China Traffic Jam Just a Brief Bottleneck on the Road to Growth
Besides recently being crowned the world's second-largest economy, China now has the dubious distinction of spawning the world's longest traffic jam. And it's all directly attributable to China's voracious appetite for energy and automobiles.
A line of cars and trucks 60 miles long (100 kilometers) has snarled the road along the Beijing-Tibet 110 Expressway for the past nine days.
The bumper-to-bumper gridlock, which finally began to ease yesterday (Wednesday), was created by a surge in trucks carrying coal from the province of Inner Mongolia to the suburbs of Beijing, where power plants continue to suck up and incinerate millions of tons of the black rock.
South Korea Moves on U.K. Energy Assets as Competition with China Increases
Korea National Oil Corp. (KNOC) on Friday made a hostile bid for the United Kingdom's Dana Petroleum PLC, marking the first time a state-owned Asian company has gone directly to shareholders.
The move underscores South Korea's determination to double its oil output by 2012 and increase its energy security. It also shows that South Korea will not be denied energy assets, despite being outbid by Chinese companies in several instances.
KNOC took the $2.9 billion (1.87 billion pound) bid to Dana's shareholders after the oil explorer rejected KNOC's previous offer of 1,800 pence a share offer. In a filing with the London Stock Exchange, KNOC said it had support from 48.62% of shareholders, putting the needed 50% approval target within close reach.
- Three Ways to Profit as China Causes Gold Prices to Spike China's growing importance in the world economy is about to have ramifications for the entire commodities market. Specifically, for Gold. Find out why China will push gold prices through the roof - and how to profit now. Read More...
China Dumps the Dollar as Yields Sink
China cut its holdings of Treasury notes and bonds by the most ever in June, instead favoring the debt of Europe, Japan and Korea. The move has fueled speculation that plummeting U.S. yields are driving away the Asian giant, which has ambitions for its currency, the yuan, to replace the dollar as the world's main reserve currency.
China's holdings of long-term Treasuries fell by $21.2 billion in June to $839.7 billion, a U.S. government report showed recently. Total Chinese investment in U.S. debt declined 2.8% to $843.7 billion, the smallest in a year, following a 3.6% slide in May.
The shift comes as President Barack Obama increases U.S. debt to record levels, making it harder to finance sales to sustain the U.S. economic expansion.
This China Province Will Become a Global Oil-and-Gas Market Powerhouse
Like everything else, the balance of power in the global energy market is shifting toward China, where a little-known province is perfectly situated to become a global oil-and-gas market powerhouse.
Nestled in the far northwest of China, Xinjiang is the country's largest province and the primary domestic source for oil and gas. It is sparsely populated and as big as Western Europe. The name, Xinjiang, literally means "New Frontier." And recent decisions in Beijing are going to give that translation even more meaning - transforming this province into a "new frontier" for the global energy sector.
To understand how to profit from this development, please read on... Read More...
Three Ways to Profit as China Causes Gold Prices to Spike
When recently gold sold off and fell as much as 8% below its record high level of $1,260 an ounce, investors had to be more than a little concerned.
With the huge debt loads top world economies have taken on to rebound from the worst financial crisis since the Great Depression, investors have grabbed onto gold as the best way to hedge against the inflation and other financial calamities they felt were certain to come. So far, those calamities haven't materialized.
But those investors shouldn't be worried. There's another catalyst on the horizon. It's headed directly for us. And, at least as far as gold prices are concerned, it figures to be an almost ideal catalyst: Even if it doesn't spawn the near-term price spikes some gold bugs predict, it's a near-certainty to send the yellow metal skyward in the long run.
I'm talking, of course, about China.
To see just how powerful a gold-price catalyst China figures to be, please read on.
China Manufacturing Slowdown Not Enough to Cause "Double Dip"
The China manufacturing sector expanded at the slowest rate in 17 months in July, showing the government's efforts to tighten lending is weighing on the country's economy. But the Asian juggernaut is still posting strong enough growth to keep the rest of the world out of a "double dip" recession.
The HSBC China Manufacturing Purchasing Managers' Index released Sunday showed activity fell to 49.4 in July from 50.4 in June. A reading above 50 signals expansion, indicating manufacturing activity actually contracted for the first time since China's economic recovery began.
The HSBC PMI's reading was the first below 50 since March 2009. Measures of output, orders and export orders all showed contractions. Another measure, the official government PMI released yesterday (Monday), fell to 51.2 in July from 52.1 in June, the third straight month it has declined.
"We're in a moderate slowdown, not a double-dip," Ken Peng, a Beijing-based economist for Citigroup Inc. (NYSE: C) told Bloomberg News.
Similarly, HSBC Holdings plc (NYSE ADR: HBC) economist Qu Hongbin said China is having a "slowdown not a meltdown" and "there is no need to panic."
Buy, Sell or Hold: Peabody Energy Corp.'s (NYSE: BTU) Global Dominance Is Heating Up Profit Growth
While advanced economies are still facing high levels of unemployment, more than a billion people in emerging markets are experiencing advancing standards of living.
As these emerging economies - especially China and India -grow, there is a strong trend toward urbanization. People are leaving the countryside for the cities in droves in order to reap the promise of the global economy. This secular process alone places huge demands on the existing infrastructure.
This growth is also boosting manufacturing and energy needs. China has surpassed the United States in both car production and energy consumption. And India's Tata Motors Ltd. (NYSE ADR: TTM) launched the cheapest car in the world, the Nano, which costs roughly $2,500. The critically acclaimed vehicle's mass appeal and affordability is creating additional congestion on India's famously overcrowded streets. Adding more fuel to the global-demand fire, most emerging economies implemented a strong dose of infrastructure spending within their budgets as a result of the global financial crisis of 2008.
The result of all that infrastructure development, urbanization and increased consumer affluence is a myriad of new road, bridge and building construction, additional urban development, and stepped-up production of cars, home appliances and other consumer goods. All of these developments require two key ingredients to become reality: Steel and energy.
China Leapfrogs Japan and is Now the World's No. 2 Economy – And is Gunning for the No. 1 United States
As the old Avis rental car slogan used to say: "When you're No. 2, you try harder."
With the growth rates that its economy has turned in the past few years, no economist could ever accuse China's leader of not trying hard. China now claims to have jumped over Japan to take over the No. 2 spot in the world economic pecking order.
China's next target: The No. 1 U.S. economy.
In fact, some experts believe that China could catch up to the United States' $14.4 trillion economy in as little as 10 to 15 years.
Fighting to Feed the Dragon: McDonald's Vs. Yum!
Speed kills. And in the fast food industry, it's imperative.
The speed of service and the ability to quickly adapt menus, packaging and advertising are what makes a market leader. And right now, the speed at which fast food companies make the transition into foreign markets, particularly China, is what matters most of all.
The industry's two biggest players, McDonald's Corp. (NYSE: MCD) and Yum! Brands Inc. (NYSE: YUM) - the parent company of KFC, Pizza Hut, and Taco Bell - know that.
Dr. Copper's Diagnosis: A Strong Recovery
As stocks have slipped lower over the last three months, copper has bucked the broad trend and broken the pattern of lower highs and lower lows it set in the spring.
After bottoming on June 7, the iPath Dow Jones-UBS Copper Subindex Total Return ETN - which closely tracks copper futures - has gained more than 12.2%. In the same span, the Russell 2000 small cap stock index has lost 0.6%.
The red metal is nicknamed Dr. Copper for its ability to peer around the corner and act as a leading indicator for the global economy. And right now, the commodity with a Ph.D. in economics seems to be saying the future looks bright. Is the trend set to continue?
Taipan Daily: Reasons to sell in the aftermath of the Agricultural Bank of China IPO
In the aftermath of the $19 billion Agricultural Bank of China IPO, the dragon is struggling... and there are plenty of reasons to consider selling.
A few months back we broke down the major China ETFs - FXI, HAO and PGJ. (You can access that piece here.)
Today the technical and fundamental picture looks bearish for all three...
The chart above is for the most popular of the three ETFs, the Xinhua China 25 (Read More...