‘Made in China’ Refers to Money

Posted by

March 6, 2009

If Chinese Premier Wen Jiabao is only half right, his country will still foster GDP growth of 4%. What a great problem to have. Granted, it’s still not the growth rate we’ve seen in years past, 8%, but I’ll take it. More importantly, I think we all need to be taking a little larger piece of Chinese pie for our portfolios.

And which stocks are your best bets? Those are below. First, some Chinese food for thought….

In Q4 of 2008, the United States’ GDP shrank at a rate of -6.2%, For the same quarter, China’s GDP ’shrank’ at an annualized growth rate of +6.8%. (It ’shrank’ because it had been growing as fast as 14% at one point in 2007.)
Year-to-date, China’s market is down 14.3%, while the U.S. market is down about 23.7%. Neither is ‘good’, but on a relative basis it sure seems like their stocks have less of a bearish tide to deal with.
China is planning a one potent stimulus…. a lot more potent than the United States’ stimulus. The proposed $586 billion stimulus China has been discussing is about 20% of their GDP. Every $1 trillion worth of stimulus for the United States is about 8% of GDP. Granted, the U.S. stimulus price is ever-changing (higher), and the Chinese stimulus is still in question. Even if China’s is shaved and the United States’ swells, they’re still doing more on a relative basis.
China’s budget deficit this year will be about 3% higher than their GDP., while the United States deficit for 2009 is on pace to exceed GDP by about 12.3%.

And, some stock you may want to consider:

Aluminum Corp. of China (NYSE:ACH) - The implosion of aluminum prices have just about drop-kicked the company, but that’s a good thing in a way…. the stock is priced rock-bottom, and if the recovery happens sooner than later, this is a big-time value.

China Mobile Ltd. (NYSE:CHL) - The Chinese are as glued to their cell phones as anybody else is. Even with the slowdown, the earnings forecast for 2009 still leaves CHL with a projected P? of around 10.0.

Mindray Medical International Ltd. (NYSE:MR) - A 63.6% increase in domestic revenue, and a 103.9% increase in overseas revenue? Full year earnings were up 48.7%. What’s not to like.

China Energy Recovery Inc. (CGYV: OTCBB) - If there are two things China is doing now, it’s still burning coal, and no trying to do it cleanly. China Energy builds waste heat boilers that make coal burning factories and plants more efficient and environmentally-friendly… one of the country’s massive initiatives. The company doubled revs last year, and is primed to do so again this year.

Share and Enjoy: