Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Capitalizing on Global Growth from Emerging Markets

Companies / Emerging Markets May 02, 2007 - 12:51 PM GMT

By: Michael_K_Dawson

Companies The latest revelation on CNBC is that overseas growth can offset a slowing U.S. economy enabling the big U.S. multi-national companies to continue generating outstanding earnings. Talking head after talking head have parroted this theme for the last week and a half. Well, it is nice to be ahead of a trend for a change. Over the past three years, this has been the predominant theme of stocks in my portfolios. However, I haven't limited myself to U.S. companies.


If you have read any of my previous articles, you will know that some of my favorites companies are BHP Billiton (BHP), Companhia Vale do Rio Doce (RIO) and Southern Copper (PCU). These companies provide key commodities essential to the industrialization of countries that are growing at incredible rates like China and India. Chip Goodyear, CEO of BHP Billiton, has made it quite clear that a slow down in the U.S. would be offset by growth in the emerging markets with the statements such as the following:

“The incremental copper required as that person upgrades from a Chevrolet to Mercedes is not significant.  However, when a consumer moves from a bicycle to a motor cycle to a car, as the Chinese are now doing, the incremental demand is quite substantial.”

It's great that CNBC is finally getting religion, but why limit it to U.S. based companies.

The second part of their eye-opening news is that U.S. based companies also receive a currency benefit from the declining dollar. Although the dollar has been in free-fall since 2001, it is very seldom discussed. Now, there is finally a politically correct benefit for a declining dollar. Portfolios favorites such as heavy equipment manufactures Caterpillar (CAT) and Terex Corp. (TEX) completely capture CNBC's latest money making idea. View the remaining stocks in my industrialization leveraging portfolio here .

The social and economic benefits of industrialization are desired by many undeveloped countries. Interestingly, the developed countries benefit nearly as much from their industrialization as new markets and labor pools become available. Try to envision the size of China's middle class in 10 years. Now visualize the potential consumption boom. Are you seeing dollar signs yet? Maybe these statistics from the McKinsey Quarterly will help:

  • By 2025 China's urban households will make up one of the largest consumer markets in the world, spending about 20 trillion renminbi annually - almost as much as all Japanese households spend today 
  • By 2011 the lower middle class will number some 290mn people, representing the largest segment in urban China. By 2025 this segment will comprise a staggering 520mn people

CNBC's discovery was far from earth shattering, but it did prompt me to shift my thinking to the second order effect of industrialization – consumption.

Two companies that recently reported earnings, the ipod phenom Apple (AAPL) and KFC, Pizza Hut and Taco Bell operator Yum! Brands (YUM) are ideal candidates to capitalize on the consumption theme. Yum highlighted its powerful growth in China and International divisions in its earning's press release.

  • Worldwide operating profit increased 12%. 
  • Strong double-digit operating-profit growth from our international divisions: China, +31%, and Yum Restaurants International (YRI), +25%. 
  • Mainland China restaurant unit growth of 19%.

Finally, how can one truly be a consumer without a credit card or two or three? Hello, MasterCard.

I am in the process of extending my industrialization portfolio to include companies positioned to capitalize on the upcoming consumption boom in the emerging countries. My current thinking is that Apple's slick gadgets will make it a fine center piece. 

I would love to hear your thoughts on other companies that fit this profile.

By Michael K Dawson
http://www.thetimeandmoneygroup.com/

Copyright © 2007 Michael K Dawson
Michael K Dawson founded the Time and Money Group with the aim of educating and sharing 20 years of experience on how to reach financial freedom. "Financial Freedom is freedom to focus on what is truly important to you and your family without having to trade time for a wage. It is enabled by a portfolio of income producing assets, managed by you, which generates sufficient income to cover your yearly expenses on an ongoing basis. It provides both time and money". The intent of his website is to become a repository of information to put you on the fast track to becoming financially free. For further infromation visit http://www.thetimeandmoneygroup.com/


© 2005-2022 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