Chinese Consumers Pick Up the Slack from America

Video Transcript

Hi, this is Tony Sagami for Uncommon Wisdom Daily.

If you’re like most Americans, you haven’t been doing much shopping lately. In fact, U.S. retail sales fell by two-tenths of a percent in May. That marked the second-straight month of negative growth, the first time that’s happened in more than two years.

Plus, if you back out auto sales, the May number was even worse — negative four-tenths of a percent. The report was an unwelcome surprise, because a drop in gasoline prices during the month should have freed up more dollars for clothes, food and other products.

Obviously, the numbers are bad news for retail stocks, but the problem is much bigger than that. Consumer spending accounts for 70% of economic growth, so a slowdown like this could cause serious damage to second-quarter GDP.

But while things are going from bad to worse here, it’s a completely different story on the other side of the Pacific Ocean.

China’s Ministry of Commerce just reported that May retail sales there grew by 13.8% on a year-over-year basis. In addition, China’s 100 biggest retailers increased their sales by 20.9% in the first five months of the year.

This huge discrepancy between the retail sectors in China and the U.S. is no accident. China’s government has engineered a monumental transformation from an economy dependent on low-margin exports, to one driven by internal consumption. That has allowed the country to shrug off its past dependence on the west to buy its exports, and focus on growing its own domestic demand instead.

If you want to take advantage of this massive shift, consider the Global X China Consumer ETF, ticker symbol CHIQ. It’s packed with China’s most successful retailers, which are among the country’s fastest-growing and most profitable stocks.

But if you’re not comfortable investing in Chinese stocks, there are also some U.S. companies that are doing big business in China. One of these is Apple (AAPL), which owes much of its phenomenal growth to surging sales in Asia. Apple already has three retail stores in Shanghai and two in Beijing, and it plans to open two more Chinese locations by the end of the year.

If you’re worried about the U.S. economy, you should be. But don’t let your pessimism lead you to ignore the booming opportunities in Asia.

I’m Tony Sagami for Uncommon Wisdom Daily. Thanks for watching.

Tony Sagami is the editor of Blue-Chip Option Alert, a trading service designed to help investors profit from the seemingly unstoppable Asian consumption machine. He helps his subscribers tap into this potential through a variety of easy-to-execute strategies on global companies that trade on the U.S. exchanges that also do big business in Asia.

Tony is also the editor of International ETF Trader, where he shows members how to make money from trends taking place all over the world in areas like natural resources, gold, oil, commodities, tech, consumer goods and even in individual countries themselves.