Focus Advisory

Can China Take Up Consumption Slack From the U.S.?

Exports as a % of Chinese GDP is approximately 10%. The U.S. accounts for 24% of those exports. EM's account for the plurality of Chinese exports.
The Chinese are trying to hold up exporters, but will realize a stronger currency will increase consumption. In so doing, they will also accomplish their goal of moving their exporters up the supply chain as they are forced to become more competetive.
Bottom line: The Yuan will rise and Chinese consumption will rise in kind. Having said that, it will not happen overnight, but will be a strong trend over the next 3-5 years.
Get long the Yaun with CYB. I am long this note for clients and believe it will provide a bond like return over the next 5 years. The underlying currency that you are invested in over the next 3-5 years will be the most important decision an investor makes.
Thank you for the article...good stuff.

China Wants the U.S. Dollar to Drop Dead

Thank you for a well written and timely article.
Yesterday I began to take advantage of the $US strength to begin to sell. For all the reasons mentioned above and the fact that 65% of todays foreign exchange reserves are held in $US convinces me this is the turning point in the global currency markets.
There will be a new world order.

Why Every Investor Needs To Have a China Investment Strategy

In regards to current valuations the Chinese market is beginning to look dirt cheap. Those that say the market is expensive are not looking at the facts.

China Mobile trading at 11x 2009 EPS
China Merchants Bank trading at 13x 2009 EPS (2008 EPS is still growing over 100%...some slowdown).
Focus Media trading at 10x 2009 EPS
Shanda Interactive trading at 9x 2009 EPS
...The list goes on and on.

There has been a tremendous amount of China bashing of late and it all smells of American ignorance. There is no factual basis for the argument that China will slow. If China were to slow it would be due to the U.S. and Europe falling off the face of the earth. If that were to happen, China is the country with $1.5Trillion in reserves. China is in the position to grow through any slowdown.

Bottom line: No signinficant slowdown coming and stocks are beginnin to look dirt cheap. If the market stays at these levels as earnings continue to grow, the market will be littered with high growth stocks trading at single digit PE's. China is here to stay, don't be ignorant of that fact.

Good luck

Why Every Investor Needs To Have a China Investment Strategy

The primary reason for an investor to be in China is money flow. Money flow drives markets and Chinese money flow will only grow.
China today has only 8% of all assets in the stock market. It's the lowest percentage in Asia and compares to a 35%-40% rate for the U.S. and Euro countries.
The Chinese market is at bottom and money flow will take it higher for decades to come.

China & Copper: Prepare for Crisis

I'm neutral on copper, yet find the thesis of this article silly. Even if there are secret stockpiles of copper in China, perhaps they are simply following the Korean model. Korea, last month, ordered that all metal reserves be tripled as a matter of national security.
Just six motnhs ago, China fronted the government of the Congo $12BILLION for access to the country's copper resources. Doubt they would pay such a sum to such an unstable source if they had all the copper they needed.
While I think copper could easily fall back to $3, Chinese demand will support the long-term trend. If, as you suggest, China must revalue its currency then copper goes through $4 in a week...stronger currency = higher demand.
Good luck