Asian Emerging Market Stocks Rocket on Strong Growth Outlook
Stock-Markets / Emerging Markets Jan 30, 2008 - 02:02 AM GMT
Tony Sagami writes: What an amazing bounce!
You may think I'm talking about last Wednesday's big 298-point rally for the Dow Jones, but I'm not. I'm referring to a much bigger bounce that happened across the Pacific Ocean on the same day:
» The Hong Kong Hang Seng Index soared almost 11%, recovering every bit of its previous 8.7% loss and then some!
» The Hang Seng China Enterprises Index , which tracks Chinese companies listed in Hong Kong, leapt 12%.
» And the Indian, Australian, Singaporean, and Indonesian indexes rose as much as 7.9%.
In a moment, I'm going to tell you about some individual Asian stocks that shot even higher. They're what I like to call "Asian superballs" ... the kind of shares that bounce back just like those rubber balls my kids love to play with.
But first, I want to tell you why Asian markets are rebounding higher than their U.S. counterparts, and why they should continue to do so ...
Unlike the U.S., Asia Is Still Posting Unprecedented Growth!
China, the economic engine of Asia, is still growing by leaps and bounds regardless of any U.S. recession.
The National Bureau of Statistics just released its 2007 full-year growth figures for China and they were impressive ...very impressive!
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| China's industrial output surged in 2007! |
Gross Domestic Product soared 11.4% in 2007, the fastest pace in 13 years and China's fifth straight year of double-digit growth.
Industrial output, an excellent measure of manufacturing strength, expanded 18.5% in 2007. China has become — and still is — the workshop of the world.
Retail sales rose 16.8% in 2007, proving that the growing Chinese middle class is becoming less dependent on U.S. sales to support their economy.
Per-capita income of urban Chinese residents reached 13,786 yuan (U.S.$1,907) in 2007, inflation-adjusted growth of 12.2% from a year earlier.
Spending on fixed assets — factories, office buildings, railroads, airports, etc — jumped by a whopping 24.8% in the last year.
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| Chinese consumers pushed up retail sales, too. |
Those numbers prove that the Chinese economy is still growing like mad. And let me tell you, continued growth is virtually guaranteed. Why?
China is still a command economy controlled by the Communist Party. Moreover, the country's leaders have $1.4 trillion in cash reserves at their disposal. That gives them the ability to flood their economy with new public works projects ... create jobs ... and keep things humming along.
That's exactly what they've done in the past!
During the 1998 Asian financial crisis, Beijing injected the Chinese economy with a huge influx of government cash that kept their economy growing at an impressive 8% rate.
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| China's Ministry of Railways is going to spend $41 billion on projects! |
And that's exactly what I expect this time around ...
Just recently, the China Ministry of Railways announced a major increase in its construction plans. It will now shell out $41 billion to lay 7,800 kilometers of track.
This Is Why I Suggest Buying Asian Superballs During Dips
If Asia's growth is going to continue, it makes sense to accumulate while everyone lets their emotions get the best of them.
Let me give you a real-life example ...
Last Tuesday, when the pre-market futures were indicating a 500-point Dow Jones loss, I sent out an urgent Flash Alert to my Asia Stock Alert subscribers.
One of the stocks I told them to load up on was E-House, the real estate company I mentioned right here in Money and Markets just two weeks ago. The shares traded as low as $15.02 on the day of my alert.
Then, last Friday, I sent out another Flash Alert telling them to bag their gains. Reason: E-House closed at $21.15. Do the math — that's a 40%-plus gain in just four days!
Now, I'm not trying to say I'm some sort of market-timing genius. Rather, I'm saying that the China growth story has years — if not decades — to run. Therefore, I think anybody who treats corrections as buying opportunities is going to be very happy with their results.
Just look at some of the other stocks that rebounded higher last week:
China Life Insurance gained 15.5%
HSBC Holdings rose 11.3%
PetroChina soared 17.5%
China Unicom shot up 15.1%
China Mobile skyrocketed 10.5%
Cheung Kong increased 10.4%
Perhaps the best part is that you don't have to open an exotic brokerage account to participate in these kinds of bounces. There are more than 100 Chinese stocks trading right here on U.S. stock exchanges.
But you cannot buy indiscriminately. Triple-digit returns will only come your way by investing in true Asian superballs.
Where can you find them? Well, if you're a do-it-yourselfer, the Bank of New York has a complete list of all foreign stocks traded in the U.S. You can start there, and then whittle down the list with some further research.
Or, if you want to know which stocks I recommend — and when I recommend buying them — I encourage you to try my Asia Stock Alert service, risk-free for 90-days .
But either way, as you can see from the E-House results, there are some big bucks to be made by investing in Asia right now!
Best wishes,
Tony
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