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Albert Sung is the author of Correlation Economics, monitoring breaking economic news on a day to day basis. He started investing in 2008 because of the economic crisis and holds a masters degree in chemical engineering. Previously, he worked several years as a process engineer at Ashland, a... More
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Correlation Economics
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  • Marc Faber's New Recommendation: The Case For Hong Kong Stocks

    This week, Marc Faber came in with a new recommendation. He is advising investors to invest in Hong Kong stocks as we can see in this interview with CNBC. The reason for that is because we see a technical breakout on the upside for China. As a result also the Hong Kong stock market is up. See chart of the Hang Seng Index below from Google Finance.

    (click to enlarge)

    Now why is China doing so well? I have already hinted on that in this article. Basically, we see many signs of a recovery in China. First off, the PMI had surged to 52 after several months if not years of decline. A surging PMI indicates that GDP growth is accelerating. And the evidence of an accelerated growth in GDP can also be seen in the Chinese power consumption numbers (chart below created by Correlation Economics). As our correlation shows, the rising power consumption numbers go hand in hand with GDP growth.

    Next on, this China GDP growth translates itself into a positive development in the commodities market. The zinc and copper prices for example have bottomed out just recently. Also China and Hong Kong real estate have been bottoming out. I have been recommending Tai Cheung Holdings here, which has seen a nice 10% return.

    To put some more evidence on display, we can see that the CRB Commodity index has seen a surge since the start of 2014, indicating a recovery in commodity prices. See chart below from Bloomberg.

    (click to enlarge)

    And last but certainly not least we have a very important development in the currency market. Not only has the Chinese yuan stopped dropping against the U.S. dollar. The Hong Kong dollar is said to finally de-peg from the U.S. dollar, which will boost Hong Kong stocks even more.

    If U.S. investors want to buy Hong Kong stocks, I recommend Hang Seng Bank (OTCPK:HSNGY), because this bank is based in Hong Kong and is highly correlated to the Hang Seng Index. And while you wait for the rise, you get to be paid a handsome dividend of 4%.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

    Tags: HSNGY, long-ideas
    Jul 31 1:12 PM | Link | Comment!
  • Indian Gold Panic Buying

    India didn't decrease its import taxes from 10% to 6%.

    Result: panic buying among the jewellers to restock gold, because Indian gold premiums will skyrocket again.

    Of course, in the long run, this is not good for Indian gold imports. So official Indian gold demand will not strengthen due to these 10% import taxes. Smuggling on the other hand is going to continue.

    First reaction: gold surges.

    Tags: GLD
    Jul 10 5:46 AM | Link | Comment!
  • Stock Market Completely Overextended

    When GDP growth gets consistently revised downwards while the stock market goes up every day, we get an overextended TMC/GDP ratio at 121.3%. Yes, we are in a stock market bubble. The question is, when will it pop? Keep your finger on the sell button.

    First it was 0.1% GDP growth, then it was -0.1%, then it was -1% and suddenly today they reported -2.9% GDP growth. Incompetent people...

    Jun 25 9:40 AM | Link | 2 Comments
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