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As an investor, was 2009 kind to you?
Most of the investors I talk to are delighted with their 2009 results. The Dow Jones started the year at 8,776 and closed at 10,428 … an 18.8% return.
Hey, that’s nothing to sneeze at. But before those investors start patting themselves on the back for a great year, they should take a look at what they could have done if they had followed my nagging advice and added some Asian spice to their portfolio.
The WORST performing Asian market was Japan, which produced a 16.6% return. That’s only slightly less than the U.S., but it looks downright disappointing compared to the rest of Japan’s Asian neighbors:
44.5% Hong Kong
45.2% Malaysia
46.0% South Korea
53.4% Thailand
57.9% Vietnam
58.3% Singapore
74.2% Taiwan
74.3% China
76.3% India
As you can see, you could have increased your returns by 300% … 400% … or more just by investing in the regions of the world that you know are experiencing stronger economic growth than the U.S.
Honestly, I’m puzzled that most investors I talk to are heavily-if-not-completely invested in the U.S. stock market and woefully under-invested in Asian markets, especially China.
Sure, the Chinese economy hasn’t been growing at the breakneck pace it enjoyed in the first half of this decade, but it has been chugging along just fine at an 8%-plus rate.
That’s about to change though. In a big way. In a big POSITIVE way.
The Chinese economy is about to return to those 10%-plus growth rates it enjoyed when its economy was rocking and rolling. More importantly, those were the days when the Chinese stock market was enjoying 100%-plus single year returns.
Yeah … you heard me … 100%.
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Here’s why. The Chinese economy is a double-barreled growth machine. The first barrel is the robust growth in China’s domestic consumption. Wages have been rapidly rising along with the economy and the Chinese have been enjoying their new-found affluence on better food, better housing, better clothes, better transportation, and just an overall better standard of living.
I see more Louis Vuitton handbags in Beijing than I do in Boston, more cell phones in Shanghai than I do in Seattle, and more BMWs in Hong Kong than Houston.
That strong consumer spending has kept the Chinese economy chugging along at a prosperous pace even though the export business has been in the dumps. Americans and Europeans just aren’t spending money like they used to and the Chinese manufacturing business has been in a slump.
Not any more.
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| The Chinese economy is poised to return to 10%-plus annual growth rates, fueled by strong consumer spending. |
The latest numbers from the China Federation of Logistics and Purchasing Managers (analogous to our Purchasing Managers’ Index) show that the manufacturing business has turned around and is well on its way back to the go-go prosperity.
The purchasing managers’ index (PMI) jumped to 56.6 in December, up from 55.2 in November. That’s the 10th month in a row that the index has been above 50, the tipping point that indicates economic expansion, the largest one-month gain since March, and the highest number in almost two years.
What impressed me the most was the broad strength of Chinese export recovery. Seventeen out of 20 industries reported improving conditions with metal products, like steel, the strongest and tobacco at the weakest.
The biggest proof of all that Chinese exporters are back with an economic vengeance was the news last week that China has now surpassed Germany as the world’s largest exporter.
China exported $1.2 trillion worth of goods to the world, nudging ahead of the $1.17 trillion that Germany sold.
Who does China sell all those goods to? Twenty percent of China’s exports go to the European Union, 17% to United States, 13% to Hong Kong, and 8% to Japan. As you can see, the U.S. is an important but not overwhelming buyer of Chinese goods.
That combination of strong domestic growth and the resurgence of the Chinese manufacturing and export industry tells me that 2010 (and beyond) are going to be great years for the Chinese stock market.
Still skeptical? You know what the top-performing IPOs in the U.S. were in 2009?
Lihua International (LIWA) 161%
Duoyuan Global Water (DGW) 124%
Changyou.com (CYOU) 108%
Yup, all three of those stocks are listed in the U.S. and you could have had a piece of them. My Asia Stock Alert subscribers still own Duoyan Water today and have made a bundle on it.
Listen, you need to get off your investment butt and add a significant chunk of Asian (especially Chinese) stocks to your investment portfolio. Asia is where the growth is TODAY and is going to get better TOMORROW.
Best wishes,
Tony
About Uncommon Wisdom
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Uncommon Wisdom (UWD) is published by Weiss Research, Inc. and written by Sean Brodrick, Larry Edelson, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in UWD, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in UWD are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amy Carlino, Selene Ceballo, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.
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