2010 February
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How to Profit From China's Next Move
For many investors who don't have the benefit of 20 years of experience in Asia like I do, figuring out what Beijing is up to is both puzzling and difficult.
But a handy little tool called a "Form 13F" can help.
In case you're not familiar with it, the 13F is a disclosure document that the U.S. Securities and Exchange Commission (SEC) requires institutional-investment managers to file when they hold $100 million or more of certain U.S.-listed stocks.
China's $300 billion sovereign wealth fund (SWF) – the China Investment Corp. (CIC) – just filed its first-ever 13F with the SEC, revealing that it purchased about $9.6 billion worth of U.S. stocks last year.
And it confirms much of what we've been telling you since the global financial crisis began – namely that China would take advantage of the crisis by purchasing beaten-down stocks, resources, and hard assets … and in a big way.
Even more important, this filing hints at what China is likely to do next – an insight that will help investors figure out where to put their money in order to maximize their personal profits.
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What China's Investment Trends Are Telling Us Now
Many investors have reaped their biggest gains by playing the stock-market equivalent of "follow the leader." In the past, investors pursuing this strategy have followed the moves of such luminaries as Warren Buffett, Jim Rogers, Bill Gross, and even the late Sir John Templeton.
But there's now a potential new "leader of the pack" whose moves investors need to watch and even emulate.
We're talking about China.
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Despite India's Optimism, There May Be a Better Time to Buy
The Indian government announced Monday that the country's economy was expected to expand by 7.2% during the fiscal year that ends next month.
Agriculture – which had been expected to be a major drag on the economy because of a poor monsoon season – contracted a mere 0.2%. That is a truly stellar performance, showing that India – like China – has emerged almost unscathed from the global economic meltdown. It would pretty well justify the Bombay Stock Exchange Ltd.'s rich Price/Earnings multiple of 20 and would make Indian stocks a "Buy" even at these levels.
Unfortunately, when looked at closely, the picture is not quite so rosy.
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Four Ways to Profit From a Business-Driven Rebound
Last week we learned that the U.S. economy expanded by a whopping 5.7% annual rate in the 2009 fourth quarter – the biggest jump since 2003. This was well ahead of the 4.5% consensus estimate and solidly beats the 2.2% growth rate achieved in last year's third quarter. The turnaround is the largest in almost three decades.
The main driver of the performance was a big slowdown in the rate at which businesses were drawing down their inventories. This alone contributed 3.4% to overall growth in the quarter. Paul Ashworth at Capital Economics in London believes that inventory rebuilding will continue to boost gross-domestic-product (GDP) growth for another two or three quarters.
But what happens after that – especially after the stimulus spending out of Washington winds down later this year? Will this rate of growth continue?
Investors who know the answer to that question will be the best-positioned to profit.
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How to Profit From the Geothermal Energy Push
Geothermal energy isn't a new concept in the United States.
It's actually been around for some time, with numerous geothermal power plants in California, Nevada and a few other western states. There are new plants on the drawing board, too. Unfortunately, the recession has stifled the construction progress on many of them.
But all that's about to change. Thanks to a few key technological developments – and a big cash infusion from the government – the stars are aligning to produce the perfect storm for this super-green energy source.
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Ghana May Kill Exxon's $4 Billion Oil Deal
The government of Ghana may kill Exxon Mobile Corp.'s (NYSE: XOM) plans to buy a $4 billion stake in a giant offshore oil discovery from Kosmos Energy LLC. The move could help China expand its growing presence in the region through its state-owned oil company China National Offshore Oil Corp. (NYSE ADR: CEO).
Ghanaian Energy Minister Joe Oteng-Adjei sent a letter to Exxon last week informing the company that the government wouldn't approve the deal with Kosmos. The letter said the government is "unable to support an Exxon Mobil acquisition of Kosmos's Ghana assets," according to a copy reviewed by The Wall Street Journal.
The government said Dallas-based Kosmos had shared critical information about the field with potential buyers without its permission. Ghana also said Kosmos had left Ghana's state-run oil company, Ghana National Petroleum Corp. (GNPC) out of discussions held to determine how the field should be developed.
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CIT Taps Former Merrill Chief Thain as New CEO
In a move that unites two prominent casualties of the financial crisis, CIT Group Inc. (NYSE: CIT) ended a prolonged search by naming John Thain, the former chief of Merrill Lynch & Co., as its new chairman and chief executive officer.
Thain, who left Bank of America Corp. (NYSE: BAC) 13 months ago amid controversy over its takeover of Merrill, will have his hands full rebuilding CIT, an embattled commercial lender that nearly collapsed in 2009.
CIT still operates under restrictions that were imposed after receiving $2.3 billion in funding under terms of the Troubled Asset Relief Program (TARP). Those measures include being banned from the commercial paper market, its traditional source of funding.
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Six Ways to Profit From the Rebound in Luxury Spending
If the rich truly have gotten richer during the current financial unpleasantness – as some pundits allege – members of the moneyed set have been smart enough to avoid flaunting their new wealth with a rash of high-end purchases.
Lately, however, this seems to be changing: The luxury markets led a January surge in the retail sector – a surge that could mean new opportunities for investors astute enough to grab for the golden ring.
