China's economy keeps humming along nicely, growing at about an 8% annual rate. And so far in 2009, retail sales in China have been rising at a brisk 15% rate. Much of this economic growth has been driven by a purchasing powerhouse - Chinese women under the age of 35.
That growth looks set to continue. A recent study surveyed female consumers in China and 80% of them said they expected to spend more in the next six months than in the last six months. Sounds like the United States before the Wall Street "bomb" blew up the US economy.
Chinese women are not only exerting influence on decision-making in their own homes but they are also making purchase decisions for their parents when they live in the same house or neighborhood.
Women in China now contribute about half of household income, up from 20% in the 1950s. Their educational opportunities have greatly grown, and they have entered the white-collar force in large numbers.
Female consumers in China are becoming less price sensitive and more sophisticated about the brands and products they buy. These female consumers are similar to female consumers elsewhere and do things such as conducting research online before buying items.
Chinese women have another similarity - they are also greatly concerned about the safety of the products they buy for their children. At times, American shoppers worry about a 'Made in China' label and safety issues. These women have to deal with this every day. Many choose where to shop based on whether they think they can find genuine and non-toxic products.
In fact, affluent Chinese women have been known to fly to Taiwan just to buy products for their babies. They are willing to spend more for their children's safety and buy the safer foreign products.
This huge body of confident consumers has investment implications. It bodes well for the continued rapid growth of the Chinese economy and for the long-term growth in investments in Chinese stocks, mutual funds and ETFs.
It can also bode well for large American companies that have a large presence in China. Some of the best-known American brands would include: Coca-Cola, Pepsico, McDonald's, Yum Brands, Johnson & Johnson and Walmart.
Friday, September 25, 2009
Tuesday, September 22, 2009
Another First for China
Circle September 28th on your calendars. It will be a momentous day in financial markets history. That is the day that China will issue its first sovereign bonds denominated in its own currency - the renminbi - to offshore investors.
The amount of bonds to be sold will be small - only $879 million. But as the Chinese proverb says - "even the longest journey must start with a small step."
This first sale of renminbi bonds is another step taken by China to turn the renminbi into a global currency someday. Developing an offshore bond market will be an important step if the renminbi is to become a global cuurency, as bonds would provide foreign institutions with an attractive means by which to hold the renminbi.
Beijing has already taken a number of steps in the past year to encourage greater use of the renminbi in international transactions. The aim is, of course, to decrease China's dependence on the falling US Dollar.
For example - in the past year, China has signed deals with Malaysia, South Korea, Indonesia, Argentina and Belarus that allow it to receive renminbi instead of dollars for its exports to those countries. There are similar deals expected soon with other countries such as Brazil, etc.
The amount of bonds to be sold will be small - only $879 million. But as the Chinese proverb says - "even the longest journey must start with a small step."
This first sale of renminbi bonds is another step taken by China to turn the renminbi into a global currency someday. Developing an offshore bond market will be an important step if the renminbi is to become a global cuurency, as bonds would provide foreign institutions with an attractive means by which to hold the renminbi.
Beijing has already taken a number of steps in the past year to encourage greater use of the renminbi in international transactions. The aim is, of course, to decrease China's dependence on the falling US Dollar.
For example - in the past year, China has signed deals with Malaysia, South Korea, Indonesia, Argentina and Belarus that allow it to receive renminbi instead of dollars for its exports to those countries. There are similar deals expected soon with other countries such as Brazil, etc.
Friday, September 18, 2009
Contrarian Investing
Some of the most successful investors of all time have been contrarian investors. The list of most famous contrarian investors would include the likes of Warren Buffet, Jim Rogers and John Templeton.
What exactly is contrarianism? What it means is developing your OWN approach to investing and working toward LONG-TERM investing goals. I'm sure the late John Templeton would be appalled by today's emphasis on the short-term such as day trading or Wall Street's high frequency trading.
Contrarians are aware that short-term movements in the markets are caused almost entirely by 'investor psychology' - that is what the majority of investors happens to be thinking at the moment. We see it all the time on Wall Street - everyone in the "herd" is invested in the same things. Another applicable term may be 'momentum investing' - chasing what is 'hot' at the moment.
A contrarian investor NEVER entrusts their money to others for precisely this reason. If they do, their money will most likely go into 'popular' investments and when the 'popularity' fades, so will the asset value of their portfolio.
Small investors who entrusted their money to others experienced this last fall until the spring of this year.
My favorite contrarian investor has to be John Templeton of whom I wrote about recently in my article titled "Investing Lessons from John Templeton".
As I discussed in the article, Sir John Templeton pioneered the idea of global investing in this country. He invested the monies in his Templeton Growth Fund into foreign markets when it was considered "nuts" to do so.
The fund grew at about a 16% per year rate. So if someone invested $10,000 into the fund when it was launched in 1954, by 1999 that $10,000 would have been worth an incredible $5.5 million!
Templeton's focus was always on the fundamentals of the company he was investing into. He could care less about currency movements, or what the charts 'said'.
John Templeton's investment maxims were very simple and they were just basic common sense. Here are some maxims that he published:
1) NEVER follow the crowd.
2) Avoid the popular.
3) Search worldwide.
4) Buy during times of pessimism.
5) Hunt for value and bargains.
6) Keep an open mind.
7) Learn from your mistakes.
8) No one knows everything.
9) Everything changes.
10)Invest for real returns.
Just by following some of these investment maxims from Sir John Templeton should help improve your long-term investment performance.
What exactly is contrarianism? What it means is developing your OWN approach to investing and working toward LONG-TERM investing goals. I'm sure the late John Templeton would be appalled by today's emphasis on the short-term such as day trading or Wall Street's high frequency trading.
Contrarians are aware that short-term movements in the markets are caused almost entirely by 'investor psychology' - that is what the majority of investors happens to be thinking at the moment. We see it all the time on Wall Street - everyone in the "herd" is invested in the same things. Another applicable term may be 'momentum investing' - chasing what is 'hot' at the moment.
A contrarian investor NEVER entrusts their money to others for precisely this reason. If they do, their money will most likely go into 'popular' investments and when the 'popularity' fades, so will the asset value of their portfolio.
Small investors who entrusted their money to others experienced this last fall until the spring of this year.
My favorite contrarian investor has to be John Templeton of whom I wrote about recently in my article titled "Investing Lessons from John Templeton".
As I discussed in the article, Sir John Templeton pioneered the idea of global investing in this country. He invested the monies in his Templeton Growth Fund into foreign markets when it was considered "nuts" to do so.
The fund grew at about a 16% per year rate. So if someone invested $10,000 into the fund when it was launched in 1954, by 1999 that $10,000 would have been worth an incredible $5.5 million!
Templeton's focus was always on the fundamentals of the company he was investing into. He could care less about currency movements, or what the charts 'said'.
John Templeton's investment maxims were very simple and they were just basic common sense. Here are some maxims that he published:
1) NEVER follow the crowd.
2) Avoid the popular.
3) Search worldwide.
4) Buy during times of pessimism.
5) Hunt for value and bargains.
6) Keep an open mind.
7) Learn from your mistakes.
8) No one knows everything.
9) Everything changes.
10)Invest for real returns.
Just by following some of these investment maxims from Sir John Templeton should help improve your long-term investment performance.
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