought….

The growing proximity between China and EU will ultimately take EURO to levels unforeseen. We have a long term and medium term bullish perspective on the EURO. What happens to the US ? Well US will crash down from a developed economy to a third world economy once China completely migrates its forex reserves away from the US dollar into EUROs. The process is progressing as seen above. Soon China will not need to buy any US dollar bonds to peg its currency and finally can sen its existing reserves as well as they would have been converted into other currencies.

China is really going to dump the US bond markets and we will see that long awaited bond market failure. The failure at first may not seem to be a failure as yields rise to a fantasy recovery which only the FED can understand, later on to be led by commodities and finally in the final stages when China, India and Russia will all dump the dollar bonds into an abyss of no return. We will not have a US dollar in about 2 years time. Looks aggressive? Wait for the unraveling to begin no later than October 2011 as 10 year yields will cross 4.5%.

We stand by our call that US economy is dusted and over. We are in the last few months of a massive bull trap before the asset re pricing that is to hit the whole world in 2011/12. Asset repricing is a painful process where sovereign debt and assets are restructred and written off as investors will take a hit on their holdings. Who will emerge as the new axis powers of this decade from Asset Repricing of 2012? China, India, Brazil and Russia. Countries who will dump the US dollars and migrate to the EUROs through FDI investments into EU and Asia-Australia. What happens to EU debt problem? Well the asset re pricing will write off a lot of debt in Europe but EU will be relatively stable cause of China holding and backing in the bond markets. Infact EU will raise rates even while asset re pricing process kicks-on which attract even further capital. The 2010 floated euro fund (EFSF) will serve as a proxy treasury for the new model to be ushered in.

But the scope of this article was not to discuss the asset re pricing model but rather to throw light on the Chinese strategic investments. The trend is to diversify Chinese reserves to acquire resources around the world with EU leading the path and attention of Chinese investments.

Source: http://dawnwires.com/investment-news/...

By Justin John

http://dawnwires.com

Justin John writes for DawnWires.com and is a Director at a European Hedge Fund.

© 2010 Copyright Justin John - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 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