beijingwalker
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Who's Afraid of China?
by John Blank
January 25, 2013 |
over 40% of ALL the world's economic growth comes from China
by John Blank
January 25, 2013 |
over 40% of ALL the world's economic growth comes from China
If your stocks have limited China exposure, then don't expect outperformance in 2013. Exposure might be buried in revenues or equity risk taken directly, but it MUST be there. That is because China is a market elephant now; you can't avoid it.
The internal migration reshaping the country? - Epic
Its demand growth? - Picking up
Investment signals? - Positive!
All of this provides a strong catalyst to take shares higher. So in the next few paragraphs, I am going to show you what is going on with China and how to invest more successfully in 2013 because of this key trend.
What is Going on With China's Economy?
China's consensus GDP forecast is rising.
Growth is forecast at +8.1% for 2013 after +7.7% in 2012. We heard much about China's slowdown, but not much about its current recovery. Truth is, over 40% of ALL the world's economic growth comes from China -- no small matter for investors.
Inside China's financial markets, I see upside -- China's retail sales are up +14% year over year. With low forward P/E ratios, Chinese stocks look reasonable even after the recent eight-month long rebound. China's managed currency may be a political hot potato, but it lowers currency risk for investors.
China's CYCLICAL slowdown signaled its end in June 2012.
The 2012 slowdown was a back-end signature of their huge 2009 fiscal stimulus. Late in 2010, tight money began to attack a housing price bubble. Two years later, slower growth cooled prices, and put in place a stable expansion.
In June 2012, the People's Bank of China [PBC] cut its average 6.5% rate to 6.0%. It can go to 5.3% to match the 2010 low. To skeptics who see slack, I ask this: Why doesn't the PBC go to 5.3%?
After ending speculation, housing bottomed. Prices have come down -10% to -15%. Wage growth of +10% to +20% a year means home affordability is up +30% to +50%. Now, home and auto sales - accounting for 40% of China's consumer spending - should pick up.
More . . . Who's Afraid of China? - Zacks.com