Coming Soon to Your Neighborhood

Everyone has an opinion on how to lower gas prices. People have resorted to:

By Grace Chen

Playing the market and predicting the future of global economics seems to be on the top of everyone’s daily agenda. In rough times, everyone is an economist looking for the best place to store their money. As doom and gloom is all over the airwaves in the developed nations of the world, new capital and overseas investment is pouring into developing markets, particularly in the strengthening Asian markets. Investors of the developed world are catching wind of undervalued corporations and currencies whose economies are growing at a 10% rate.

The now world renowned automaker known for its $2500 (100,000 rupees) car has contracted with Boeing (BA) to produce parts for the 787 airliner. This news adds more strength to Tata Motors’ (TTM) bottom-line, confirming the company as a great investment.

Boeing partnership increases revenues and exposure

Has the Chinese Stock Market bust arrived? Or, has a harsh winter merely caused a temporary pause in the growth of the Shanghai Composite?

The Shanghai Composite, which monitors the major Chinese stock markets, fell 9.3% last week, closing at 4,320.77 on Friday’s trading session. This leaves the composite at nearly 30% less than last October’s historical highs. The Shanghai Composite’s weekly performance has not closed this poorly since May 16, 1997.

This week’s whipsaw markets symbolize the significant economic insecurity we face in 2008. As the selling activity heightens, investors are rushing to stay on the sidelines with cash. However, amidst the rollercoaster stock market, there are certain industries that can provide a safe hedge in the tumultuous market.

• Consumer Necessities: In any market, non-cyclical stocks balance your portfolio, and they are an especially excellent defense against economic hardships. Most important in this category are food, personal care, and household goods – the bare necessities for human existence. Regardless of the economic conditions, consumers must purchase these goods and services. Johnson & Johnson (JNJ) and Proctor and Gamble (PG) are two consumer companies that consistently raise their dividends, posting gains every year for the last decade – but you may want the price to pull back slightly amidst additional market declines to capture a good entry price.

In addition, non-cyclical stocks constitute a good defense against economic recessions because they are also a long-term hedge against inflation. The large-cap stocks in consumer necessities also pay consistent dividends, which are a great source of income during recessionary times.

Microchip giant Intel (INTC) has been taken for a rollercoaster pricing ride in the start of 2008. Fear of worsening economic conditions has pushed down the price of Intel by more than 25% during January 2008 thus far.

Preface: Once upon a time, Federal Reserve Chairman Ben Bernanke had very big shoes to fill. He arrived into the story of the American economy at the heels of Alan Greenspan, who holds the longest Fed Chair tenure in history. Immediately after becoming the Federal Chair, Bernanke was faced with major economic meltdowns, with prospects of a recession on the horizon.

Opening chapter: Though his public words regarding the economy were modest, stories began spreading about Bernanke’s true feelings expressed in private quarters. Within the confines of his private life, Bernanke had discussed his growing concern regarding the health of the economy – and he purportedly believed that the recession would be significantly worse than his public words.

Knowledge is power, and in the case of China Finance Online's (JRJC) strategic alliance with China Telecom (CHA) – that knowledge is profitable.

China Finance Online, a leading mainland financial information provider, has forged a partnership with China Telecom – resulting in an instantaneous readership of more than 40 million broadband users and 10,000 business halls. Working together, these two companies will jointly launch a personal finance portal. The financial online publication will be hosted on China Telecom’s Vnet, which is one of the country’s most visited websites.

When one door closes in the stock market, another window of opportunity opens.

Case in point: Bank of America (BAC) saw the window of opportunity with Countrywide’s sub-prime catastrophe, and thus, initiated a takeover of the Countrywide Financial Corp (CFC) via $4 billion in stock.

The current state of the U.S. dollar does not bode well for the greenback. This month, the dollar depreciated significantly, falling to its lowest value against the yen in the last two and a half years. Against the Swiss franc, the U.S. dollar has fallen to a historical low; the downward push was prompted by continuing signs of American economic woes, including the world’s largest finance broker, Merrill Lynch (MER), reporting a $16.7 billion dollar loss from the plummet of sub-prime mortgages – the worst quarter in its history.

With the value of the American paper continuing its decline, many investors are looking elsewhere to invest their funds. Considering that gold and the U.S. dollar move inversely in value, the question now begs, will gold prices continue its tear upwards, potentially hitting $2000 as the next milestone? The popularity of gold rises during economic and political turbulence, satisfying investors’ psychological needs of an inherently valuable, safe asset.

For an investor already diversified among equities, real estate is a solid instrument for overall portfolio diversification. While the American real estate market stagnates to its lowest volume in the last 20 years, investors are looking to put their asset allocation funds elsewhere.

Interestingly enough, real estate in China has been positioned for growth – and despite its already large percentage gains, there still remains additional growth potential. However, for many foreign investors, the choices for traditional real estate purchases are limited by the People’s Republic of China’s government. Having to pay higher land fees, combined with lower property choices for foreigners, it can be monetarily risky for a foreign investor to purchase real estate in China.

Bank of America (BAC) purchased Countrywide Financial (CFC) for $4 billion in an all-stock deal to rescue the struggling mortgage lender. According to the deal, Countrywide shares are valued at $7.16 a piece, which is a huge discount from CFC’s 52 week high of $45.26.

Current CFC shareholders will receive .1822 shares of Bank of America (BAC) stock in exchange for each share of Countrywide. This deal gives Countrywide shareholders a favorable piece of the America’s leading financial institution.

Global investors have plenty of reasons to look forward to an exciting 2008. I have a few predictions up my sleeve that will shake up the global markets this year. Exciting mergers, historic IPOs, and record profit moments are just a few of opportunities ahead of us. Let’s dive right in.

#1: Facebook.com Launches an IPO

New Oriental Company Report

New Oriental Education & Tech. Group Inc. is a provider of private educational services. The Company offers a range of educational programs, services and products consisting primarily of English and other foreign language training, test preparation courses for admissions and assessment tests in the United States, the People’s Republic of China and Commonwealth countries, primary and secondary school education, development and distribution of educational content, software and other technology, and online education. It provides educational services under its New Oriental brand.

Starbucks on a Corner

Like many Starbucks locations in the city, Starbucks has a proclivity for opening coffee shops on street corners. I noticed the dark green “Starbucks Coffee” roof from 2 blocks away, and of course the iconic symbol reminded me of similar well branded logos like McDonald’s (MCD) golden arches. The traffic outside of Starbucks was pretty heavy around 8:30 am, around 5 customers entered the shop while I stepped inside.

Blackstone commentaries from Wall Street Investors

Because there is very little financial data to analyze, I will instead provide you with some interesting commentaries for thought on the Blackstone IPO.

Elong, Inc Company Report:

eLong, Inc. is an online travel service provider in China. The Company utilizes a centralized modern call center and Web-based distribution technologies to provide its services. Through its nationwide 24-hour, toll-free call center, Chinese and English language Websites and extensive reseller network, eLong provides its customers with consolidated travel information and the ability to book rooms at discounted rates at over 3,000 hotels in more than 278 cities across China and air tickets in over 50 cities across China. The majority of the Company’s hotel suppliers are three-, four- or five-star hotels catering to higher-end travelers. The Company also offers vacation packages.

HMIN provides lodging for Beijing tourists, but they have to book their trips, don’t they?

#2: Ctrip.com International, Ltd (CTRP)

Even when the 2008 Beijing Olympics conclude, China will reap the social and monetary benefits that hosting the Summer Olympics provides for years to come.

In order to ease your search, we’ll ditch the quarterly earnings reports and conference calls for a moment, and analyze the most crucial aspect of a successful business: the strength of its brand. A strong company brand translates into profits in the long run, and businesses build their brands by changing the world and earning loyal followers.

World changing service/product + Loyal Following = Strong brand + Company profits.